Good Faith Estimate (GFE), Truth-in-Lending (TIL) and HUD-1 form changes

The mortgage industry is making big changes again. In an effort to help Consumers better understand the key features, cost and risks of the mortgage loan for which they are applying, the disclosure forms are being revamped.

These changes titled the TILA-RESPA rule are effective as of August 1, 2015.

You can read more about this on the the Consumer Financial Protection Bureau (CFPB) website: www.consumerfinance.gov/regulatory-implementation/tila-respa/

Below are a few excerpts from the Consumer Financial Protection Bureau website:

“First, the Good Faith Estimate (GFE) and the initial Truth-in-Lending disclosure (initial TIL) have been combined into a new form, the Loan Estimate (LE). Similar to those forms, the new Loan Estimate (LE) form is designed to provide disclosures that will be helpful to consumers in understanding the key features, costs, and risks of the mortgage loan for which they are applying, and must be provided to consumers no later than the third business day after they submit a loan application. Second, the HUD-1 and final Truth-in-Lending disclosure (final TIL and, together with the initial TIL, the Truth-in-Lending forms) have been combined into another new form, the Closing Disclosure (CD), which is designed to provide disclosures that will be helpful to consumers in understanding all of the costs of the transaction. This form must be provided to consumers at least three business days before consummation of the loan.”

“The forms use clear language and design to make it easier for consumers to locate key information, such as interest rate, monthly payments, and costs to close the loan. The forms also provide more information to help consumers decide whether they can afford the loan and to facilitate comparison of the cost of different loan offers, including the cost of the loans over time.”

Hopefully these changes will help ease the confusion of the old disclosures.

David Mully has been in the mortgage industry for 26 yrs. He writes for a national mortgage website: www.mortgageloan.com/contributors and is the President and CEO of Lender Insider. He formerly worked as a mortgage loan officer for several years as well as in the business-to-business sector of the mortgage industry. He also wrote a column in several newspapers and online for more than 6 yrs. titled “Mortgage Search”. His Blog can be accessed on his website:lenderInsider.com