MEGAN MCARDLE IS GETTING A MORTGAGE, and observes:

Actually going through the mortgage process is a reminder of one of the reasons that things went so badly wrong during the housing bubble; we are inundated with paper. There are disclosures about the Mortgage Disclosure Improvement Act telling us we have seven days to review any change in our APR; disclosures about the Home Valuation Code of Conduct, even a disclosure solemnly informing us that the bank intends to check credit scores and may not loan us money if there’s a bad payment history of too much debt.

I’m pretty good with paperwork, and I understand all the terms being used (not to mention the laws being referenced), and I find it impossible to keep track of it all mentally–especially when you add in the tax returns, the W-2s, the bank statments and sworn certifications that all the money being used was legitimately earned or received as gifts. In fairness, we’re going through our credit union, which is apparently especially bureaucratic, but still–it’s very easy to develop a sort of attentional blindness and keep signing things. I requires heroic effort to read every document.

This illustrates, I think, the limits of transparency.

Want to limit a bubble? Make originators responsible for covering defaults, or at least a percentage thereof. Yes, this will also have other consequences.