NEW YORK - a federal consumers guard dog is taking steps to make it easier to shop for a mortgage loan comparison.
On Wednesday, the Financial Consumer Protection Office launched its project "Prior knowledge you need". It is seeking comments from the public on how to simplify paperwork borrowers receive when applying for a home loan. The Office has unveiled two prototypes of a new form that will eventually replace the existing required disclosures.
The Office will begin testing forms to determine which is easier to understand; He also wants suggestions on how to further clarify the expenses associated with a mortgage. The objective is to make it easier for borrowers to compare loan for what could be the biggest financial commitment of their lives.
Beyond the marketed to borrowers interest rates, the cost of a mortgage is affected by several factors such as the adjustment of the rates and underwriting and settlement costs. Critics say improved disclosures could have helped prevent problems past surrounding the subprime crisis.
Currently, borrowers are entitled to receive two forms within three days after the application of a mortgage - a truth of two pages in the form and an estimate of three pages of loan in good faith. This last form has been reorganized last year. a new regulation requires that the final costs cannot change more than 10% from the cited estimates.
Despite past efforts to make the forms used currently more user-friendly, they still present information that overlap and remain a source of confusion.
They really Don ' t tell the consumer what they want to know, "said Mike Anderson of the National Association of mortgage brokers. For example, major concerns for borrowers are the total amount they will have to pay at closing. However, this figure is absent from the current form.
The forms of two prototype unveiled Wednesday the two detail fresh key on the first page, including total closing costs, monthly payments and projected monthly payments for the years in the future. Both versions provide more details and explanations on loan on the pages of the second.
The Office said that it will make revisions in September before a single form is selected and refined. Other forms and disclosures borrowers are given later in that the loan process can also be modified. All new proposed forms will be issued by July 2012.
To review the sample forms and suggest feedback, consumers can go to http://www.consumerfinance.gov/knowbeforeyouowe. The Office said that forms will also be tested in the summer in individual interviews with consumers, lenders and brokers. Interviews in Albuquerque, N.M.; Baltimore; Birmingham, Alabama. Chicago. Los Angeles. and Springfield, Mass.
The Financial Consumer Protection Office was established under the Federal financial review year last financial products police and services sold to consumers. One of his first tasks was to consolidate and simplify the mortgage paperwork, applicants are given.
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