CFPB Working to Simplify Mortgage Closing Process
Since its inception as part of the Dodd-Frank Wall Street Reform Act, one of the early tasks charged to the Consumer Financial Protections Bureau has been designing a new simplified system for closing on mortgage loan agreements.
The catch phrases for the post-Wall Street Collapse economy has been "transparency" and "consumer confidence." The Obama Administration has been consistent in their belief that simplified and streamlined financial products are the key to restoring consumer confidence in banks, and getting the economy rolling again.
No other industry, and no other financial product, received more scrutiny and bad press than mortgage loans and mortgage lenders during the recession. The media clung to the foreclosure epidemic and established it as the poster child for the entire recession.
Before the Dodd-Frank, part of the process for home buyers closing on a new mortgage was filling out the HUD-1 Settlement Statement and the Truth-in-Lending Disclosure. These forms were widely criticized as being cumbersome and convoluted. The CFPB is working on creating one unified and simplified form to replace the two older models.
So far the CFPB has developed two prototypes for the new form. Both are up on the new agency's website, where anyone and everyone is encouraged to review them and leave suggestions and feedback.
One of the principal goals of the new form is to provide the customer with an easy format to compare different mortgage offers and the terms within those offers. The CFPB also wanted to simplify the disclosures of closing costs and terms to make them easier to understand.
The new mortgage disclosure forms are not the only new processes that are out on a test run, however. By asking for feedback, engaging the public, and actually acting on their suggestions, the CFPB is starting to chip away at the old stereotypes of impersonal bureaucracy, establishing and solidifying the Dodd-Franks vision of a new style of government agency that actually works for and with the citizens its designed to protect.
By: Javi Calderon
