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New: LE vs. GFE and CD vs. HUD-1

Posted on Oct 30, 2015


This month has seen a significant change to the way mortgages are finalized. The GFE, initial TIL, and HUD-1 and final TIL forms are gone for good and, as of October 3rd, the LE (Loan Estimate) and CD (Closing Disclosure), replaced them. If you’re an average consumer, you’re probably wondering two things:

  1. What do these new forms mean?
  2. How does this change affect me?

Luckily, both questions are relatively easy to answer. Below, you’ll find the basic information about what the new laws mean and how they’ll affect anyone applying for a mortgage in the future.

LE and CD: the Basics

Historically, lenders have been legally required to provide consumers applying for mortgage loans with two documents, the TIL and GFE, and then two more documents, another TIL and the HUD-1, shortly before finalizing a mortgage loan agreement. All of these documents communicated repetitive information using irregular language, thus sacrificing an unnecessary amount of trees to provide you with much of the same information twice.

This process, as you can imagine, was a complicated one for average Americans.

To streamline the process, federal law has mandated that the GFE, initial TIL, and HUD-1 and final TIL forms be replaced by two basic forms, the LE and the CD. Anyone applying for a mortgage loan will receive an LE three business days after submitting his or her application, and this form will describe the basic details of the loan, including costs and any potential risks. The CD will be provided three business days before finalizing a mortgage deal, and it will provide basic information that will aid consumers in understanding the costs associated with the loan, such as the interest rate, a breakdown of monthly costs, and more. Both the LE and CD are designed to use understandable and coherent language so that consumers will know exactly what kind of financial agreement they’re making before finalizing a deal.

How the Change Affects You

At its most basic level, the new law should make the process of applying for and finalizing a loan much easier for consumers. The new forms are designed to tell consumers exactly what kind of situation they’re getting into by focusing on important information like monthly costs, interest rates, and how these prices might change in the years to come. The forms should also make it simpler for consumers to compare the prices of different loans to ensure that they get the best deal possible.

All in all, the LE and CD will streamline and simplify the process of applying for a mortgage loan, making it easier than ever to purchase a home. For more information about the new law and forms, read about them in more depth on the Consumer Financial Protection Bureau’s website. Additionally, contact Cody Touchette, MLO # 83216, Pickett Street’s preferred lender, to apply for a mortgage loan using the new and improved system.

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