CFPB Finalizes ‘Know Before You Owe’ Rule

Filed in Codes and Regulations, Housing Finance by on April 27, 2018 0 Comments

The Consumer Financial Protection Bureau (CFPB) has announced that it has finalized an amendment to its “Know Before You Owe” mortgage disclosure rule that addresses when mortgage lenders with a valid justification may pass on increased closing costs to consumers.

In a press release issued by the CFPB on April 26, the agency said the change is “intended to provide greater clarity and certainty to the mortgage industry.”

The Know Before You Owe mortgage disclosure rule took effect Oct. 3, 2015 and created new Loan Estimate and Closing Disclosure forms that consumers receive when applying for and closing on a mortgage loan.

Since then, the CFPB has heard feedback from the industry regarding clarification when lenders may pass on increased costs to consumers and disclose them on a Closing Disclosure.

The finalized amendment to the rule effectively eliminates a timing restriction on when a creditor can use the Closing Disclosure to communicate closing cost increases to the consumer. In essence, this will enable a creditor to charge a borrower for cost increases stemming from a valid reason, such as a changed circumstance or borrower request.

The final rule will take effect 30 days after publication in the Federal Register.

For more information, contact Curtis Milton at 800-368-5242 x8597.

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