Know Before You Owe: Help Us Make Your Mortgage Forms Better

By

Let’s say you want to buy a home or refinance your mortgage.

You might be in the market to buy today, or you might be planning to do so down the road. You think about the neighborhoods you might like, the features you want, and what it will be like when you get the keys and take your first step through the front door.

For most Americans, this means taking out a loan. A mortgage loan is the biggest financial commitment most Americans will make in their lifetimes. With something so important, you ought to be able to get up-front, easy-to-understand information that lets you compare different loan offers and find the one that’s best for you. But if you’ve actually applied for a mortgage recently, what you probably remember most are lots of technical terms and long lists of fees.

We want to help fix that, and we’d like to have your help. Today, we’re announcing the Know Before You Owe project – sign up now, and we’ll tell you when it launches. Know Before You Owe is an effort to combine the Truth in Lending disclosure and the Good Faith Estimate into a single, simpler form.

Wait – the what?

If you’ve ever applied for a mortgage loan, you’ve received two forms required by federal law: A two-page Truth in Lending form and a three-page Good Faith Estimate. They are meant to give you the basic facts about home loans that you apply for and to help you pick the mortgage product that’s best for you. But these forms have overlapping information and complicated terms and are just plain difficult to understand.

These disclosures don’t work if they give you too much information or if the information they provide isn’t what you need. They don’t work if they drown you in detail or leave out crucial information, like warnings about hidden risks. Can the cost of your loan go up? When, and why? Complicated disclosures can make it hard to answer or even ask the right questions, and many consumers don’t know what to ask until it’s too late.

Over the coming months, we will design and test new draft disclosure forms and seek one-on-one input from consumers, lenders, and brokers as we refine the forms. But this disclosure affects everyone. That’s why we will also put them online, while they’re still in the design phase, and ask you to weigh in. We will deliver your input to our testers and designers and factor it into our design process.

Sign up now, and we’ll email you when it’s time to have your say.

  • Anonymous

    But, but… SOCIALISM!!1! *foams at the mouth, falls over backward*

    No, seriously, this is a great thing and I can’t wait to be involved. You have my email.

  • Anonymous

    I am purchasing a home, and hired a licensed realtor. My realtor’s costs were not clearly disclosed, nor were additional fees disclosed before appearing on my HUD-1 form. The CFPB should encourage real estate agents to disclose their fees clearly, and up front, so that shopping between realtors based on cost is easy. A real estate agent’s compensation structure should also be disclosed upfront, so that a purchaser knows a real estate agent’s ultimate objectives.

  • http://sorebuttcheeks.blogspot.com/ steroids

    I’ve always found the mortgage forms rather complicated.

  • Tired Compliance Officer

     I have been auditing mortgage loans for 25 years, and right now the disclosures do more to confuse borrowers than ever before.  The latest revision to the Truth In Lending disclosure – the payment table disclosure for mortgage loans – is an unmitigated disaster.  It is confusing to lenders to fill out, and the consumer can no longer see the total number of payments on the disclosure!  The Fed gets a huge SYSTEM FAIL on that one.

    The rules governing the Good Faith Estimate and Truth In Lending disclosures are so complex and convoluted that most smaller banks and credit unions struggle to figure out how to provide the information AND accommodate the wishes of their customers or members.   Every time a customer or member wants to change a little something in their loan request, a whole host of new disclosures must be generated.  It is not uncommon to review a mortgage loan file and find 6 or 7 sets of “early” disclosures.  At what point does the consumer receive these packages and say “Whatever” before tossing them in the trash or stacking them on top of their junk mail?

    After 25 years of explaining disclosures to both bankers and consumers, I know what is the important information that people want to know, and what is the useless “gotcha” information that auditors and bank examiners look for in order to cite pointless findings.   For instance, Line 2 of the GFE is NOT supposed to be updated when a revised GFE is issued due to valid changed circumstances, even if date on Line 1 is updated.

    And if that last sentence left you scratching your head, then you have a small inkling of the problem created by the massive disclosure mess that has evolved over the last 2 years. 

The CFPB blog aims to facilitate conversations about our work. We want your comments to drive this conversation. Please be courteous, constructive, and on-topic. To help make the conversation productive, we encourage you to read our comment policy before posting. Comments on any post remain open for seven days from the date it was posted.