On February 19, 2012, the CFPB released the final round of both the loan estimate and settlement disclosure prototypes. The release of the prototypes is part of CFPB’s Know Before You Owe initiative, which seeks to integrate the two mortgage loan disclosure forms--under the Truth in Lending Act and the Real Estate Settlement Procedures Act--into a single more simpler form. By combining these federally mandated disclosure forms, the CFPB hopes to make the costs and risks of the loan clearer for borrowers while also reducing the burdens on lenders.

Based on the February 19, 2012, CFPB release, a consumer would receive something akin to the loan estimate prototype when applying for a loan and the settlement disclosure prototype at closing. The prototypes include information such as the loan amount, the monthly principal and interest rates, projected payments (and actual payment) at closing. Some new proposed features included in the prototypes are comparisons of interest rates with other loans and the total payments a consumer would make over the term of the loan. In addition, the contact information of the lender, mortgage broker, real estate broker, and settlement agent are all clearly listed in the settlement prototype. Both the loan estimate and settlement prototype provide the above-mentioned information in 3-5 short and clearly labeled pages. The prototypes can be found on the CFPB website by clicking here. The CFPB is asking for the feedback on the prototype based on the following questions:

  • Can you easily find key loan terms?
  • Are you able to identify changes to the loan terms or costs?
  • Do you know who to contact to discuss your loan or changes to your loan?
  • Do you have the information you would need to feel comfortable closing on the loan?
  • Are the disclosures easy for lenders and settlement agents to use and explain to consumers?  

Feedback, questions or other comments can be made to the CFPB by going to the following website: knowbeforeyouowe@cfpb.gov.