WASHINGTON, July 9 (UPI) -- The Consumer Financial Protection Bureau proposed new rules for U.S. mortgage lenders that would better prepare buyers for potentially unpleasant surprises.
The bureau said Monday its proposals were aimed at providing consumers with a simpler picture of how much their loan will cost them over the years so they can avoid finding themselves hit with unexpected increase in their payments.
"When making what is likely the biggest purchase of their life, consumers should be looking at paperwork that clearly lays out the terms of the deal," CFPB Director Richard Cordray said in a written statement.
The New York Times said the proposed rules, which are part of a broader effort to reform the mortgage market, would provide applicants with a "loan estimate" that outlines the terms and interest rates and the potential changes in costs they could face down the road.
The estimate would have to spell out how the buyer's interest rate could change if they fall behind and what the penalties for prepayment would be. The Times said lenders would be required to provide these detailed estimates within three days of an application, and also lay out full disclosure on closing costs.
The public will be able to comment on the proposals until Nov. 6.