When it comes to mortgages, banks say, "Trust us." Federal regulators are now saying, "Some new rules may be in order."
Richard Cordray, the head of the Consumer Financial Protection Bureau, says the agency will look at new requirements intended to make loan statements easier to understand.
"It's time to put the service back in mortgage servicing," he says.
Specifically, banks could be required to make monthly statements simpler for customers to decipher, and to provide borrowers with warnings before their interest rates adjust. The rules could also make it easier for homeowners to avoid foreclosure.
These are worthy changes, and remind of me of regulations imposed on banks requiring them to make credit-card statements easier to read, and to inform customers about the consequences of not paying off bills on time.
It's kind of amazing, though, that such simple matters of fairness have to be required by government authorities, rather than being routine business policies intended to maintain long-term relationships with customers.
Then again, these are the same banks that had to reach a $25-billion settlement with federal officials over so-called robo-signing and other foreclosure abuses.
"Trust us," the banks say, with apparently no awareness that trust is something that needs to be earned.