Resident Fellow Alex J. Pollock

In "Mortgage 'crisis' fixes" (Editorial, Monday), you rightly compliment the Department of Housing and Urban Development for trying "to help borrowers better understand what they are getting into." Indeed, I believe the most obvious long-term reform to the American mortgage finance system is to make sure borrowers understand the obligations of the mortgage--and don't commit to them if they don't make sense. As HUD Secretary Alphonso R. Jackson earlier told the Washington Times about his personal experience with complex mortgage documentation, "I didn't read it--and I doubt anyone around this table read it" ("HUD plan tackles crisis," Page 1, Friday).

HUD is proposing a four-page disclosure form. This proposal is a step in the right direction. However, the form does not include three essential elements: the total monthly mortgage payment, including not only principal and interest, but also property insurance and taxes; the borrower's income on which the loan is based; and the percent of that income that the total monthly payment will consume (for adjustable-rate mortgages, at both the initial rate and the fully indexed rate). The lender has to know this to underwrite the loan, and the borrower equally needs to know it.

Moreover, the essential information for the borrower can be put on one page. I have proposed such a one-page form, "The Basic Facts About Your Mortgage Loan," available on the American Enterprise Institute Web site at www.aei.org. A similar one-page form is contained in New York Democratic Sen. Charles E. Schumer's bill, S. 2296, introduced in November.

Let's hope we really do create short, clear, straightforward mortgage disclosures.

Alex J. Pollock is a resident fellow at AEI.