Could Clearer Docs Have Helped Avert Mortgage Meltdown?
Unless you buy for cash, purchasing a home involves signing a mountain of mortgage paperwork detailing the terms of the loan. Ironically, this means that many buyers don’t understand even basic loan terms, because it’s commonplace to simply sign the complex documents without reading them.
Now, the nation’s mortgage meltdown is fueling a call for simpler mortgage forms, because understanding the terms of a home loan can help individuals avoid taking on too much debt, Reuters reports. Banking regulatory agencies, including the Federal Trade Commission, are proposing a two-page voluntary form that would be given to buyers at closing.
“Consumers today do not understand the forms that they sign,” says Marc Savitt, the National Association of Mortgage Brokers president-elect. “All (loan) originators should disclose in the exact same forms and in the exact same manner. … the FTC is right about this.”
Among the individuals who admit they haven’t perused all the paperwork in a personal real estate closing, Reuters reports, are Sen. Charles Grassley, R-Iowa; Sen. Charles Schumer, D-N.Y.; and the chief executive of mega-mortgage-purchaser Freddie Mac.
Schumer, who is a member of the Senate Banking Committee, is sponsoring a bill that would require a one-page mortgage disclosure summary. Grassley apparently supports the concept, but says legislation probably isn’t required in order to put clear, concise forms on the mortgage closing table.
