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CFPB Proposes Remedy for Mortgage Pain Points

CFPB Study Looks at Mortgage Pain Points

Know Before You Owe - Mortgage Pain PointsOver the course of the last year, the Consumer Financial Protection Bureau (CFPB) has been gathering data on the mortgage loan closing process. They solicited feedback from borrowers, lenders and others involved in the loan closing process. Their study had yielded a list of the major mortgage pain points that each group deal with.

Armed with these results, the CFPB has released the latest phase of “Know Before You Owe”, aimed at making the home buying process less of a headache for borrowers. Know Before You Owe phased in two documents –  a Loan Estimate that lays out a loan’s terms, closing costs and fees as well as a Closing Disclosure, which gives borrowers a detailed accounting of the loan transaction.  

The CFPB found that borrowers report being overwhelmed by the huge amount of documents and the short amount of time they have to review them when they are in the final phase of securing a mortgage.

The report details three major mortgage pain points:

To try and ease these pain points, Know Before You Owe requires that the Closing Disclosure must be received by the borrower at least three business days before the closing takes place. This is intended to give borrowers time to review the terms of the loan. However, the CFPB does not have jurisdiction over all the documents that are part of a closing, so borrowers still see the majority of forms for the first time at the closing table, with no time before-hand to look them over.

eClosing Program

Another effort to reduce the pain points is the beginning of a pilot eClosing program, which will launch later in 2014. The pilot will test a number of ways to make the closing process less burdensome. The CFPB will collect data and study if eClosing results in the more efficient review and signature of closing documents. The goals of the eClosing program encompass many areas, including:

Lenders that wish to take part in the program must submit a proposal that includes a partnership between them and a technology vendor who will create an eClosing solution for them to use.



Consumer Finance.gov – CFPB Report Highlights Mortgage Pain Points

Consumer Finance.gov – eClosing Pilot Program PDF

National Mortgage Professional Magazine – CFPB Reports on Consumer Frustration with Mortgage Paperwork