Media inquiries: Veronique Rodman
202.862.4870 (vrodman@aei.org)
FOR IMMEDIATE RELEASE: June 13, 2007
More and more Americans are defaulting on their mortgages, and foreclosures rates are skyrocketing because of risky subprime loans. It appears that many troubled subprime borrowers had not understood the obligations they were undertaking. Yet, despite the current crisis new mortgage applicants still have to face the same complicated, befuddling loan applications which do not make clear their financial responsibilities. Borrowers are forced to navigate an overwhelming mortgage loan process that includes a huge stack of documents riddled with confusing language, in small print, presented just before the loan closing.
In light of this situation, AEI resident fellow Alex J. Pollock, a former president and chief executive officer of the Federal Home Loan Bank of Chicago, proposes an important first step to ensure that future borrowers understand the obligations and responsibilities of their loans. Pollock recommends that a required one-page form (
PDF) be provided to borrowers three days before closing. This form gives the essentials of the mortgage, such as its monthly cost and the principal loan terms. The document would serve as a critical tool for promoting mortgage loan awareness among borrowers.
Pollock recently testified on his one-page form before the U.S. House Committee on Oversight and Government Reform’s Subcommittee on Domestic Policy. His testimony is available at www.aei.org/publication26220/.
AEI will host a conference about improving mortgage disclosure to consumers on Friday, June 15, 2007, from 9:00-11:00 a.m. The event will feature a keynote address by Rep. Patrick McHenry (R-N.C.) of the House Financial Services Committee. Pollock will moderate. Information about this event is available at: www.aei.org/event1532/.
To interview Alex J. Pollock, please contact him at 202.862.7190, apollock@aei.org, or through his assistant at 202.862.5940. For additional media inquiries, please contact Veronique Rodman at 202.862.4870 or vrodman@aei.org.
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