That’s the length of the Federal Reserve’s latest notice of a proposed rule to implement a federal law that says lenders must determine whether a borrower has the ability to repay a mortgage.

The issue of whether a borrower can repay a loan should be up to the borrower.

But 475 pages?

That’s longer than most novels, and the notice is significantly more challenging, if not impossible, to read.

Consider two snippets, chosen at random:

•”Current §226.32(b)(1)(i) requires that ‘points and fees’ include ‘all items required to be disclosed under §226.4(a) and 226.4(b)’ — the provisions that define the term ‘finance charge’ –‘except interest or the time-price differential.’ Proposed §226.32(b)(1)(i) would revise the current provision to include in points and fees ‘all items considered to be a finance charge under §226.4(a) and 226.4(b), except –”
•”Specifically, §226.43(b)(11) defines the term ‘recast’ as follows: (1) for an adjustable-rate mortgage, as defined in §226.18(s)(7)(i),34 the expiration of the period during which payments based on the introductory interest rate are permitted under the terms of the legal obligation; (2) for an interest-only loan, as defined in §226.18(s)(7)(iv),35 the expiration of the period during which interest-only payments are permitted under the terms of the legal obligation; and (3) for a negative amortization loan, as defined in §226.18(s)(7)(v),36 the expiration of the period during which negatively amortizing payments are permitted under the terms of the legal obligation.”

Can anyone actually understand that? Or read 475 pages of it?

Wouldn’t it be easier to present the total monthly cost to the borrower and ask: Can you afford this payment, plus the utilities and repair and maintenance costs for this home? And have him or her sign yes or no? If it’s yes, you’re good to go. If it’s no, they should be looking at a less expensive house.

After all, the borrower should be the best judge of his or her own financial capacity.

Thanks to the good folks at Bankrate.com for this information.