WASHINGTON, June 15 (Reuters) - Could a one-page mortgage form save borrowers from the confusion of mile-high disclosure documents?
A former banker turned scholar says such a document is vital for homebuyers who too often cross their fingers and hope for the best as they sign novella-length contracts at closing.
“At a certain point, adding more and more detail means there is less and less information communicated,” Alex Pollock, the father of the one-page disclosure idea told a panel Friday discussing mortgage disclosure. “If you keep adding detail, eventually the information you communicate becomes zero.”
Pollock’s mortgage contract would contain vital information and identify whether the loan has a fixed or variable interest rate, how payments could adjust and the borrower’s annual income. The last line of the document contains the admonition “DO NOT SIGN THIS IF YOU DON’T UNDERSTAND IT!”
Several industry representatives roundly endorsed the one-page plan at a meeting organized by the American Enterprise Institute, where Pollock works.
“I think Alex is on the right track. He deserves credit for grappling with this thorny issue,” said Allen Fishbein of the Consumer Federation of America. “But even his proposal illustrates the complexity of the task (i.e., the one pager is actually three pages).”