The Anti-Steering Disclosure is a consumer protection measure arising from the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, designed to ensure mortgage loan originators present loan options that put your financial interests first. This rule addresses past abuses where lenders and brokers were incentivized to push borrowers toward loans that generated higher commissions instead of those that best fit borrowers’ needs.
Under this rule, when considering loans like a 30-year fixed mortgage, the lender must provide at least three key options:
- The loan with the lowest interest rate.
- The loan with the lowest total points and origination fees.
- The loan with the lowest interest rate that does not include risky features such as prepayment penalties, negative amortization, or balloon payments.
This disclosure compares these options side-by-side, allowing you to evaluate trade-offs between upfront fees, monthly payments, and loan risks. For example, you might find a lower interest rate option with higher upfront fees versus a loan with minimal fees but a slightly higher rate.
Consider a $400,000 mortgage scenario where the Anti-Steering Disclosure presents three options with respective rates, fees, and monthly payments. With this information, you can decide whether to pay more upfront for a lower monthly payment or save cash initially with a higher monthly cost—choices you might otherwise miss if a lender steered you toward the most profitable loan for them.
To make the most of the Anti-Steering Disclosure:
- Always request the disclosure before finalizing loan discussions. It is a required form; if not offered, ask directly.
- Compare options carefully, using calculators to understand long-term payment impacts.
- Shop around and request Loan Estimates from multiple lenders, since the disclosure only covers options from one lender.
- Ask questions about unfamiliar terms like “points” or “origination fees” to fully understand costs.
Note that the Anti-Steering Disclosure is different from the Loan Estimate. The Loan Estimate details costs for one particular loan, while the Anti-Steering Disclosure compares multiple loan options offered by the same lender.
Noncompliance with this rule can result in enforcement actions and penalties by the Consumer Financial Protection Bureau (CFPB), ensuring lenders adhere to these consumer protections.
For further details, see the official Loan Originator Compensation Requirements under Regulation Z and review the Consumer Financial Protection Bureau’s guidance on mortgage protections.