Plan calls for more transparency

WASHINGTON - Prospective homebuyers would get easierto-understand information on mortgage terms and save an estimated average of $700 in closing costs under a proposal unveiled Friday by President Bush.

The proposed overhaul to a 1974 law requiring lenders to give what's called a "good faith estimate" is aimed at making it simpler for consumers to make comparisons when they shop for a house or refinance a mortgage. It's the latest in a series of White House initiatives to help end a housing market crisis that has stalled the U.S. economy and sparked global financial market turmoil.

"These mortgage agreements can be pretty frightening to people," Bush said. "There's a lot of tiny print."

The proposed revision to the 34-year-old Real Estate Settlement Procedures Act would mandate a federal disclosure form to be given to consumers who refinance a mortgage or borrow to buy a home. The form is simpler than privateindustry disclosure forms, which can vary widely.

The mortgage broker industry was expected to oppose the proposal because it calls for lenders' payments to brokers, known as yieldspread premiums, to be disclosed to borrowers before they go to settlement. But the National Association of Mortgage Brokers issued a statement Friday calling the move "a major step forward in terms of consumer protections."

Brokers receive the premiums for steering customers toward certain lenders, although consumer advocates argue the practice prevents consumers from getting the most competitive interest rate and loan terms on mortgages.