HUD Proposes Rules to Clarify Mortgages
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HUD, mortgages March 17th, 2008Standard Form Would Provide Details on Terms and Costs to Borrowers
A federal proposal announced yesterday aims to give mortgage borrowers clearer information about their loans and encourage them to shop around for the best deals.
Housing officials said borrowers’ confusion about loan terms and closing costs has contributed to the current mortgage crisis. So the Department of Housing and Urban Development is backing a standard form that lenders would give borrowers before they commit to loans.
The form would:
¿ Disclose terms of a loan, including the interest rate and monthly payment; whether the rate or principal balance can increase and if so, by how much; and whether the loan has a prepayment penalty or a large final payment, known as a balloon payment.
¿ Display settlement charges prominently, including fees paid for outside services. The proposed form would also specify which of those charges could change at settlement, and by how much.
