Confusion Abounds!

An article in National Mortgage Professional Magazine  reviewed a recent 2014 U.S. Primary Mortgage Origination Satisfaction Survey by J.D. Power that found that 54% of first time home buyers are confused as to the loan options available to them.  While reports indicate that young people are staying out of, or getting out of, the homebuying market, their peers who remain in the market do not understand for the most part, exactly what they are getting involved in with any given loan program.  Are mortgage professionals really doing that bad of a job?  I sure hope not because in 2015 we are facing the introduction of integrated disclosures which may add to the confusion until everyone gets some practical experience with the new forms and their disclosures.

In the J.D. Power survey, only 41% of first time home buyers indicated that their mortgage representative fully and completely explained the types, terms, special programs, fees, options, and down payment variables that all home buyers really need to fully understand to get a loan that suits their needs and their budgets and puts them in their new home in a comfortable financial position.  Less than half of the mortgage professionals involved with the people surveyed did not apparently do a full and complete job.  Of experienced mortgage consumers on the other hand, 56% were satisfied with the explanations they received.  That number to me is almost as alarming if not more alarming than the 41% of first time home buyers.  So-called sophisticated homebuyers are not comprehending their loan options, which I find to be unacceptable.  All homebuyers should understand all options available and lenders, brokers and originators should not leave the table until the buyers do understand their options and choices.

In another comparison brought out by the survey, 44% of first time home buyers indicated that their closing agent did not fully explain all of the closing documents.  Of experienced or sophisticated homebuyers, only 26% complained about the lack of a full explanation of closing documents.

As a profession, that survey indicates to me that mortgage professionals and closing agents (attorneys, escrow officers, etc.) are not doing a very good job and that is disturbing.  We need to make sure that a borrower does not go out the door with questions about their loan choices and options.  It is imperative that we do our jobs fully and completely, all of us.  A few bad apples can tarnish the reputation of all of us and that is just not acceptable.

Image courtesy of futurestartup.com