Posted by flexo-notaries flexo-graphex inc on 8/26/07 8:33am
Msg #207716

Forbes- Mortgage Mess

http://www.forbes.com/feeds/ap/2007/08/25/ap4053912.html

Reply by Dorothy_MI on 8/26/07 9:29am
Msg #207717

Again it points out

how important it is that your borrowers are made aware of their loans terms. Several of those stories either wouldn't have happened or at the very least the borrowers would have understood the implications of their loan. The same story was repeated several times about how the papers were just shoved in front of them and they were told to just sign on the line. And XYZ is still just teaching notaries to point and sign! We can't protect people from their greediness (wanting more house than they can afford), nor their laziness in not reading their docs during the 3 day RTC (on refi's, which most of these were), nor their naiviety (sp) in only hearing what they want from the loan officer, but we can do our part and make sure they are aware (not explain) of exactly what their rates are, prepayment penalty, etc.

Reply by SueW/Tn on 8/26/07 10:21am
Msg #207718

Re: Again it points out

Amen Dorothy! Early last year I signed a single woman and she greatly impressed me when she phoned the LO and gave him an earful over fees etc. BUT didn't flinch over the neg amm. Docs were redrawn and I went back, same neg amm. When we got to that doc I specifically asked her if she was aware of these terms and she got downright nasty. Pointed to her MA is business hanging on the wall and TOLD me she was well aware of every single term in her note. Case closed, docs signed. Most that I visit that are refi'ing an ARM tell me up front that last time they signed in Title Office and was only told where to sign. I hear that over and over again. To only blame "point and sign SA's" or newer SA's is a mistake. LO's, EO's and TO's are only interested in the ink on the paper and it's my personal opinion that the majority of the blame for "unanswered questions" lies on the shoulders of those that just don't ask.

Reply by John_NorCal on 8/26/07 12:23pm
Msg #207734

Re: Again it points out

It is the LO's responsibility to make sure that the borrower is made aware of the loan terms. When I originated loans I took it as my responsibility to fully explain the terms of the loan, I didn't leave that up to the title company. When I conduct a signing I point out each document, and explain what it is for. I point out their note let them know if it is adjustable or fixed, the interest rate, the loan amount and the term. When it comes to the amortization sheet I present it to them and tell them what it is for.
I am not going to go into the specifics of their loan and try to sell them on it again or dissuade them from it. I am there strictly as a neutral witness. People need to take responsibility for their own actions.

Reply by flexono on 8/26/07 1:24pm
Msg #207739

Re: Responsibility

David Downs, a professor of real estate at Virginia Commonwealth University, believes blame for the current quagmire falls on all involved. But he says the consumer should be held accountable first and foremost for failed loans.

"If somebody takes on financial risk, it's incumbent on the consumer to understand that," Downs said

Reply by Philip Johnson on 8/26/07 10:51am
Msg #207720

Someone should just say no.

Now who that someone is, can be a bit tricky. Should the lender have told the folks in the story that their credit is spotty, or that they don't have any downpayment? Probably, but they are not in the business of turning folks down. Should the folks have looked a little deeper in themselves and honestly asked themselves, can we do it? Probably, but when it comes to dreams, who hasn't seen a more rosey picture then what is staring them in the face?

This is a rough spot in the road and in all rough spots there are those who always thought the road would be pot hole free and the wind at their back. Well the road has turned bad and those that were not prepared are having the winds of fortune turn on them and probably face a world of trouble before it gets better.

One would hope that this will be a lesson, for them. Most likely though the next upturn and these folks will get caught up in the moment again and overextend one more time. The moral of this is very simple. Personal responsibility and Nancy Reagan said it best " Just say NO" and mean it.

Reply by flexono on 8/26/07 11:30am
Msg #207729

Remember the Good Old Days

Prime rare today 8.5%
Prime rate 12/19/80 21.5%

Reply by janie/vt on 8/26/07 12:58pm
Msg #207736

I can't tell you how many times I explained to borrowers their rate was adjustable and would change in two years. They would respond we know that, but our loan officer said we could refinance for a fixed rate. I always made sure they knew if their was a prepayment penalty or if their loan was interest only, also if it was a balloon note. I think that the balloon notes are the ones that everyone is going to have the biggest problems with in 10 to 15 years, when they come due. I always told borrowers to try and make extra payments on balloon notes, to help with that final payment.

Reply by JK/TX on 8/26/07 2:08pm
Msg #207740

*****
I can't tell you how many times I explained to borrowers their rate was adjustable and would change in two years. They would respond we know that, but our loan officer said we could refinance for a fixed rate.

******

I "pointed" it out too and I too cannot tell you how many times the Bo's response was the same as above. An Escrow Officer/Closer cannot get into explaining docs or their loan, much like a SA. When I would leave the table to make copies, I'm thinking "yeah, here comes another foreclosure."

When they say they can refi in a couple to 3 years... and then say "right?". I normally say, depends on numerous factors... credit rating, appraised value, the real estate market, payoff amt(s), and right now we can only borrow 80% of the appraised value. Then their eyes glaze over, they shake it off and continue signing.

Homebuyers need to educate themselves much more than they do and not rely on loan officer info only. I have had loan officers at the table state to the borrower over and over, that the loan before them is infact the loan they applied for and the LO will produce the disclosures and GFE to prove it. Borrowers get to the point of information over-load and don't understand all that is told to them.

Several years ago, when all the ARM's and 100% 1st and 2nd's started I knew what was going to happen. Here come the foreclosures, then the market values decline, then the refi's cannot be done because the value of their homes have declined and an 80% loan will not payoff their existing mtg(s).

Sad!

Reply by Lee/AR on 8/26/07 2:10pm
Msg #207742

Yuh.... and when you point out the ppp IF paid off in 2 years & they (rarely) have enough sense/concern to call the LO about 'how can we refi to fixed rate w/ the ppp?' and s/he says "Oh, don't worry--we'll waive that" and they cheerfully sign & ignore the words in black & white right under their nose. Actually, I don't think the balloons will create another crisis...10, 15 years is enough time for this current mess to straighten out, they'll have much more both equity and appreciation in their home and should have no trouble refi-ing into a nice low rate mortgage.

Reply by MelissaCT on 8/26/07 3:32pm
Msg #207752

I had a LO telling a borrower that the PMI would go away in 2 years (magically, I might add). It was all I could do to bite my tongue when she asked how that would happen automatically. She gave it some thought & decided that (after reading) the only way it could go away then was by increased property value (in an inner city -- she decided that was less likely) or by paying more toward principal (decided she couldn't even afford the monthly payment being presented with new loan). She saw the light & didn't sign -- one out of hundreds that used their common sense over what the LO was saying on the phone.