This week, federal regulators announced plans to scale back mortgage paperwork for home buyers via a more streamlined application process, a movement being headed up by the newly created Consumer Financial Protection Bureau.
The proposed new application would also allow consumers to shop around for the best mortgage offers, according to Dow Jones.
Jeff Kaufmann, senior partner at KEL Attorneys, said the planned revamp of the paperwork is a huge win for consumers.
"Right now, these people are brutally confused," Kaufmann said. "Normally, around the country it's just notaries present at a home closing. You are signing 29 documents in 15 minutes—it's like rapid fire."
Before the housing meltdown, and still today, many consumers are just happy to be able to secure a loan, he said. Therefore, they are not taking the time to ask what their exact monthly payment will be, or even what type of a mortgage they are getting.
"They just want a loan," Kaufmann said. "By making the terms so much clearer, the consumer can't later 'not understand' what happened. Instead of just blindly signing, they will have a better understanding of the documents actually sitting in front of them."
It may be over a year before consumers will be able to access and use the new form. The bureau's prototypes will be tested over the next few months, which will include interviewing consumers, lending agencies and brokers in Chicago, Albuquerque, N.M., Baltimore, Birmingham, Ala., SpringfieldMass. and Los Angeles, according to Dow Jones. The prototype can be viewed at: www.consumerfinance.gov/KnowBeforeYouOwe.
Kaufmann said he is happy to see the government stepping up to make changes to prevent another housing bubble.
"I think this is a very easy change to make, and the government is showing that at least they are trying," he said.