Thanks largely to new rules from the Consumer Financial Protection Bureau, taking out a mortgage is not the risky business it was during the bubble. But it is still the largest and most complex financial transaction in the lives of most people. And it still involves inherent imbalances in expertise between lenders and borrowers, including the use of intermediaries who may or may not be trustworthy. In short, conditions for abuse still exist.
That is why the bureau’s new and long-awaited mortgage disclosure forms are important. It is also why they are disappointing. Required by the Dodd-Frank financial reform law, the new forms use an easy-to-read format to disclose complex terms; in addition to clear entries of principal, interest and closing costs, there is information on prepayment penalties and other complicated loan features. But the forms fall short in the crucial task of helping consumers assess and compare the total cost of various loans. Without that information, it is difficult for borrowers to know whether they are getting the best deal.