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​CFPB Makes Modifications to “Know Before You Owe” Mortgage Disclosure Rules

Financial Institutions Law Update James D. Friedman, James I. Kaplan

On January 20, 2015, the Consumer Financial Protection Bureau ("CFPB") announced two minor changes to the "Know Before You Owe" disclosure rules for mortgage lenders. The changes, which address (1) when consumers will receive updated disclosures after locking in an interest rate, and (2) how consumers receive information regarding construction loans, are meant to "make it easier for creditors to comply with the disclosure rules while maintaining important new consumer protections."

The first change gives creditors three business days to provide a revised Loan Estimate after a consumer locks in a floating interest rate. The CFPB determined that the initial same-day Loan Estimate rule resulted in creditors only allowing customers to lock in interest rates during business hours or even before noon each day. The second change adds language to the Loan Estimate form informing construction borrowers that they might receive a revised Loan Estimate if their loan takes more than 60 days to settle. This modification addresses specific concerns over longer settlement times with construction loans. Both of these modifications will become effective August 1, 2015.

You may view the Final Rule here and the CFPB's press release on the two modifications here.

If you have questions about the modifications, please contact James Friedman at (414) 277-5735 / [email protected], James Kaplan at (312) 715-5028 / [email protected], or your local Quarles & Brady attorney.

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