What disclosures were replaced under the Know Before You Owe rule?

The Know Before You Owe rule, formally known as the TILA-RESPA Integrated Disclosure (TRID) rule, was implemented to streamline the mortgage process and improve consumer understanding of loan terms and costs. Under this rule, the Good Faith Estimate (GFE) and the HUD-1 Settlement Statement were replaced by two new forms: the Loan Estimate and the Closing Disclosure.

The Loan Estimate consolidates key information about the loan, such as the interest rate, monthly payments, and total closing costs, providing borrowers with an early snapshot of what they can expect financially. The Closing Disclosure provides detailed information about the final terms of the mortgage and the closing costs, ensuring that borrowers clearly understand their obligations before the transaction is completed.

This integration simplifies the disclosure process for consumers, allowing them to compare loan offers more easily and understand the total costs of borrowing. Thus, the identification of the Good Faith Estimate and the HUD-1 Settlement Statement as the replaced disclosures is aligned with the aims of the Know Before You Owe rule, emphasizing transparency and clarity in financial transactions related to housing.