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One Page Mortgage Disclosure

If you have ever purchased a home with a mortgage, you will remember the stacks upon stacks of papers you needed to sign, bothe during the loan application and the closing, all the while supposedly knowing everything each paper said, even while there was not time to read them.

Well now, Elizabeth Warren, the woman tapped by the President to create the Consumer Financial Protection Bureau, has stated that one of the first orders of business for the new Consumer Financial Protection Bureau is the create a one-page disclosure form for all home buyers.

Apparently the bureau has already drafted four separate forms that the industry and consumer watchdog groups will review before they establish which one will become the final version. And of course, if it is anything at all like Real Estate Purchase Contracts or HUD statements, there will probably be revisions as time passes and different considerations come to light.

There has always been disclosures with home mortgages, hence the stacks of papers a home buyer and a home seller are required to sign at closing. But the fact is that a disclosure is supposed to assist a buyer to better understand the all of the terms of the mortgage. Elizabeth Warren has stated that the existing regulations that require dozens of arcane disclosure forms for closing a loan now is one of the most ineffective rules that are currently in place and this is one of the things that she seeks to change.

Imagine, just one form that spells out all of the details in an effective and concise manner.

Many financial analysts, including Elizabeth Warren herself, have said that the subprime bubble in mortgage lending was created by lenders steering unsuspecting borrowers into overpriced subprime loans that became too burdensome for the borrowers in the long term contributing to the housing downturn and the recession.

Much of the problem was the stacks of papers the borrowers had to sign at closing and also at loan application. The paperwork was so laden with “fine print” that it became nearly if not completely impossible to compare mortgage offers.

A one page mortgage disclosure form would be a relief and much easier to understand by the typical homebuyer.

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