With a mission to, among other things, ensure that consumers get the information they need to make sound financial decisions, the CFPB (Consumer Financial Protection Bureau) is tackling the mortgage acronym issues with its latest round of changes to documents designed to simplify mortgage closing disclosure forms.
Mimosa or Sassafras? We prefer Sassafras—with a few changes.
It appears the CFPB is using trees to distinguish between various versions of changes to the settlement disclosure forms (much better than continuing a long tradition of acronym, letter and number combinations to distinguish the various versions—V1-2A.TILA.12) that replace the Truth in Lending Disclosure and the HUD-1 Settlement Statement consumers receive at closing.
Although the CFPB tested these two versions of a simplified Settlement Disclosure form in December (and we responded with our concerns and suggestions for changes), we expect the industry will go at least two more rounds before settling on a final settlement form. Check out
both forms at http://www.consumerfinance.gov/knowbeforeyouowe
The fine print. …“that prices are clear up front…and that nothing is buried in fine print.” The problem we have with both versions is the “fine print”—7 point type on page 2 of Sassafras and page 3 of Mimosa. And, while we’re sure that’s not what the CFPB meant by “nothing buried in fine print,” we think consumers need to be able to physically read the documents before they can be expected to sign them.
As experts in financial document printing, we’ve studied things like type size, line length, font choices (serif vs. sans serif), leading (space between the lines), and margins for years. And, with the advent of electronic documents, we’ve done the same kind of research on electronic readability, too.
We made two recommendations to the CFPB: Increase the font size even if it means adding an extra page (we use 10 pt. in our printed documents). We also said we preferred the Sassafras version primarily because it eliminated the line numbers used on the Mimosa version which spanned from 100 to 1600. We felt the line numbers were an unnecessary distraction for the consumer and interfered with overall readability.
Did you know? Because attorneys are a curious sort, we checked Wikipedia and found that sassafras is a primary ingredient in root beer and that dried and ground sassafras leaves are used to make a powder used in some types of gumbo.
Get ready for round three
We’d like to share your input in our CFPB response to the next round of changes on the proposed Settlement Disclosure Forms. Respond to this blog and follow us on Twitter, LinkedIn or Facebook to stay up to date on the latest CFPD TILA, RESPA, HUD-1, Sassafras and Mimosa changes.
Authored by Jeanne Erickson, Senior Attorney, Compliance Services
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