Last month, as part of its “Know Before You Owe project,” the CFPB began taking comments on two prototypes (named Hornbeam and Ironwood) of a settlement disclosure that combines the final TILA disclosure and the RESPA HUD-1 Settlement Statement. The CFPB received over 3,000 comments on the prototypes. This week, based on those comments, the CFPB posted two new prototypes (named Mimosa and Sassafras) on its website which it will be testing in Birmingham, Alabama and on which it is requesting public input.
The new prototypes take different approaches to presenting closing costs. Mimosa’s format is similar to Ironwood’s in that its first page is modeled after the CFPB’s prototypes for the combined TILA and RESPA application disclosure and the second page continues to be modeled after the existing HUD-1, with some information rearranged. In particular, Mimosa includes various cost summaries at the top of the second page. On Sassafras, instead of using the HUD-1 format, settlement cost information is presented in a format closer to the application disclosure prototypes.
The CFPB wants to know which approach is preferred. Many in the mortgage industry think the combined application and settlement disclosures should be very similar to make them easier to compare and to allow efficient mapping of information from the application disclosure to the settlement disclosure. Sassafras represents a step in that direction but may not be viewed by industry members as sufficiently similar to the application disclosure. We hope industry members will be telling the CFPB what they think of its latest prototypes.