CFPB explains 1,099-page notice of proposed rule-making for new mortgage disclosure

The Consumer Financial Protection Bureau released information this week related to the 1,099-page proposed rule-making designed to simplify existing mortgage disclosures.

“Recently, I saw your notice of proposed rule-making to combine and simplify existing mortgage disclosures,” an individual wrote to the CFPB. “Why does it take so many pages to create something that’s supposed to be easy to use and understand?”

Under the 2010 Dodd-Frank Act, the CFPB is required to propose a rule that combines disclosures from the Truth in Lending Act and the Real Estate Settlement Procedures Act, both of which mandate that consumers receive certain information about mortgages.

“We are not proposing 1,099 pages of new regulations,” the CFPB said. “That page count is for the notice of the proposed rule, not the rule. Like notices of proposed rule-making issued by other agencies…our proposal consists of three basic parts: 1) the preamble explaining the proposal; 2) the text of the proposed regulations; and 3) guidance on how to comply with those regulations.”

The CFPB said that a large part of the proposal relates to the fine details of the rule, including what the agency plans to do and why the agency is proposing the rule. Additionally, the CFPB said that it performs a cost-benefit analysis, as mandated by law, and issues guidance based on information received by industry participants.

When broken down, the law includes 684 pages of preamble, 209 pages of proposed amendments to regulations, 205 pages of proposed guidance and one signature page. The CFPB said that context regarding the rule is sometimes not only mandated by law but important to the agency’s goals and mission.

“First, some of it is required by law,” the agency said. “Second, we believe that part of our commitment to open government is providing more rather than less information about our work. Finally, we want your comments to help us understand the market better, and providing context can lead to more informative comments. Explaining what we considered in writing the proposal makes it easier to craft specific responses or to draw our attention to something you think we’ve missed. Comments that provide new insight or information can be the ones that have the greatest impact on what we do next.”

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