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From Banking and Finance Law Daily, March 31, 2015

CFPB booklet walks home buyers through mortgage process

By J. Preston Carter, J.D., LL.M.

The Consumer Financial Protection Bureau has announced the availability of its updated home buying information booklet—"Your Home Loan Toolkit: A Step-by-Step Guide." This publication guides home buyers through the home loan process. The booklet contains interactive worksheets, checklists, research tips, terms, and conversation starters to help home buyers shop for the home loan that suits their needs. The CFPB says the booklet is written in plain, straightforward language and “is a must-have” for potential home buyers, realtors, mortgage brokers, bankers, and others who need to explain the home loan process.

“This toolkit is a great resource for consumers navigating the home-buying process, and will help consumers make well-informed decisions about the biggest financial transaction of their life,” said CFPB Director Richard Cordray. “The new mortgage disclosure forms coming in August will help consumers comparison shop for mortgages and avoid surprises at the closing table. We are releasing this toolkit well in advance of the effective date to help the mortgage industry come into compliance with the new rules.”

The CFPB is also providing an electronic version complete with fillable text fields and interactive check boxes so the consumer can save and print their progress as they work through the toolkit. A Spanish language version will also be made available later in 2015.

Replaces HUD booklet. The toolkit is designed to replace an existing booklet that creditors currently must provide to mortgage applicants, which was initially developed by the Department of Housing and Urban Development. The updated toolkit is designed to be used in connection with the new Loan Estimate and Closing Disclosure forms that will be effective on Aug. 1, 2015. Creditors must provide the toolkit to mortgage applicants as a part of the application process, and other industry participants, including real estate professionals, are encouraged to provide it to potential homebuyers.

Dodd-Frank requirements. The CFPB’s notice of the booklet’s availability explains that Section 1450 of the Dodd-Frank Act amended section 5 of the Real Estate Settlement Procedures Act by, among other things, transferring responsibility for the booklet from HUD to the bureau, requiring the CFPB to prepare, at least once every five years, “a booklet to help consumers applying for federally related mortgage loans to understand the nature and costs of real estate settlement services.”

Dodd-Frank also added new content requirements, including information on homeownership counseling services; an explanation of a consumer’s responsibilities, liabilities, and obligations in a mortgage transaction; and a list of questions a consumer obtaining a federally related mortgage loan should ask regarding the loan, including whether the consumer will have the ability to repay the loan, whether the consumer sufficiently shopped for the loan, whether the loan terms include prepayment penalties or balloon payments, and whether the loan will benefit the borrower.

MainStory: TopStory CFPB DoddFrankAct Loans Mortgages RESPA

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