Your monthly mortgage bill has been less than helpful when it comes to keeping track of your home loan. But that could soon change, thanks to the newest Federal agency.
The Consumer Financial Protection Bureau has unveiled a model form to make monthly mortgage statements more informative and easier to understand.
“Our goal is to create a statement that is easy to understand and that provides information to borrowers about current and past payments,” the bureau, which debuted in 2011,said in a blog post.
An early draft of the periodic statement (PDF) lays out important terms, including outstanding prinicipal, interest rate, description of fees and penalties, past payments and housing counselor information.
Many loan servicers already provide this information, but there is yet to be a standard that governs these forms.
“We want to include all the important information but not overload the consumer with unnecessary details,” the CFPB added.
The Dodd-Frank Act charges the CFPB with the responsibility of developing a model form for monthly mortgage statments.
The model form and a proposed rule will be open for public comment in the summer.
Mortgage form disclosures in focus
In an op-ed on Politico, Richard Corday, the newly-appointed direct of the consumer bureau, says that the agency will also issue new consumer protections for “force-placed insurance” — preventing mortgage servicers from imposing expensive hazard insurance on borrowers.
Additionally, there will be new disclosures for hybrid adjustable-rate mortgages — tricky loans that lure borrowers with teaser interest rates before jumping to higher rates.
In May 2011, the agency revealed two prototypes for simpler disclosure forms that lenders must give borrowers before a mortgages is closed.
The initiative by the CFPB — called the “Know Before You Owe” project — hopes to prevent another housing crisis similar to the one that ensued after American consumers were subject to predatory lending.
“It was, after all, the house of cards that crashed our economy and caused so much pain for millions of Americans,” wrote Corday.