Disclosures developed and being considered by the CFPB will likely improve the information that consumers receive under current federal regulations; they are generally simpler and less technical, and should be easier to understand. ~ FTC Staff
Minneapolis, Minnesota (PRWEB) October 05, 2012
The Federal Trade Commission’s (FTC) released comments under housing and real estate to the U.S. Consumer Financial Protection Bureau (CFPB) on disclosure forms designed to help buyers regarding disclosures they receive when applying for and close on a home mortgage loan. The FTC states why - "because buying a home is a big deal".
Home Destination sees many real estate buyers that find buying a home too confusing. The FTC says, "The more consumers know about the home buying process before they start looking — either for properties or real estate professionals to help in the search — the more time and energy they can save".
The FTC praised the CFPB's focus to help consumers understand the features, costs, and risks of home mortgage loans. The comment is in response to a CFPB Notice of Proposed Rulemaking. The FTC commends the CFPB’s efforts to develop improved mortgage disclosures to help consumers make better-informed decisions when buying a home. It states that "the disclosures developed by the CFPB will likely improve the information that consumers receive under current federal regulations; they are generally simpler and less technical, and should be easier to understand.It is important to ensure that disclosures effectively enable consumers to evaluate the real costs of taking out a mortgage".
Home Destination can attest to the conclusions the FTC reached based on the 2007 Home Buyers Survey findings:
- About a fifth of the consumers could not correctly identify the APR of the loan, the amount of cash due at closing, or the monthly payment.
- Nearly a quarter could not identify the amount of settlement charges.
- About a third could not identify the interest rate.
- About a third did not recognize that the loan included a large balloon payment; • A third did not recognize that the loan amount included money borrowed to pay for settlement charges.
- Half could not correctly identify the loan amount.
- Two-thirds did not recognize that they would be charged a prepayment penalty if they refinanced with another lender.
- Three-quarters did not recognize that substantial charges for optional credit insurance were included in the loan.
- Nearly nine-tenths could not identify the total amount of up-front charges.
Additionally, The CFPB is writing rules that can have an enormous impact on real estate. The qualified mortgage (QM) rule, which sets out lender standards on what constitutes borrowers’ ability to repay, is one of them. "As banks understandably seek to protect themselves from mortgages that fail, both parties, being the buyer and the lender, need mortgage terms spelled out for making better-informed decisions," says Jenna Thuening, owner of Home Destination.
A buyer's decision to purchase a home or seek to modify a home's financing, and the importance of mortgage disclosures in enabling buyers in the process of buying a home, is one of the most biggest decisions made in a life time. The FTC says, "In light of the significance of a consumer’s decision to purchase a home or seek other home financing, and the importance of mortgage disclosures in enabling consumers to evaluate the costs of the transaction, it is important to ensure that disclosures effectively enable consumers to evaluate the real costs of taking out a mortgage."
With the U.S economy looking for a strong housing recovery, buying a home requires understanding the features, costs and risks of a mortgage. Home buyers need to read and rely on their mortgage disclosure statements. With the residential mortgage lending rules being in review by the CFPB, Home Destinations is hoping to see a balance so that not only home buyers with the most pristine credit profiles can get financing.
“The Fed should work to ensure that these rules take reasonable steps to reduce risk without inhibiting access to mortgage credit,” NAR President Moe Veissi said in a recent letter representing the real estate industry to Fed Chairman Ben Bernanke.
Home Destination sells Minneapolis metro residential real estate, helping both home buyers and real estate sellers make solid housing decisions. If you or someone you know is ready to buy in the Minneapolis / St Paul area and would benefit by engaging an experienced CDPE's expertise, fill out the Home Buyers Quote; Jenna will respond on a priority basis. The best home buying opportunities go quickly. Call 612-396-7832.