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Economic News

Could mortgage disclosure forms be redesigned to bubble-proof America?

Could better forms have helped the crisis?

The newly formed Consumer Finance Protection Bureau (CFPB) is seeking to circumvent future crashes and protect consumers. One of the ways they are seeking to do this is by making financial information more clear, for example, they recently passed the “The CARD Act” which demands credit card providers be clear with terms and limits their ability to arbitrarily change those terms.

That brings us to housing. According to Fast Company, “No matter where you put the blame–whether it’s on the banks, mortgage brokers, or buyers–part of the problem is the whole home-buying process. It’s complex, confusing, and emotionally overwhelming.”

Symposium on simplifying the mortgage disclosure form

So, the CFPB decided to ask experts on behavioral economics, linguistics, public policy, and graphic design to come together in a symposium focused on redesigning the often overlooked mortgage disclosure form (MDF) in order to better communicate lending terms in a universal way.

During the symposium, they agreed on four goals:

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  1. Speak the language that people understand: Translate financial units and concepts into terms that click with the consumer’s mental model.
  2. Keep vocabulary clear and consistent: Make sure your words mean the same thing in every place they appear.
  3. Pare down to the data that matters: Cut out the information aimed at the bank; leave in only what the consumer needs.
  4. Make it easy to grasp: Use engaging visual cues that can shortcut the process of understanding.

Several firms were invited, but below is what Fast Company has featured via Continuum Innovation Design:

Does this save the economy?

Will graphically depicting the mortgage disclosure form help circumvent the next bubble? Will this help the buyers who either ignore the terms and sign out of excitement or who just cannot process the information that is often in size 8 font on dozens of papers they shove in a file and discard? Could an infographic style MDF improve the industry overall? Tell us in the comments what you think.

Lani is the COO and News Director at The American Genius, has co-authored a book, co-founded BASHH, Austin Digital Jobs, Remote Digital Jobs, and is a seasoned business writer and editorialist with a penchant for the irreverent.


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