How to Complete and Deliver the Anti-Steering Loan Options Disclosure

The anti-steering loan options disclosure is an optional form mortgage loan originators use to document compliance with Regulation Z’s prohibition on steering borrowers toward loans that pay the originator more. The form itself is not federally mandated, but the underlying rule at 12 CFR § 1026.36(e) is, and completing the disclosure is the most practical way to establish safe harbor and defend against a steering claim.¹

What the Anti-Steering Rule Actually Prohibits

Regulation Z bars a loan originator from directing a borrower to a mortgage that would pay the originator more, unless the loan is genuinely in the borrower’s interest. The rule reaches consumer credit transactions secured by a dwelling, so conventional purchases, refinances, and most other residential mortgages are covered.¹

Renegotiations, modifications, and subordinations of an existing obligation generally fall outside the requirement unless the transaction qualifies as a refinancing under § 1026.20(a) or brings a new borrower onto the loan.²

Proving you didn’t steer a borrower is difficult without paperwork. The disclosure creates that paperwork: written options, borrower acknowledgment, and a clear record that a range of products was on the table. An originator who follows the presentation rules in § 1026.36(e)(3) is presumed not to have steered.

The Three Options Required for Safe Harbor

To qualify for the safe harbor, present three loan options for each type of transaction the borrower expressed interest in. If the borrower is looking at both fixed-rate and adjustable-rate mortgages, that’s three options for each product type, six entries total.³

The three options are:

The loan with the lowest interest rate available to the borrower, whatever its other features. This one may carry negative amortization or a prepayment penalty; it just marks the cheapest rate on offer.
The loan with the lowest interest rate that has none of the risky features listed below. For reverse mortgages the disqualifying list is narrower: no prepayment penalty, no shared equity, and no shared appreciation.⁴
The loan with the lowest total dollar amount for origination points or fees and discount points. This helps a borrower focused on cash needed at closing, even if the rate is higher over the life of the loan.³

Sometimes a single product wins in two or all three categories. When that happens, the same product may appear more than once on the form.

Features That Disqualify a Loan From the Second Slot

The second option is the clean comparison, so a loan with any of these features cannot go there:

Negative amortization, meaning the balance grows because scheduled payments don’t cover accruing interest.
Interest-only payments during an initial period, with no principal reduction.
A prepayment penalty triggered by early payoff, sale, or refinance.
A balloon payment due within the first seven years. A balloon after year seven does not disqualify the loan.
A demand feature letting the lender call the loan due even when the borrower is current.
Shared equity or shared appreciation, where the lender takes a percentage of the home’s value.³

One disqualifying feature is enough. Move to the next-lowest-rate product that carries none of them.

How to Complete the Form

The CFPB does not publish an official template, so most originators rely on forms from their loan origination software, compliance vendors, or industry groups. The format varies; the content should not.

Open with identifying details: borrower name, property address (or intended use if the property has not been identified), and the date the disclosure is prepared. Include the originator’s name and NMLS number so the document ties back to a specific individual on audit.

Record the transaction type. One product type means one set of three options. Two product types means two sets, each under its own heading.⁵

For every option in every transaction type, enter the interest rate available to the borrower, the origination points or fees in dollars, any discount points, the loan term in years, and the creditor offering the product. Use current pricing as of the disclosure date. Stale rate sheets weaken the safe harbor defense.

You also need a good-faith belief that the borrower actually qualifies for every option listed, which means each product has been run against the borrower’s credit, income, and debt ratios.³ Listing a rate the borrower could never obtain defeats the purpose of the form.

Note which option the borrower selected. That entry documents that the borrower saw the choices and made a decision, rather than being funneled into a single product.

What Safe Harbor Requires Beyond the Three Options

The three options are necessary but not sufficient. The safe harbor also requires that the products come from creditors with whom the originator does not have an exclusive relationship.⁵ An originator working with only one lender can still comply, provided the options genuinely reflect what the borrower can get.

Keep the rate sheets from each creditor whose products you considered. If an auditor later questions whether the “lowest rate” really was the lowest, the rate sheets are the proof.

When and How to Deliver the Disclosure

Deliver the form early enough that the borrower can actually compare options before committing. At or near application is the practical window, once you have enough borrower information to identify qualifying products and pull rates. Delivering it after the borrower has already locked a rate defeats the point.

For electronic delivery, the Electronic Signatures in Global and National Commerce Act applies. The borrower must affirmatively consent to receiving disclosures electronically and be told how to withdraw consent, how to request a paper copy, and whether any fee applies for the paper copy.⁶ Emailing the form without going through that consent process is not compliant.

Have the borrower sign or electronically acknowledge the form. The signature is not an acceptance of any option. It confirms the borrower received the disclosure and had the chance to compare.

How Long to Keep the Records

Regulation Z requires loan originator organizations to keep records of all compensation received and paid, and the governing compensation agreements, for three years after each receipt or payment.⁷ The anti-steering disclosure and its supporting rate sheets fit that category because they document the connection between compensation and the products offered.

Retain the signed form, the rate sheets from each creditor considered, and any notes explaining why a specific product filled a specific option slot. Timestamped digital storage is the cleanest approach when audit time comes.

What a Steering Violation Costs

A borrower steered into a costlier loan can sue under the Truth in Lending Act. For a closed-end transaction secured by real property or a dwelling, individual statutory damages run from $400 to $4,000, on top of actual damages and attorney’s fees.⁸ Class actions raise the exposure further.

The CFPB brings enforcement actions as well. The Bureau ordered Guarantee Mortgage Corporation to pay a $228,000 civil penalty for paying originators based partly on the interest rates of the loans they closed, a practice tied to the compensation rules that sit alongside the steering framework.⁹ In either forum, a properly completed and retained disclosure is the single strongest piece of evidence an originator can put on the table.

1
eCFR. 12 CFR 1026.36 – Prohibited Acts or Practices and Certain Requirements for Credit Secured by a Dwelling – Section: Prohibition on Steering Incentives
2
Consumer Financial Protection Bureau. 12 CFR 1026.36 – Prohibited Acts or Practices and Certain Requirements for Credit Secured by a Dwelling
3
eCFR. 12 CFR 1026.36 – Prohibited Acts or Practices and Certain Requirements for Credit Secured by a Dwelling – Section: Safe Harbor
4
Consumer Financial Protection Bureau. 12 CFR 1026.36 – Prohibited Acts or Practices and Certain Requirements for Credit Secured by a Dwelling – Section: Safe Harbor
5
Carrington Mortgage Services, LLC. Anti-Steering Safe Harbor Attestation
6
Office of the Law Revision Counsel. 15 USC Chapter 96 – Electronic Signatures in Global and National Commerce
7
eCFR. 12 CFR 1026.25 – Record Retention
8
Office of the Law Revision Counsel. 15 USC 1640 – Civil Liability
9
Consumer Financial Protection Bureau. CFPB Takes Action Against Guarantee Mortgage for Loan Originator Compensation Violations