The Consumer Financial Protection Bureau is busy drafting a new model form for mortgages: the monthly statement that borrowers receive with the details of their loans.
Required by the Dodd-Frank Act, the new prototype must include:
- The principal loan amount
- The current interest rate
- The date on which the interest rate may next reset
- A description of any late payment fees and any prepayment fee to be charged
- Information about housing counselors
- Phone number and email address for borrower to obtain information about the mortgage
- Other information the CFPB may prescribe in regulation
The Bureau’s first draft of the form includes all of this information on one page, taking into account that the form may be mailed as a hard copy or sent electronically. It’s been through one round of consumer testing, with another two rounds scheduled.
This summer, the CFPB will publish a proposed rule and final prototype for public comment. “After final publication of the rule and form, creditors, assignees, and servicers will have some flexibility to tailor the model form to work for their needs and the needs of their customers,” according to the CFPB blog.
In a Politico guest column that details the problems with the mortgage industry and the steps the CFPB is taking to fix it, Director Richard Cordray wrote that the Bureau will also issue new disclosures for hybrid adjustable-rate mortgages, which start with a “teaser” interest rate.
“Force-placed insurance” – referring to hazard insurance that mortgage servicers put in place at the borrowers’ expense – is another area of concern that the CFPB will address with new consumer protections.
“The CFPB cannot address all of the problems in the servicing industry in one fell swoop. … As we mature and grow, we will carefully identify risks and act as needed. We will also make certain that all federal consumer financial laws are being followed,” Cordray wrote.