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"a plague on both your houses"

Mortgage and Lending with Wells Fargo Home Loans

Ok. I am confused is this a Real Estate Blog or a Shakespeare blog....

"As concerns about subprime mortgages plague the nation's leaders and lenders, America's homeowners are confused and worried about their own mortgages, according to a recent poll commissioned by Bankrate.com."

From Bankrate.com Mortgage ignorance rampant 

Could some of the subprime woes and mortgage industry changes and record foreclosures be the responsibility of the consumer too? 

I was shocked to read in this article that when "asked what type of mortgage they had. A stunning 34 percent of the homeowners had no idea."

That means 1 of every 3 people in the United States did not pay attention to anything they were told in a 1 month process consisting of hours of conversation concluded with a potentially 50 page stack of papers they signed. 

Even more perturbing is that another 1 of every 3 people in the United States do not know what they will do when their Adjustbale Rate Mortgage starts to Adjust.  This is why the media has story after story of people suffering from payment shock.  Those people surffering most likely either didn't know they had an ARM, or didn't know what to do once it adjusted.

I don't know about everyone else, but if I have a borrower going into an ARM I make a plan with them.  I make sure they know they know what they are getting into, why they are doing it, what the plan is, and how to get out of it.

When in comes to major financial decisions, it seems that many people put their trust in a salesperson's hands, nod their heads, and move to the next item in their planner.
Mar 27, 2007 07:14 AM
Rich Schiffer
Swarthmore, PA
Referral Agent, e-PRO

(Brian, thanks for linking to this from Subprime Fallout -- Are You to Blame? Nope. I am. These two articles do seem to go very well together.) 

As with many things in life, if you fail to plan, you are in effect planning to fail.

Consumers who take this seriously will not have problems, because they have planned for the expected changes.  Smart ones even plan for unforseen contingincies.  This is partly why I tell all my clients to consult with a financial planner.  I may give them advice about a particular home, but I am not qualified to help them plan their "big picture."   If their financial planner says that they really can only afford a home that costs xxx or less, due to the fact they are planning junior's education and the purchase of their pleasure boat, then that is what I want for them.  I don't want to go just by what the bank prequalifies them on.  If they go with the max, they may also have to cut back on meals out, going to the movies, etc...all things that they might not think about on their own.

The consumer needs to get the advice from the proper professionals, but then they need to act accordingly.  Too many times people get into trouble because they didn't follow the words of their advisors.

There is one thing I can think of that is better than getting good advice:  following it. 


Mar 27, 2007 08:16 AM
Marc Blasi
Palm Beach Gardens, FL

Hi Brian-

We just need to make sure we explain everything - completely open, nothing hidden.

I never assume a Client understands everything -

Once I'm done explaining, I ask them to explain the Loan back to me.

I've been shocked at some of the answers I've gotten!  But then you have a chance to correct any misunderstandings.

Mar 27, 2007 11:26 AM
Rich Schiffer
Swarthmore, PA
Referral Agent, e-PRO

Marc, that is a great strategy!  I use a similar tactic when I am talking to my 3-year old twins while they are engrossed in watching something on TV...

"Boys, when this show is over, I want you to go brush your teeth, and get ready for bed." 
(Blank stares, eyes transfixed on Elmo) 
"Boys, did you hear me?" 
(Slight nods only, still staring at TV.)
(I stand in front of the TV.)
"What did I ask you boys to do."
(They lean left and right, trying to see around me) 
One of them says, "We will get ready for bed after this.  Now move, please. OK, Daddy?"

At least I know they understood.  If they say, "I don't know" then I havve to turn off the TV, and tell them again, making sure their eye contact is on me...

I don't suggest treating your clients like 3-year olds, but sometime the psychology is strikingly similar...

Mar 28, 2007 01:03 AM