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All You Need to Know About New Federal Mortgage Requirements

Buying a home is most likely the biggest purchase that you will make in your lifetime.

As a not-for-profit credit union, our members' financial well-being is our top priority. We want to make sure that you have the information that you need to make well-informed decisions. And, we want you know about the new federal mortgage requirements designed to help consumers make well-informed decisions.

If you have any questions, we are here to help

Schedule an appointment to speak with a BECU Mortgage Advisor–pick a location, day and time that works best for your schedule during our regular business hours. 

What is changing and how does it affect you?

The Consumer Financial Protection Bureau (CFPB) has established new requirements commonly referred to as Know Before You Owe to help consumers better understand the mortgage buying process. As a result, if you apply for a mortgage after the new requirements are implemented, you will receive new easier to understand documents.  

Who is the CFPB and why were the new requirements needed?

The CFPB is an independent government agency established under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, a federal law that regulates the financial industry to help prevent another financial crisis similar to the 2007-2009 national mortgage crisis.

Video: Understanding CFPB and Know Before You Owe

What are the new requirements?

All U.S. mortgage providers are required to provide applicants with the new following documents effective October 3:

  1. Instead of the current Good Faith Estimate and Truth in Lending Act documents that you receive shortly after you apply for a mortgage, you will receive a new Loan Estimate.
  2. Instead of the current Real Estate Settlement Statement that you receive shortly before you close on the mortgage, you will receive a new Closing Disclosure.
  3. In addition, consumers must receive the Closing Disclosure at least three business days before the closing to allow for adequate review time. Make sure to work with your mortgage loan specialist for details on how this may impact your closing date.

Please know that like all U.S. mortgage providers, BECU will be adhering to the new requirements. As always, we support efforts to help consumers better understand their financial options and promotes financial wellness. 

What are the benefits of the new requirements?

The CFPB provides the following benefit explanation for consumers:

  1. Combining several forms and additional statutory disclosure requirements into two forms will reduce paperwork and consumer confusion.
  2. Using clear language and design that will help consumers understand complicated mortgage loan and real estate transactions.
  3. Highlighting the information that has proven to be most important to consumers. On the new forms, the interest rate, monthly payments, and the total closing costs will be clearly presented on the first page. This will make it easier for consumers to compare mortgage loans and choose the one that is right for them.
  4. Providing more information about the costs of taxes and insurance and how the interest rate and payments may change in the future. This information will help consumers decide whether they can afford the mortgage loan and the home, now and in the future.
  5. Warning consumers about features they may want to avoid, like penalties for paying off the loan early or increases to the mortgage loan balance even if payments are made on time.
  6. Making the cost estimates consumers receive for services required to close a mortgage loan more reliable, for example, appraisal or pest inspection fees. The rule prohibits increases in charges from lenders, their affiliates, and for services for which the lender does not permit the consumer to shop unless a specific exception applies. Examples of the specific exceptions include when information provided by a consumer at application was inaccurate or becomes inaccurate, or when the consumer asks for a change in the services.
  7. Requiring that consumers receive the Closing Disclosure at least three business days before closing on the mortgage loan. Currently, consumers often receive this information at closing or shortly before closing. This additional time will allow consumers to compare the final terms and costs to the terms and costs they received in the estimate. That will better equip them to raise any questions before they go to the closing table.

 Benefits source: CFPB

If you have any questions, we are here to help.

Schedule an appointment to speak with a BECU Mortgage Advisor–pick a location, day and time that works best for your schedule during our regular business hours.