Know Before You Owe: A Program for Consumers, an Opportunity for Lenders

By Douglas Hattaway, Esq.

Last year the Consumer Financial Protection Bureau (CFPB) created the “Know Before You Owe” initiative in order to educate borrowers about the true cost of consumer loans and give them the tools to shop for the financial products that best fit their needs. Now the CFPB is using “Know Before You Owe” to get feedback from the public on how disclosure forms and other legal documents can be redesigned—both in terms of content and visual presentation—to more effectively communicate the information that consumers need to make an informed decision about financial products.   

Consumers are not the only ones who should have an interest in “Know Before You Owe”. The project could have a significant impact on the future of legal compliance for consumer lenders. The Dodd-Frank Act gave the CFPB the authority to prescribe rules that ensure that consumers receive full, accurate, and relatively easy-to-understand disclosures when they are considering a consumer financial product or service. The Act also provides that the CFPB may create model forms that lenders can use to ensure compliance with the new rules, but these model forms must be “validated through consumer testing”. The “Know Before You Owe” initiative will help the CFPB accomplish this consumer testing, but it will also allow lenders to view the proposed model forms and provide the CFPB with feedback from an industry perspective. 

The first “Know Before You Owe” project is mandated by the Dodd-Frank Act: the creation of a concise mortgage disclosure form that consolidates the Truth in Lending disclosures and the RESPA HUD-1 Settlement Statement. The CFPB is currently testing two prototype disclosure forms named “Mimosa” and “Sassafras.”  Feedback about “Mimosa” and “Sassafras” will be used to develop another model form to be released in the coming months. The CFPB has indicated that it wants to provide “lenders and settlement agents with a document that is easy to use and reduces unneeded regulatory burden,” so industry suggestions will also play a role in shaping the next proposed form.

“Know Before You Owe” has also proposed redesigns of student financial aid offers and credit card agreements.  The CFPB says the financial aid offer form is only a “thought starter” and that the credit card agreement is “not a model form,” but these may be the next areas of focus for the CFPB. 

Lenders interested in viewing and commenting on the proposed forms should go to the CFPB website at

Doug is an associate in Consumer Collections in the Grove City office of Weltman, Weinberg & Reis Co., LPA. He can be reached at 614.801.2739 and


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