The Consumer Financial Protection Bureau (CFPB) gave lenders a slight reprieve on the Know Before You Owe rule that provides borrowers with all the charges, fees and line items three days before closing instead of at closing, saying they will not be held accountable for most minor errors in loan processing and paperwork.
By trying to avoid the opportunity for unscrupulous lenders and real estate agents to slip in higher interest rates and hidden fees, like what happened during the housing boom, some disruptions have occurred in home lending and closings.
CFPB Director Richard Cordray, in a letter to Mortgage Bankers Association (MBA) president David Stevens, said, “We believe that the risk of private liability to investors is negligible for good-faith formatting errors and the like,” Cordray wrote to MBA president David Stevens. “We recognize that a certain level of minor errors in the early days of implementation is to be expected,” as he noted that the GSEs and the CFPB are seeking good-faith efforts to come into compliance.
Lenders, realtors and title companies have seen the average time for closing loans rise as much as a week, which has cost some borrowers more in fees to lock in specific interest rates. “Needless to say, we think this is a very positive development,” said Pete Mills, a senior vice president at the MBA. ##
(Image credit: housingwire)
Article submitted by Matthew J. Silver to Daily Business News-MHProNews.