CFPB Publishes Final ‘Know Before You Owe’ Rule

Filed in Codes and Standards, Housing Finance by on July 10, 2017 0 Comments

The Consumer Financial Protection Bureau (CFPB) on July 7 published final updates to its “Know Before You Owe” mortgage rule. The updates offer amendments on finance charge disclosures, disclosures that are tied to housing assistance that a borrower receives, and when information can be shared with third-parties, including real estate agents.

Of particular interest to NAHB, the final rule clarifies disclosures for construction and construction-to-permanent loans addressing many of the concerns lenders have expressed in making these loans.

The CFPB decided not to adopt the proposal which NAHB opposed that would have required a creditor who offers both construction and permanent financing to provide disclosures to the consumer for both the construction and permanent phases regarding whether or not the consumer expressly indicated they would obtain permanent financing from the same creditor who provided the construction financing.

In addition, the CFPB clarified that a creditor may share the Closing Disclosure (CD) with sellers and various other parties, including real estate agents. However, the CFPB omits an originally proposed fix for the so-called “black hole” that is created when a mortgage closing is delayed.  The agency has published a proposal for additional comments that attempts to clarify the circumstances that a creditor can use the CD form, instead of the upfront Loan Estimate.

NAHB staff is still reviewing the nearly 600 page rule which can be accessed here.

If you have any further questions or comments, please feel free to contact Curtis Milton at 800-368-5242 x8597.

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