HUD Unveils Reformed Mortgage-Term Disclosure Form For Consumers
WASHINGTON (AP) — The Bush administration is unveiling a new program Friday that would give prospective home buyers easier-to-understand information about the lending process and save them money in closing costs.
The proposal, from the Department of Housing and Urban Development, is the latest in a series of White House initiatives to help end a housing market crisis.
It would require lenders to give borrowers a federal disclosure form that includes a summary of loan terms, interest rates and monthly payments, and information on whether the principal balance can increase and whether the loan has a balloon payment or prepayment penalty.
The federal form would be simpler than private-industry forms, which vary state by state.
The mortgage broker industry is expected to oppose the proposal because it also requires that lenders disclose their payments to brokers. Brokers get premiums for steering customers toward certain lenders.
The proposal could go into effect before the summer.