Know Before You Owe

Know Before You Owe - New Mortgage Disclosure Rules

New disclosure rules for mortgage loan transactions – designed to protect consumers and prevent surprises – are now in effect.

Stronger, more effective disclosures were required by the Dodd-Frank reforms of U.S. financial markets, enacted by Congress and the President in 2010. The U.S. Consumer Financial Protection Bureau (CFPB) adopted the rules in November 2013, with an effective date of Oct. 3, 2015.

The rules integrate disclosures required by the federal Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA). Formally called the TILA-RESPA Integrated Disclosure, or TRID, the new rules are more popularly known as “Know-Before-You-Owe” (KBYO).

KBYO consolidates four existing disclosures for mortgage loans into two forms:

  • A Loan Estimate that must be delivered or placed in the mail no later than the third business day after receiving a consumer’s loan application.
  • A Closing Disclosure that must be provided to the consumer at least three business days before the loan closing date.

The objective is to improve consumer understanding of the mortgage process, aid comparison shopping, and help prevent surprises during loan closings.

The new TRID disclosure forms must be provided by all lenders or brokers who receive a mortgage loan application from a consumer on or after Oct. 3, 2015. The DBO will examine licensees for compliance with the new rules.