As proposed last July, a timing restriction for mortgage closing disclosures that could prevent a lender from charging otherwise valid closing cost increases was removed today from the federal consumer protection agency’s “Know Before You Owe” mortgage disclosure rule. The final rule takes effect 30 days after its publication in the Federal Register.
The revision addresses when mortgage lenders with a valid justification may pass on increased closing costs to consumers and disclose them on a closing disclosure. The Consumer Financial Protection Bureau (CFPB), in a press release, said the update is intended to provide greater clarity and certainty to the mortgage industry.
“Specifically, a timing restriction on when the creditor may use a Closing Disclosure to communicate closing cost increases to the consumer could prevent a creditor from charging the consumer for those cost increases despite a valid reason for doing so, such as a changed circumstance or borrower request,” the bureau said. “In response, in July 2017 the Bureau proposed an amendment removing that particular timing restriction. Today, after considering public comment on the proposal, the Bureau is finalizing that amendment.”
The rule change revises the bureau’s Truth in Lending Act (TILA)/Real Estate Settlement Procedures Act (RESPA) combined mortgage disclosures rule, or TRID. It’s also known as the “Know Before You Owe” mortgage disclosure rule, which took effect Oct. 3, 2015. The rule created new loan estimate and closing disclosure forms that consumers receive when applying for and closing on a mortgage loan.
CFPB Final Rule, mortgage closing disclosures