Example of filled-out Loan Estimate

The rollout of easier-to-use mortgage documents has been delayed two months.

The gist

When you apply for a mortgage today, you get a pair of disclosures soon after: the Good Faith Estimate of closing costs, and the first TILA disclosure (named after the Truth in Lending Act).

Those two documents had been scheduled to go away Aug. 1 in favor of a three-page disclosure called the Loan Estimate. Now the debut of the Loan Estimate has been pushed back to Oct. 1.

The CFPB says this is what the first page of the Loan Estimate will look like after the lender fills it out.

Why this is happening

The Consumer Financial Protection Bureau says it recently discovered an administrative error that would have delayed the introduction of the Loan Estimate by two weeks. Instead of pushing the debut of the new document to mid-August, the bureau will delay it until October to “accommodate the interests of the many consumers and providers whose families will be busy with the transition to the new school year at that time,” bureau director Richard Cordray says.

The real reason, probably

Homebuyers with school-age children are in a minority, but I suppose this saves face for Cordray. Lenders and members of Congress have been lobbying the CFPB to delay implemenation of the new document because some lenders and their service providers aren’t ready. It’s not as simple as filling in the blanks in a different document. Lenders and third-party vendors have to change procedures, alter deadlines, rewrite software and train employees.

The reaction

  • The National Association of Realtors clapped its hands at the news. “NAR has long advocated the need to avoid implementing the new regulation during the peak summer selling season,” the association’s president, Chris Polychron, said.
  • The American Land Title Association, the lobbying group for the title insurance industry, applauded, too. “Clearly, the bureau listened to the concerns that industry has for consumers,” ALTA’s CEO, Michelle Korsmo, said.
  • David Stevens, president of the Mortgage Bankers Association, said: “The complexity of this rule, which impacts not just mortgage disclosures but also the business processes behind the entire real estate transaction, warrants the additional time to get it right and ensure that consumers are not adversely effected by the transition.”