Bloomberg: Simple Mortgage Disclosures May Favor Smaller Lenders

NewImage.jpgThe Consumer Financial Protection Bureau will begin writing and testing a simplified mortgage disclosure form aimed at making it easier for borrowers to compare deals from different lenders.

The bureau is expected to award a contract to develop the form by the end of the month, making it one of the first projects of the new agency, according to a bidding document given to vendors in November and reviewed by Bloomberg News.

Elizabeth Warren, the adviser to the Obama administration responsible for setting up the agency has stressed the new documents need to be simple and enable consumers to compare different products.  Warren would like to see a standard document of one or two pages to replace about 80 percent of the mortgage disclosures mandated by the Truth In Lending Act and the Real Estate Settlement Procedures Act. The current “pile of papers” confuses consumers and is costly to business, Warren has said.

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Bob Davis, an executive vice president at the American Bankers Association, said short disclosure forms might not simplify the process as much as Warren suggests, because of the “interconnected requirements” imposed by federal law.

Smaller community banks might become more competitive with Wall Street if new regulations succeed in reducing costs, Davis added. “The compliance process lends itself to certain scale and big technology solutions,” Davis said.

Big Lenders May Lose With Simpler Mortgage Disclosure

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  • What will the reverse mortgage disclosure forms look like and when will we see them? What disclosures will the new disclosures replace (if any)? Will Ms. Warren be satisfied with the Fed proposed disclosures? Most bureaucrats would not.

    Ms. Warren is not a compliance attorney; she is a consumer advocate. Many have tried to reduce disclosures in other areas such as public reports but to no avail.

    This latest announcement looks like much ado about nothing although the parties have the best intentions and discussed it over lunch and all of that. What may result is what normally does; several more pages added to all of the existing docs. Ms. Warren has not committed to the concept that if the existing disclosures must be kept she will withdraw her new forms; few bureaucrats do.

    Looks like more forests wasted.

  • What will the reverse mortgage disclosure forms look like and when will we see them? What disclosures will the new disclosures replace (if any)? Will Ms. Warren be satisfied with the Fed proposed disclosures? Most bureaucrats would not.

    Ms. Warren is not a compliance attorney; she is a consumer advocate. Many have tried to reduce disclosures in other areas such as public reports but to no avail.

    This latest announcement looks like much ado about nothing although the parties have the best intentions and discussed it over lunch and all of that. What may result is what normally does; several more pages added to all of the existing docs. Ms. Warren has not committed to the concept that if the existing disclosures must be kept she will withdraw her new forms; few bureaucrats do.

    Looks like more forests wasted.

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