The Federal Reserve on Thursday approved proposals designed to make it easier for Americans with mortgages, or shopping for them, to better understand how the loans work.

The action comes after lax lending and, in some cases, borrowers who didn’t fully understand the terms of their home loans, ended up buying houses that they couldn’t afford. That contributed to the worst collapse in the housing and mortgage markets in 70 years.

“Consumers need the proper tools to determine whether a particular mortgage loan is appropriate for their circumstances,” said Fed Chairman Ben Bernanke. “It is often said that a home is a family’s most important asset, and it is the Federal Reserve’s responsibility to see that borrowers receive the information they need to protect that asset.”