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Consumers, Cast Your Vote

posted by Katie Porter

The Consumer Financial Protection Bureau has launched the first project in its "Know Before You Owe" initiative with the release of proposed mortgage disclosures. While the CFPB did its homework in designing these forms, including getting feedback from a wide variety of sources, it is taking field-testing to a new level by asking American consumers to review two proposed forms. Consumers can then vote for the form that they think best conveys the key information needed to understand a home mortgage loan. The choices, named "Azalea" and "Camellia" for the fictional banks on the sample disclosures, are available here. (Simply click to view them as a PDF and then vote for your favorite.)

The first page of the forms are the same. There, I really like how attention is called to the balloon payment, and the way a section is entitled "Comparison: Use this information to compare this loan with others." The comparison part is especially important given research showing that many consumers do not in fact shop for their mortgage loan. The Azalea form goes on to highlight kinds of closing costs, such as inspections, that a borrower can shop for. The main difference in the forms is on page 2, where the the Camellia form provides much more detail on closing costs.

Now admittedly, we like to think that Credit Slips readers are wee bit more interested in borrowing than the typical American, but that shouldn't stop you from reviewing the forms, casting your vote, and passing along the link to all your family and friends who always want advice on their consumer debt issues from you. And feel free to discuss your vote and your preference in the comments. It'll be interesting to see the preferences of the Credit Slips readers--and to see if the CFPB comes to the same conclusion.


Thanks. I could not find a link to send feedback and I need more email like I need a hole in my head so I am leaving mine here.

The Projected Payment box is poorly designed. It overemphasizes, visually and typographically, the balloon payment that has already been disclosed once immediately above, and conversely plays down, visually and typographically, the monthly escrow and the total monthly costs, which have not been mentioned.

I think there should be a line of bold type after the last payment row that says, if you can't pay all of these amounts when due you could lose your house in foreclosure.

The APR still makes no sense. "your costs over 30 years" doesn't tell the borrower: which costs / why 30 if this is a 7 year loan?

Page 2: Azelia is visually cleaner and better aligned but Camelia does a better job of explaining the costs, which is more important to me. The labels "services you can / cannot shop for" are pointless and even arguably snide, because you don't receive this until you're past the time to shop for any of them. Thx again.

Btw, I never heard of a 7-yr fixed rate loan. If this is meant to be a 7/1 ARM, with a 30 year amort of principal, it's terribly misleading, especially in the interest rate row.

(mt, the comment period to submit feeback to CFPB for this phase ended on Wednesday, 8/10. But the proposed form drafts remain up on their site to form a basis for comment here.)

Katie, I agree that the clarity of the balloon payment information on page 1 is very helpful, as is the comparison shopping section. Few people know they can shop for any of those services. Once consumers do start to shop around, perhaps competition will result in lower costs?

I agree with your assessments as well, mt. For me, as an average consumer who is likely to see very few of these forms in my lifetime, I agree that the *total* monthly costs should be emphasized more strongly in the projected payments section (loan payment & escrow and insurance). I think a lot of people focus on the loan payment amount when they consider how much they can afford and tend to forget that real estate taxes and insurance can add a significant amount on to monthly payments. Further, those items are subject to change on an annual basis, something that I think should be emphasized more strongly in that section.

I, too, am torn between the simplicity of Azalea's page 2 and the detail of Camelia. Whenever an "other" box is checked on any financial form I see (Azalea), I want to know more about what that really is. However I have no idea what "Tax Monitoring Fees", "Warehousing Fees" or "Rush Fees" are, why I must pay for them, and why they can't be shopped for. So, in this case, the additional detail of Camelia results in more questions than it answers.

Strictly from a consumer's perspective, I give Azalea a slight nod.

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