1,099 Pages to Propose a Three-page Mortgage Disclosure – CFPB Explains Why

Ever wonder why it takes the governmentrnso many words to say…maybe not so much?  </p

So did a visitor to the ConsumerrnFinancial Protection Bureau’s (CFBP) blog.  The blog features someone (something?) calledrnThe Explainer who answers consumer questionsrnand this time the question was about the process of devising new and supposedlyrnsimpler mortgage disclosures.  Thernvisitor, using the name “Interested” referenced a recent notice of proposedrnrulemaking published by CFBP regarding the disclosures.  The notice was 1,099 pages long.  “Why,” Interested asked, “does it take sornmany pages to create something that’s supposed to be easy to use andrnunderstand?” </p

Yeah, why?  In case you have wondered this yourself, herernis the explanation.  For the record, it runsrnexactly 900 words.  Maybe we should put The Explainer in charge of allrngovernment documents.  </p

Dear Interested,</p

This is a great question, one you’rernnot alone in asking – 1,099 is a lot of pages, as those of us who were involvedrnin writing them can attest.</p

Let’s start with some background.rnCurrently, two federal laws – the Truth in Lending Act (TILA) and the RealrnEstate Settlement Procedures Act (RESPA) – mandate that consumers receiverndisclosures of certain information about mortgage loans. The Dodd-Frank Actrnrequired the CFPB to propose a rule to combine the TILA and RESPA disclosures.</p

If you want to see the new combinedrndisclosures, combine and simplify existing mortgage disclosures check them out here.rnIf you want to see what the proposal means for you, we’ve provided summaries,rnone on what it would meanrnfor consumers and one with morerntechnical detail. </p

You said “propose a rule to combinernthe disclosures” instead of just “propose combined disclosures.” Why?<br /It's an important distinction. The rule explains how we would expect industryrnto use the disclosures: when to issue them, how they apply to different loans,rnwhat various terms mean, etc.</p

And that proposed rule is 1,099rnpages?<br /Actually, no. We are not proposing 1,099 pages of new regulations. That pagerncount is for the notice of the proposed rule, not the rule. Like noticesrnof proposed rulemaking issued by other agencies (particularly the FederalrnReserve Board), our proposal consists of three basic parts: (1) the preamblernexplaining the proposal; (2) the text of the proposed regulations; and (3) guidancernon how to comply with those regulations.</p

In terms of pages, the newrnregulations are only a small part. Most of the pages explain what we are doingrnand why we are doing it. As required by law, we analyze the costs and benefitsrnof the proposal for consumers and industry. We also provide thorough guidancernon how to comply including samples of completed forms, which the industryrnrequested during our outreach and Small Business Review Panel process. Becausernof the variability of mortgage loan and real estate transactions, industryrnwanted specific guidance for many different potential scenarios. This added tornthe page count.</p

Here’s how the notice breaks down:</p<table cellpadding="2" cellspacing="0" border="1"<thead <tr<td width="525"

Content</p</td<td width="75"

Pages</p</td</tr</thead <tbody<tr<td

Preamble</p<ul type="disc"