Congress Should Require Simple Mortgage Pact

[Omaha Steve]

http://www.thestreet.com/s/congress-should-require-simple-mortgage-contract/newsanalysis/opinion/10372365.html?puc=googlefi

By Terry Savage
TheStreet.com Contributor
8/5/2007 10:15 AM EDT

Don't ask, don't tell.

That was the unspoken motto of the mortgage mess that has now escalated out of control. Homebuyers didn't ask questions because they wanted the house or the home equity loan. And mortgage brokers didn't tell the applicants about the consequences of the papers they were signing, because each loan paid them a fat fee.

The details of those mortgages were in the fine print of huge stacks of documents. And no one reads the fine print. The rest is history now, revealed in the statistics that roil the financial markets and in the sad stories of people losing their homes.

Now a simple solution is being offered in Congress, offering hope that the next generation of homeowners might be spared this particular financial disaster. It's part of a proposed amendment to the Truth in Lending Act.
A Simple Solution

H.R. 3012, "The Fair Mortgage Practices Act of 2007," sponsored by Rep. Spencer Bachus (R., Ala.), is a bill now moving though Congress that would create a national system for registering mortgage loan originators. And a key feature of the bill is that a "one-page disclosure form be required for all consumer credit plans secured by the consumer's principal dwelling."

The creator of this idea is Alex J. Pollock of the American Enterprise Institute, and former CEO of the Federal Home Loan Bank of Chicago. Pollock suggests that instead of imposing new and costly regulations on lenders, it would be far more practical to create a simple disclosure document that could be easily understood.

FULL 2 PAGE ARTICLE AT LINK.