The next chapter in the future of mortgage lending was published by the Consumer Financial Protection Bureau (CFPB) this week. As required by the Dodd-Frank mortgage lenders and related parties soon will be required to give borrowers with closed-end mortgage loans a statement for each billing cycle. Many financial institutions already provide statements. Currently there is no standard format for statements.
Section 1420 of the Dodd-Frank Act amends the Truth in Lending Act by requiring the statements. This section requires creditors, assignees, or servicers to send the borrower a periodic statement for each billing cycle. The statement 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 law includes an exception. A statement is not required if the consumer receives a coupon book with this same information in it.
The Dodd-Frank Act also requires the CFPB to develop a model form for this statement. An early draft of the form is available at https://www.consumerfinance.gov/wp-content/uploads/2012/02/20120213_cfpb_draft-periodic-mortgage-statement.pdf.
The CFPB plans to publish a proposed rule this summer. 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.