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Consumer Financial Protection Bureau

ALTA Urges Members to Comment on CFPB’s Initial Mortgage Disclosure Prototypes

May 19, 2011

Now that the Consumer Financial Protection Bureau (CFPB) has released initial drafts of the combined mortgage disclosure form, ALTA encourages members to inform the CFPB how the new form will affect real estate closings and your business.

The CFPB posted two prototypes of a mortgage disclosure form that combine the Truth in Lending Act (TILA) disclosure and the Real Estate Settlement and Procedures Act's Good Faith Estimate (GFE). The goal is to develop a form that is easier for both consumers and the industry to use.

The CFPB expects to conduct five rounds of revisions through September 2011 to select a single draft disclosure and then refine it. Changes to the draft form will be posted to CFPB’s website throughout the summer in order to receive feedback. The agency also plans to test the form in six markets: Albuquerque, N.M.; Baltimore; Birmingham, Ala.; Chicago; Los Angeles; and Springfield, Mass.

Prototypes for a new HUD-1 Settlement Statement are expected in the months ahead. ALTA’s RESPA Task Force will continue to work with the CFPB as the bureau continues to modify the form. The Task Force asks the title industry to engage in the process by signing up for CFPB updates and offering feedback to the CFPB regarding the prototypes. The deadline to offer input on these prototypes to the CFBP is May 27. Comments may also be sent to the Task Force at respacomments@alta.org.

CFPB staff indicated that it wants comments during this round to focus on the layout of the forms and not focus on content. The CFPB plans to get into more specific details of what’s included later in the process.

After an initial review of the forms, ALTA’s Task Force prefers the layout of Prototype 1 (Ficus Bank) compared to Prototype 2 (Pecan Bank). One of the Task Force’s main concerns was the use of the term “Non-Required Services" when referring to Owners Title Insurance on Line D of the back page of the form. The Task Force will suggest alternative terms such as “additional,” so the value of coverage can be better explained to consumers.

When reviewing the forms, the CFPB wants people to think about these questions:

• Would this form help consumers understand the true costs and risks of a mortgage?
• Could lenders and brokers clearly and easily explain the form to their customers?
• What would you like to see improved on the form? Is there some way to make things a little bit clearer?

The prototypes can be found by to the CFPB website, and can also be downloaded here:

• Prototype 1
• Prototype 2

ALTA would like to get your feedback on the prototypes and which one you prefer. Please take our poll and leave any comments you have about the forms.