If mortgage disclosure forms actually told homeowners exactly what they were getting into, in the simplest of terms, perhaps everyone could catch a break — from the lenders to the often confused consumers who have to deal with the current system and its four complicated documents from two separate government agencies. The Consumer Financial Protection Bureau is on the march once again, and this time its director Richard Cordray is proposing one simple mortgage disclosure form.
The new document would lay out interest rates, monthly payments, loan amounts and closing costs on the first page, which Cordray thinks will breathe a fresh breath of uncomplicated air into the whole business of mortgages, reports Business Insider.
“Over time this is going to save money,” Cordray said at a congressional hearing. “There’s going to be savings in each real estate settlement closing, each one over time that will pile up year by year [in] millions of transactions.”
Some critics of the idea claim that this won’t, in fact, save money, but become a financial burden to small businesses, which is why the CFPB went before the House Committee on Small Business with the proposal. Community banks and credit unions could potentially come under a burden to retrain employees and change up software, all things that cost money.
However in an earlier panel on the topic in April, many businesses did side with the CFPB and agreed that the new mortgage disclosure forms would be worth the transitional costs in the long run, as it would be much easier to explain to customers than the current forms. And if it’s frustrating for consumers to not comprehend tricky forms, it must be just as tough of an experience for someone trying to translate them into everyday terms as well. So we all win!
Previously in CFPB and mortgages: CFPB Working On Rules To Whip Mortgage-Servicing Industry Into Shape