Paulson pushes one-page disclosure

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We told you last night Treasury Secretary Paulson was going to do some jawboning today, and here it is -- a speech taking the mortgage industry to task in remarkably blunt language.

We were particularly struck by his call for better disclosure: ‘We need simple, clear, and understandable mortgage disclosure. We must identify what information is most critical for borrowers to have so that they can make informed decisions. At closing, homebuyers get writer’s cramp from initialing pages and pages of unintelligible and mostly unread boilerplate that appears to be designed to insulate the originator or lender from liability rather than to provide useful information to the borrower. We can and must do better.

‘The most critical facts, including potential future monthly payments, should be on a single page in clear, easy-to-understand language, to be signed by the borrower and the lender. In my judgment, this may have prevented many of the problems that we are seeing today.’

Our take: Better disclosure is a no-brainer, but the mortgage lobby is powerful, and has many friends in both parties. We will be surprised -- pleasantly surprised -- if Paulson’s suggestion becomes law.

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Photo Credit: Treasury.gov