CFPB Designs New Mortgage Statement, Feedback Wanted

The Consumer Financial Protection Bureau
(CFPB) has rolled out a prototype of a form for mortgage lenders to send to
borrowers during each billing cycle to keep those borrowers abreast of crucial
information about their loan.  The
prototype was published on CFPB’s blog on Monday and the Bureau is asking for
consumer and lender reaction.

The new model statement, designed for sending
by mail or by electronic transmission, is based on a set of information that
lenders are required, under the Dodd-Frank Wall Street Reform Act, to provide
to their borrowers.  CFPB is seeking to
provide lenders a model for displaying that information in a clear and easily
understandable format.

Dodd-Frank requires that consumers be notified
on a regular basis about:

  • Their
    principal loan amount
  • Current
    interest rate
  • The
    date on which that interest rate may reset
  • A
    description of any late payment fees or potential prepayment fee
  • Information
    about how to seek help from housing counselors
  • Contact
    information for the lender.

The model form proposed by CFPB goes
beyond that outline.  It shows the
borrower how the current payment will be applied, interest, principal, escrow,
or special fees, and gives an accounting both of the previous month’s activity
and activity for the year to date and how those funds were applied as well.  It also gives the borrower the ability to
designate how to apply any extra payment amounts.  In addition to the amount of any prepayment
fee it also gives the expiration date of such penalties.  It does not inform the borrower of the current
balance in escrow accounts which would be a nice addition for planning
purposes.

Lenders
who provide coupon books to their borrowers are not required to use the form,
but the coupon book must contain essentially the same information.  Once the final form is adopted lenders will
have some flexibility to adapt it to their own needs. 

Lenders
and borrowers can comment about the form on CRPB’s website.


Early Draft of Model Mortgage Statement

…(read more)

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