The Consumer Financial Protection Bureau wants to simplify the mortgage disclosure process.
The new agency revealed its "Know Before You Owe" project, which combines two federally-required mortgage disclosures into one document. The CFPB began testing two prototype forms on its website today, asking both consumers and industry to weigh in on which document works better to convey the costs and risks associated with a loan and make the concept of comparison shopping a little easier.
"Buying a home is one of the biggest financial decisions most Americans will ever make. The Know Before You Owe project is about giving consumers upfront, easy-to-understand information that helps them compare different mortgage offers and find the one that’s best for them," said Elizabeth Warren, Assistant to the President and Special Advisor to the Secretary of the Treasury on the CFPB. "The current forms can be complicated and difficult for consumers to use. They are also redundant and can be costly for lenders to fill out."
The online tool offers two options and collects public input by simply asking which one the viewer prefers. The law currently requires two mortgage-related documents: the Truth in Lending Act mortgage disclosure and the Real Estate Settlement Procedures Act Good Faith Estimate. The new form would combine the overlapping features of the two documents, while disclosing all the required information in a simpler layout.
"With a clear, simple form, consumers will be in a better position to answer two basic questions: Can I afford this mortgage and can I get a better deal somewhere else," Warren said.
The CFPB will test the two forms and gather public feedback over the summer.