The new integrated disclosure rule set to take effect in August will combine some disclosures consumers receive when applying for a mortgage. We asked mortgage pros in the latest issue of Mortgage Professional America how they think the new rules will affect business.
Jean Badciong, Chief Compliance Officer at Inlanta Mortgage:
"It is my opinion that the new disclosure rules … will be a positive step. The disclosure process has been confusing for customers, and made even more so when changes were made to the Truth in Lending [Act] in 2009 and the Good Faith Estimate in 2010. Key information regarding payment schedules, product information and estimated amount of funds required to close were omitted. Also, the ‘bundling’ of fees meant to simplify the shopping process only seemed to confuse it more."
"Now with form standardization and critical information being disclosed on the first page of the document, including the type of loan being applied for and the payment stream over the life of the loan, the consumer is able to have a better understanding of the loan terms and costs. While there are still clarifications sought for by the industry, overall, with the help of our technology partners, we feel the new simplified Loan Estimate and Closing Disclosure will be beneficial for the consumer and for our industry."
Marc Savitt, President of NAIHP
"It’s going to be a little bit of both. The current disclosure forms we have are too confusing for consumers. When [the current Good Faith Estimate] came out in 2010 with the RESPA reform, we told them it was too confusing. It turns out we were right.
"As far as the new forms are concerned, from what I’ve seen, the forms themselves are simplified. But my concern is that the final settlement statement has to be given to consumers three days prior to closing. This is going to cause a major problem for consumers and industry alike. It’s completely unnecessary. I understand the reasoning behind it. However, we already have tolerances with the Good Faith Estimates that are carried out. The tolerances are a stop-gap, so you’re not going to see the consumer with any surprises at the closing table, other than perhaps a pleasant surprise because the cost is lower than they expected."
Don Frommeyer, CEO of NAMB
"The jury’s still out on the form. It’s informative; it’s not that complicated – but everybody has to learn how to look at new forms. Not only are you going to have to teach your loan originators how to look at new forms, they’re going to have to teach their customers how to look at new forms."
"The disclosures aren’t going to be too bad – it’s going to be the extra time in the closing process that’s going to be the problem. People don’t look at this as you having a 30-day lock, so it’s going to give you less than 10 business days to get everything done – appraisal, title, everything. It’s going to be a major problem, because then you’ve got to start your three days over again. You’re going to have to make sure you get all the documents, all the fees – you need everything right the first time you disclose. And then you’re going to have situations where you still have to re-disclose. You’re going to see companies going to a 45- or 60-day lock just to make sure they have time – and that costs the customer money."