The Future of Your Mortgage Statement?

Government regulators introduced new mortgage disclosure forms this week that could help homeowners better understand how much they owe, and monitor their mortgage company for mistakes. The proposed new form, introduced by the Consumer Financial Protection Bureau, is intended to help homeowners avoid the mistakes and fraud that led to the mortgage meltdown.

“Given the widespread mortgage servicing problems we’ve seen over the past few years, consumers need clear disclosures they can count on,” Richard Cordray, the bureau’s director, said in a prepared statement. “This information will help consumers stay on top of their mortgage costs and hold their mortgage servicers accountable for fixing errors that crop up.”

Many homeowners still receive monthly statements that tell them little more about their loan than the lump sum due that month, and where to mail the check. The proposed new form would go deeper, requiring mortgage servicers to break down exactly how much of the total payment is going toward principal, interest and fees.

Servicers also would be required to list and explain any extra fees, such as late charges or penalties for early payment. The proposed form also tallies up year-to-date totals for those expenses. And it gives homeowners contact information for how to contact their loan servicer about questions or errors on the loan.

This last detail is important because in a number of cases, homeowners have found it difficult or impossible to reach their servicers to discuss problems, as Cordray says in a recent editorial. Servicers are the companies that manage monthly mortgage payments on behalf of investors, and make sure that taxes and escrow accounts are paid. Without being able to communicate with their servicers, some homeowners were overcharged, and others were foreclosed upon even though they qualified for loan modifications, Cordray says.

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