CFPB Makes Modifications to “Know Before You Owe” Mortgage Disclosure Rules
Financial Institutions Law Update 01/23/15 Stanley F. Orszula, Michael Hearon, James D. Friedman, Kathryn A. Kronquist, James I. Kaplan, David E. Funkhouser
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.
If you have questions about the modifications, please contact Stanley Orszula at (312) 715-5123 / [email protected], Michael Hearon at (317) 399-2817 / [email protected], James Friedman at (414) 277-5735 / [email protected], Kathryn Kronquist at (202) 372-9519 / [email protected], James Kaplan at (312) 715-5028 / [email protected], David Funkhouser at (602) 229-5242 / [email protected], or your local Quarles & Brady attorney.