Caveot empter: Let the buyer beware.
That is a warning tag that should have been put on those mortgages that went into and are still going into foreclosure. In my mind ignorance is not excuse. I've seen people get put into programs that they must have signed in their sleep, because no sane person would have accepted the terms and conditions they ended up with.
Who's to blame: Well the majority of the blame falls on the mortgage brokerage industry. In the mortgage industry there are two types of lenders. First you have the true brick and motar lenders who not only originate the loans but service the loans from their companies.
Then you have the brokerage industry. I'm sure there are some good brokers out there but I never ran into any. The only thing a broker does for you is go out and shop for a mortgage. The same thing you can do for yourself. The problem comes in when they start looking for you they will throw out some unbelievable rate, that you probably don't qualify for or that rate doesnt exist. Then they start contact mortgage companies after pulling your credit bureau several times and lowering your score. Then when they finally do find you a loan, most of them never disclose the term and conditions required by law thru HMDA. Then I you hang on that long, during the closing process they hire an independent loan closer who rushes you through the paperwork, never mentioning you have a three day recission period in which to change your mind regarding the loan. If that's not bad enough large numbers of their clients were led to believe they were in a fixed rate mortgage, until the day they get a rate change letter from the mortgage company saying their rate is scheduled to go up 3% beginning next month. We will address additional difference between brokers and direct mortgage lenders later
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