The proposed revision to the Real Estate Settlement Procedures Act should provide more disclosure to consumers. In particular, consumers will have to be able to see the yield premium paid by a lender to a broker to place the loan with them. Consumers do not directly pay for that premium in absolute dollars, but it is embedded in the interest rate on their loan. In many cases today, the yield premium is disclosed on the HUD-1 (signed at settlement) and not on the good-faith-estimate (seen when qualifying for the loan). However, if a customer wants to buy a certain house, they are looking to their, or the home builder's, loan broker to get them into that house. I am not sure more disclosure is helpful if the customer doesn't read it. Their focus, generally, is whether they can afford the monthly payment.

Refinancing your mortgage is something that many Americans do without giving much thought other than, am I getting a lower rate or payment? Examining the costs associated with refinancing is critical to figuring whether or not it actually saves you money. Most people do not really examine the costs because they are rolled into the new mortgage and generally they have a lower payment and that is what is where they focus their attention. For those that refinance every time rates go down, many times they lose because they pay closing costs and points that they never realize the advantage of because they refinance again. The old rule of thumb used to be that it took around a 2% decline in rate to make it worth while to refinance. Today, costs have come down so that number is less today but there are still significant expenses. Regulation that will make those costs more transparent to homeowners certainly should at least make them aware of what they are paying. A mortgagee should be able to look at a good faith estimate of closing and see all the charges that they are paying with their mortgage. In the end, it is the consumer’s responsibility to understand and evaluate the costs of refinancing!

Anything that makes mortgage terms easier to understand, or provides additional information to the consumer will only benefit the marketplace. I applaud the recommendations by President Bush, Treasury Secretary Paulson, and Housing Secretary Jackson, and I don't necessarily agree that the mortgage broker industry is going to oppose this proposal. I think most mortgage brokers will welcome and embrace the opportunity to provide even more information to their customer, and will want to have full disclosure and transparency to their clients. If you go to the Mortgage Bankers Association website (http://www.mortgagebankers.org/), or the National Association of Mortgage Brokers (http://www.namb.org), you can see they attest to the value of full disclosure. Of course, this is also a positive step to restore confidence and hopefully additional activity in the housing sector.