The U.S. Consumer Financial Protection Bureau isn't set to release its new mortgage form proposal until July 21, but it will reportedly reduce the piles of paperwork borrowers need to fill out when applying for a mortgage. In addition, the bureau said it is considering modifying core mortgage disclosure requirements, such as how the annual percentage rate is calculated.
The proposal will be the first in a series of rulemakings that will reshape mortgage lending as a whole for institutions, including Wells Fargo and Bank of America. Other rules set to be scrutinized are the responsibilities of lenders in underwriting, securitization and servicing.
The Dodd-Frank act paved the way for simplification by mandating that instead of the Federal Reserve and the Department of Housing and Urban Development each having separate forms for getting a mortgage estimate and closing, there would be one form, charged to the new consumer agency. With many other rules soon to be set in motion, the Consumer Bankers Association has urged the Bureau to keep the release limited to the simpler forms and rules to regulate them.
"Not only would this be a more organized approach for the industry that must comply with all of these massive changes, but we believe consumers will be less confused," Jeffrey Bloch, the group’s associate general counsel, wrote in an April 16 letter.
In a February 21 posting on its website, the Bureau announced it was considering making changes to the use of the annual percentage rate, the key metric laid down in the Truth in Lending Act for calculating the cost of a mortgage.
With changes clearly in the works for how mortgages are created and decided upon, lenders would greatly benefit from investing in loan servicing software as well as an amortization calculator. Both of these can ensure that lenders have proper individual payment plans created to tailor their needs and that payments are made on time.