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CFPB Proposes New Form For Mortgage Statements

by Bob Hunt
Wednesday, February 22, 2012

CFPB will affect real estate financing in matters ranging from disclosures to underwriting to appraisal practices. And that’s just the real estate part. CFPB will also have its hand in the business of credit card companies, credit reporting agencies, automobile financing, payday lenders, and many others.

Many know that CFPB was in a kind of limbo during its beginnings, because there was a political stalemate over the appointment of its director. Recently, though, President Obama was successful in installing Richard Cordray in that position, and the agency has been a beehive of activity since then.

On February 13 the Bureau released a model form for mortgage payment statements. The form can be found on the CFPB web site at www.consumerfinance.gov. It is not a final version. Input from both consumers and industry representatives is solicited. It is anticipated that a final form, and rule, will be proposed this summer.

Creating a standardized, mandatory statement form was not just the idea of an eager-beaver employee at CFPB. Rather, it was mandated by the Dodd-Frank Act (Section 1420). That law specifies several items that must be in the statement, and it also provides that other information may be prescribed by CFPB in its regulations.

It may come as a surprise to some that there currently is no standardized requirement of mortgage payment statements. To be sure, many are similar, but there are no industry-wide standards.

Particularly noticeable about the proposed form is that, in the case of an adjustable rate loan, the monthly statement shows when the interest rate will be reset – even if the date is not imminent.

Also, the proposed form shows if there will be a prepayment, how much it will be, and when the penalty will no longer be imposed. (More than a few real estate agents can tell of deals gone awry because the seller was “sure” that they had no prepayment penalty.)

Also, in what is probably a departure from the existing norm, the statement shows the maturity date of the loan.

An important component of the proposed form is that it includes information for those in need of mortgage counseling or assistance. Phone numbers are provided. That was one of the requirements of the Dodd-Frank act, and is clearly a sign of the times.

Readers are encouraged to visit the CFPB web site and to look at the form, and to make any suggestions they might have. And, for those who are really interested in these sorts of things, take a look at the proposals for new loan disclosures to be made just before the time of closing. These are not for the faint of heart.



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