New consumer bureau proposes simplified mortgage disclosure forms
Los Angeles Times
By Jim Puzzanghera
The blizzard of complex disclosure forms required in getting a mortgage soon could ease a bit as a new federal agency tries to streamline and simplify an important part of the process.
In its first major move, the Consumer Financial Protection Bureau released two prototypes of shorter and easier-to-understand disclosure forms that lenders must give home buyers when they apply for a mortgage...
The new form would replace two slightly longer mortgage disclosures that many home buyers complain are duplicative and difficult to understand.
"They're complicated and convoluted," said Richard Green, director of the USC Lusk Center for Real Estate. "Simplifying them is a good thing, but it's actually a very difficult thing to do because mortgages are just complicated."
...After settling on a single prototype, the consumer bureau will start a formal federal rule-making procedure, which also requires public comment. Such comment is crucial because providing new information, such as how much of the mortgage would be paid off after five years, could backfire by overloading consumers, USC's Green said.
"A lot of people when confronted with all those numbers just kind of panic," he said. "I think testing is a really great idea. If you give people a form and ask them about it and they seem to know what's going on, that's a good sign."