If you haven’t bought a home in recent years, the paperwork you’ll be confronted with will look a little different this time around. That’s because of new regulations put in place following the 2008 financial crisis.
Under the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), the decades-old Good Faith Estimate and Truth in Lending forms were all changed.
The good news: The newer forms are simpler to read and easier to understand so consumers like you will be crystal clear when making mortgage commitments.
Here’s what you need to know:
- Under the Consumer Financial Protection Bureau, two key disclosure forms have been consolidated and simplified. First, the Good Faith Estimate and Truth in Lending forms of the past have been combined into the Loan Estimate (LE) form, which must be provided to the borrower no later than three business days after the loan application is submitted. This gives the borrower an early look at the costs of the loan and helps with decisions when shopping other lenders.
- Second, the HUD-1 settlement statement and the final Truth in Lending disclosure have been combined and simplified in the Closing Disclosure (CD) form, which must be provided to the consumer no less than three business days before settlement.
Examples of both forms are available along with other tutorials on the Consumer Financial Protection Bureau’s website at: http://www.consumerfinance.gov/know-before-you-owe/.