Is it 1984 already Mr. Orwell? Lenders are now recording loan applications!!
Let's face it, it today's over regulated world, with the courts allowing every silly lawsuit to move forward, it isn't a giant surprise that a small number of mortgage companies are starting to either video or audio record the loan application process with borrowers to prove compliance with various rules and regulations place upon the industry.
Many homeowners, especially those who lost their homes during the housing crisis, claimed that lenders did all sorts of horrific things to them. While I am sure there was a small number of these situations, the bulk of what I personally saw was really just an attempt to use any method possible to save a house from foreclosure. They all managed to conveniently forget terms, conditions, and documents signed at both application and closing.
The government sided with homeowners, and placed significant and costly burden upon lenders for loans going forward. This has dramatically extended the time it takes to close a loan, made getting a home mortgage loan much more difficult, and increased costs.
Sadly, the government failed to accept one simple fact. These people all signed a contract that said they read and understood the terms and conditions of their loan, and agree to pay their mortgage on the first day of the month.
All foreclosures are bad. There is no arguing that fact. Any time someone loses a home, it is tragic. But no where in the mortgage documents does it say the words "but...", or "unless." It isn't the lenders fault if someone loses a job, has major medical issues, or gets a divorce. They are under no obligation whatsoever to attempt to help.
Home owners who go into default under the rules for most new mortgage loans can attempt to claim the lender didn't meet safe harbor guidelines, known as the "ability-to-pay" rules, and seek a multitude of damages.
To prevent this, a small number of lenders already have, and many others are considering video or audio recording the application process to prevent a "he said", "she said" situation.
So don't be surprised if in the future, your Loan Officer wants to record your loan application.
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Lending in MN, WI, and SD - Joe Metzler is an award winning Senior Loan Officer with Mortgages Unlimited in St Paul, MN. Recent awards include 2014 Minnesota Loan Officer of the Year.
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