CFPB Piloting Disclosures for Construction Loans

Last week, the CFPB announced its approval of an application piloting disclosures for construction loans.

In this initiative, the CFPB establishes guidelines for testing alternative disclosures in real-market scenarios, recognizing the enhanced accuracy of such tests compared to lab-based evaluations. The CFPB stated that testing in-market would allow them to gauge the potential necessity more accurately for regulatory adjustments.

In short, lenders can now apply to test modified origination disclosures for construction loans to improve consumer understanding of costs and terms. And when evaluating these lenders’ applications, the CFPB states they will carefully assess each lender’s plan to gauge the effectiveness of the disclosures.

In their announcement, the CFPB pointed out that the Independent Community Bankers of America (ICBA) applied under the program for a template covering the CFPB’s Know Before You Owe Disclosures. And went on to say, “the ICBA asked to test certain adjustments to the existing mortgage disclosures in the unique context of construction loans, for which the CFPB’s disclosures were not primarily designed. The application noted that, in particular, many first-time homebuyers in rural areas build their homes instead of buying existing homes, and consequently, the challenges of using the current disclosures in the construction loan context may impact rural areas more acutely.”

You can find the Trial Disclosure Waiver Template here.

And as always, if you have any questions or would like to learn more about the CFPB piloting disclosures for construction loans, you can always reach us at