Lenders Need to Know This

By: John Levonick for Today's Lending Insight

Know Before You Owe (KBYO), the new mortgage disclosure regulation, does not take effect until August 2015. So why talk about it now? This change in mortgage disclosures is sweeping, and, in many respects, bigger than the Qualified Mortgage (QM) and Ability to Repay (ATR) Rules. Its complexity and broad range poses significant challenges for mortgage originators.

First things first: Know Before You Owe, a product of the Dodd-Frank legislation, introduces two new disclosures: the Loan Estimate and the Closing Disclosure. The Loan Estimate is designed to provide disclosures that help borrowers understand the key features, costs, and risks of the mortgage loan for which they are applying.