RESPA NEW RULES Can't

Has anyone seen the new proposed RESPA Rules?

We are talking an extra 45 minutes per closing.  Now ,45 minutes might seem like a little bit of time for such a huge undertaking ( buying/refinancing a home), but to those of us who actually do this for living, it is a great deal amount of wasted time, not because it is not important for borrowers to understand what they are signing, but because this is not the real problem the real estate market is facing.  It is as though they believe more documents and disclosures are the answer to the fiscal irresponsibility on behalf of the financial lenders.

From personal experience, people already lose interest once you pass the HUD, note, mortgage and right to cancel.  What I think will happen is more people will lose interest even more and pay attention even less.

This seems like another case of Washington thinking it can cure all the worlds ill by simply throwing the kitchen sink at consumers.

I am a closing attorney. I sit down with the clients.  I thoroughly explain all documents. I usually get the same response.  Complaints about the length and repetitiveness of the documents.  I don't recall getting anyone ever calling me back saying that they did not understand the compliance agreement, they want a more thorough explanation or do I have more information or disclosures for them to read.

You can't force someone to listen to the explanation of documents that they don't care about.

I guess what makes me mad is that the media and politicians that have no idea what they are talking about, are grandstanding and pandering to the crowd to make it seem that this lending/credit fiasco is due to the mortgage brokers scamming poor innocent consumers, when the real reason is the poor judgement of the financial institutions on giving extremely risky loans legally to non-traditional, poor credit borrowers for homes that were way too overpriced.  ( Sorry for the really long sentence.)

They believe more documents disclosed is the answer, not more sound lending practices. 

For all the claims of people being duped and forced into sub prime mortgages, (although I do believe it did happen occasionally), I for one never saw it.  Most borrowers were simply happy and taking advantage of the fact they they could now obtain a loan.  From what I saw, they weren't duped, they took advantage of the market that allowed risky borrowers to obtain money.  So the consumers had a demand for the product, which was legal and guess, what, so the mortgage companies sold them the product. 

Were there shady loan officers switching and baiting?  I believe so.  But nowhere near what the media and politcians are portraying to be the cause of the sub prime mortgage breakdown.

For example lets take the typical scenario portrayed in the media.  A poor likable female with kids to feed, is on tv explaining how she will be cruelly thrown into the street because she can't afford to keep up with her adjustable mortgage.  She states that she did not know that she signed documents which were for a stated deal showing her to make $95,000.00 a year when she works at a coffeehouse.

She claims she didn't know that the loan company increased her pay to fit the loan product and she can't afford the adjustment on her adjustable mortgage and now will be forced into the street.

Heartbreaking, right?  I agree.  But its not always the way it seems.

The more likely scenario is she wanted to buy a house that she did not even have to put money down on.  She goes to a mortgage company and says she signed a purchase and sale agreement to buy a house.  They pull her credit, looks good.  They then see that they have to go stated. which is legal.  They tell her to qualify she needs to make this much money, she says no problem cause although her husband is not on the loan, due to poor credit, he makes enough so they can afford the payment.  The product available is a 80/20 2 year adjustable and they tell her not to worry they will refinance her before the loan adjusts.  So they state the amount combined.  They get the loan and close and are happy.

Two years later their adjustable mortgage is adjusting but they have no equity in the home to refinance, since the market has turned.  They are underwater and their are no lenders offering those same products two years ago, (Gee, I wonder why?), now they are stuck and cannot keep up with their payments.

Then the blame game begins.

I always go back to the fact that, by the time they are in front of me, the most important question they ask during the closing is "what is my payment?" 

The mortgage company, the lender and YES THE BORROWER didn't care how they got there, just as long they got that house.  ALL ARE TO BLAME!!!

But, when it all comes tumbling down, who gets the blame, those greedy mortgage brokers.

So do not be fooled into believing more disclosures will solve this problem.

Question the source!

Putting people into homes is nice, but its a whole lot better if they can actually afford to stay there with sound lending practices.

No amount of disclosures will solve that problem.

Thoughts???

Thanks for your time.

George N. Piandes, Esq.
President

Law Office of George N. Piandes, PC
10 Southville Road
Southborough, MA 01772
E-mail - george@gnplawfirm.com
www.gnplawfirm.com
Ph - 508-281-8255
Fax - 508-281-8251
Cell - 781-883-8181