Our mortgage statements might soon be changing because of a recent proposal by the Consumer Financial Protection Bureau. The mission of CFPB is to ensure consumers receive the appropriate information so they can fully understand their agreements with financial companies. In an effort to fulfill their mission, the CFPB is proposing that our mortgage statements should provide more details and at the same time get a little easier to read.
The CFPB believes the current requirements just don’t cut it and borrowers should be provided even more information on each billing statement. Currently, the law requires creditors, assignees, or servicers to send a periodic statement each billing cycle to the borrower providing the following details of the mortgage loan:
- The principal loan amount
- The current interest rate
- The date on which the interest rate may next reset
- A description of any late payment fees and any prepayment fee to be charged
- Information about housing counselors
- Phone number and email address for borrower to obtain information about the mortgage
- Other information the CFPB may prescribe in regulation
If the monthly statement comes in the form of a coupon book, which is what I have, then each coupon is required to have all the same information as the full statement.
New Mortgage Statement Proposal
Late last month, the CFPB announced on its blog proposed recommendations on a new mortgage statement form. Here are the additions they want mortgage statements to include:
- The property address
- The payment due date
- The regular payment amount broken down between interest, principal, and escrow
- Any late fees or other fees charged
- The total monthly payment amount due
- The transaction activity since the last statement
- A statement of payments for the last period and year to date broken down between
I’m assuming many mortgage statements already provide some of this information even though it’s not required, like the due date, total monthly payment due and late fees. My first thought was that with all these additions my mortgage statement is going to resemble a hard-to-read cell phone bill. I was pleasantly surprised, however, to see how well this information can be organized on a statement.
To the right we have a copy of a Sample Statement the CFPB drafted (click image to see a .pdf version). As you can see, even though the statement could potentially include a lengthy list of required information, the statement itself can still be very easy to read. The CFPB hasn’t made any of this official, yet. They have only announced their intentions of rolling out the proposed rule, which will include a polished form of this statement, in hopes of having it become part of the required regulations. Their plan is to make the official proposal later this summer. This gives them time to get plenty of feedback and make any changes they see fit.
Are New Regulations In Order?
The CFPB is asking for consumers to give their opinion about the proposal. So far most of the feedback they have received is positive, and consumers are in favor of the changes. If you want to chime in, you can leave a comment at the end of their blog post. I think having a clean, nicely organized form to go along with the proposal helps their case with consumers. The question is, will all mortgage statements be as well organized as this one? I guess we will have to wait and see.