Need help understanding your mortgage? It may be on the way from the Consumer Financial Protection Bureau. (Photo Credit: CC BY-ND/David White/Seek4Media)
In 1975, Congress passed the Home Mortgage Disclosure Act, which required mortgage lenders to fully report all public loan data. While this and other consumer-friendly provisions relating to mortgages have been in effect for more than 30 years, the recent U.S. subprime mortgage crisis illustrated that additional regulation may be necessary. Hence, the soon-to-be-activated Consumer Financial Protection Bureau plans to debut a new version of the standard mortgage disclosure form that should make things easier for homebuyers to understand.
New mortgage disclosure form a ‘key priority’
The Wall Street Journal reports that the new mortgage disclosure form is a “key priority” of the Consumer Financial Protection Bureau, a Dodd-Frank organization that will begin operations on July 21.
Mortgage forms currently consist of copious amounts of paper documenting all aspects of the mortgage agreement in Byzantine detail. Borrowing costs and other fees connected to the closing of the loan are buried in a sea of provisions. These book-like forms were created under the auspices of 1968′s Truth in Lending Act and the Real Estate Settlement Procedures Act of 1974. If the CFPB has its way, mortgage disclosure forms will become much more user-friendly.
“We will be looking at our first (mortgage form) prototypes,” White House adviser and possible CFPB chairwoman Elizabeth Warren told Dow Jones Newswires.
Housing industry has opposed simpler forms before
Elizabeth Warren sided with scores of consumer advocates when she announced the CFPB’s intentions to simplify mortgage disclosure forms. However, various members of Congress and the housing industry have opposed similar attempts in the past to improve the readability of mortgage papers so that consumers can understand the exact costs associated with their mortgage loans. It remains to be seen whether Warren, or whomever officially accedes to the top CFPB post, will have as much success against the housing industry as the organization has had thus far with the credit card industry.
Sources
Home Mortgage Disclosure Act of 1975
