Instead of receiving four different disclosures in various formats, as currently required under the Truth in Lending and Real Estate Settlement Procedures Acts, borrowers will receive just two. Intended to make the loan process more transparent, the new forms, created by the Consumer Financial Protection Bureau look similar and are much easier to understand.
According to the new rules, disclosures must be delivered on a timely schedule. The initial loan estimate must be provided to borrowers no later than the third business day after they submit a loan application.
Its first page shows the loan amount and interest rate, what the borrower’s monthly payment would be, estimated taxes and insurance, and how much cash is required to close.
The Closing Disclosure, outlining the final transaction, must be provided to borrowers at least three business days before the closing date. This is a major change, as borrowers typically don’t see the closing documents until they are ready to sign.
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