The ""Consumer Financial Protection Bureau"":http://www.consumerfinance.gov/ (CFPB) proposed mortgage disclosure forms designed for better understanding on Monday. The forms are a result of research, testing, writing, and review and are being created to help consumers comprehend the terms of their mortgage and the costs involved.[IMAGE]
""When making what is likely the biggest purchase of their life, consumers should be looking at paperwork that clearly lays out the terms of the deal,"" said CFPB Director Richard Cordray. ""Our proposed redesign of the federal mortgage forms provides much-needed transparency in the mortgage market and gives consumers greater power over the exciting and daunting process of buying a home.""
The proposed forms are part of the agency's Know Before You Owe project and are to be provided after applying for a loan and before closing.
Consumers currently receive two different federal disclosure forms after application that outline terms and costs of a loan, but the CFPB is proposing to have these forms changed.[COLUMN_BREAK]
The newly designed forms are the ""Loan Estimate"":http://files.consumerfinance.gov/f/201207_cfpb_loan-estimate.pdf and ""Closing Disclosure"":http://files.consumerfinance.gov/f/201207_cfpb_loan-estimate.pdf forms.
The CFPB stated that the proposed forms benefit consumers by using clear and easy to understand language and benefits lenders by cutting back on redundancy.
Key improvements for the forms include highlighted information, clear warnings on risks, and a simpler format so consumers can more easily understand costs and terms.
Consumers can provide feedback ""online"":www.regulations.gov/#!documentDetail;D=CFPB-2012-0028-0001 on the ""proposals"":http://files.consumerfinance.gov/f/201207_cfpb_proposed-rule_integrated-mortgage-disclosures.pdf and have until November 6 to do so.
The CFPB is also proposing ""specific protections"":http://files.consumerfinance.gov/f/201207_cfpb_proposed-rule_high-cost-mortgage-protections.pdf for those who take out high-cost mortgages.
Protections include the banning of risky features such as balloon payments as well as the banning and limiting of certain fees. Another proposal would require housing counseling for high-cost mortgages.
The public has until September 7 to provide feedback on the high-cost mortgage rules. The final rule will be issued January 2013.
In response to the proposal, Michelle Korsmo, CEO of the American Land Title Association, said in a statement that the proposed rule is a step in the right direction, but more needs to be done to refine the proposal and bring more transparency to the process.
""Consumers need to feel more confident when purchasing a home and businesses need to be able to compete on a level playing field,"" said Korsmo. ""We will continue to work with the Bureau to find ways to improve this rule.├â┬ó├óÔÇÜ┬¼├é┬Ø