OK Doomers, is anyone else incensed by this comment by Senator Schumer today? Schumer, discussing his 3-step plan to address rising foreclosures said:
There’s a lot of deception that goes on and you can’t expect average folks to read the fine print and understand. It’s up to the mortgage broker. It’s up to the lender to tell them what is wrong.
I’m sorry Senator, but I couldn’t disagree more. I can see the benefit of having the fine print written more clearly, or perhaps people should be encouraged to avail themselves of legal counsel more often. However, what borrowers really need is for their parents to do like mine did and teach them, "DON’T SIGN ANYTHING YOU DON’T UNDERSTAND."
What happens to contract law in this country if we can’t expect average folks to be responsible for what they sign?
[If you want to watch the video, you can see it here.]
That’s right, Twist!!!
What sort of a society and culture do we want? I think we ourselves shape it through our expectations of others and, most important, of ourselves.
If the Democrats are not careful they will lose the default position they enjoy as “the only potential leaders out there.”
Let’s see, what else can we NOT expect…
…we cannot expect going into a country as liberators and “read the fine print” about what it might require afterwards…
…we cannot expect to use fossil fuels like binging drunkards and “read the fine print” about the effects on our environment…
…we cannot expect to build infrastructure and “read the fine print” about how roads and bridges need fixing every decade or so…
…we cannot expect to expand programs for retirement and medical benefits while cutting taxes and “read the fine print” about how that might economically devestate our grandchildren…
…we cannot expect to interfere with other countries’ political processes and military challenges and “read the fine print” about the terrorism and other blowback that results…
…we cannot expect to water down public education investment and “read the fine print” about its effect on US competitiveness and civility…
I typically like Schumer but are politicians now setting standards for Americans and America that are no higher than if we were a banana republic? Is that our new bar?
Yes, it’s hard to be an adult, but I humbly suggest that we get on with it.
Twist,
I think the problem here is an overreaction on the part of Schumer. He is a typical patronizing eastern liberal (next door state to me, so I see alot of his posturings)trying to help people when they are hurting and not before the fact. He is reacting to the lack of oversight from the administration through to the Fed and banking in general and the fact that the truth in lending act was ignored in many cases where bait and switch was used at the last minute. He means well, but it is too late, the horse is out of the barn.
Apparently rules are made to be broken.
http://money.cnn.com/2007/08/24/magazines/fortune/eavis_citigroup.fortune/index.htm?postversion=2007082415
EW YORK (Fortune) — In a clear sign that the credit crunch is still affecting the nation’s largest financial institutions, the Federal Reserve agreed this week to bend key banking regulations to help out Citigroup (Charts, Fortune 500) and Bank of America (Charts, Fortune 500), according to documents posted Friday on the Fed’s web site.
The Aug. 20 letters from the Fed to Citigroup and Bank of America state that the Fed, which regulates large parts of the U.S. financial system, has agreed to exempt both banks from rules that effectively limit the amount of lending that their federally-insured banks can do with their brokerage affiliates. The exemption, which is temporary, means, for example, that Citigroup’s Citibank entity can substantially increase funding to Citigroup Global Markets, its brokerage subsidiary. Citigroup and Bank of America requested the exemptions, according to the letters, to provide liquidity to those holding mortgage loans, mortgage-backed securities, and other securities.
metro -
I’ve taken Mr. Eavis very seriously ever since he was among the first to point out the FIN 140 problems in Fannie’s off-balance-sheet deals in “Fannie Mae’s Trust Fund Troubles” (April 6, 2005). In this case, the story appears to be that the “largely symbolic” march of the Four Little Piggies” to the Discount Window at $500 million each was anything but symbolic for one or two of the piggies.
“DON’T SIGN ANYTHING YOU DON’T UNDERSTAND.”
I’ve never ever read or understood all the documents at any closing. I’ve relied on attorneys. So, I have signed things that I didn’t understand.
In fact, there’s no other way. The time constraints at a closing prevent a full and complete reading of the closing documents, even by the attorney(s).
While I agree in principle with “DON’T SIGN ANYTHING YOU DON’T UNDERSTAND,” there but for the grace of God go I.
twist, have you ever clicked on “I Accept” after not fully reading and understanding every paragraph in the EULA for software?
I have to agree with NVMIKE,
An attorney is your insurance policy when you buy or sell a house. They are there to make sure you do not make any mistakes.
NVMike-
It may sound like splitting hairs, but there is understand, and understand. I always click the “accept” button on the advice of my son, who owns a software development company. I’ve never really understood his explanation of “why,” but I trust him to keep me out of trouble. I also trust my attorney to read things and keep me out of trouble. I lived in Japan for several years, but I only read Japanese on about a first grade level. Mr. Twist however, reads Japanese well- I signed documents on his recommendation. I trust him to also keep me out of trouble.
My point is, I don’t have to understand all the jargon to understand what I’m signing. I can have it explained to me. Personally, I’d much rather have the explanation come from someone that’s on my side- not the counterparty.
It’s true I’ve signed all kinds of agreements with everyone from auto dealers to cell phone providers. I haven’t had an attorney review those documents, and I’ve had reason to regret on occasion not reviewing them more closely. I blame myself however. As long as the contract is legally enforceable, I am honor bound to abide by it.
A contract cuts two ways- and I like being able to hold others to their obligations that they make to me. What good is a contract to either one of us if either of us can say, “Sorry I didn’t read it or understand it, so I shouldn’t be obligated to do what I said I would?”
re: metroplexual, #6
I think you missed my point: even an attorney cannot possibly read all the closing documents in the supplied time.
Can anyone here or any attorney read and understand 50 pages worth of purchase and lending contracts in 30 minutes?
I don’t think so.
At the closing table, even the best attorney will skim, briefly summarize and assume the lender(s) and agent(s) are honest, ethical, scrupulous professionals.
The closing process provides a wide opening for fraud that has been exploited in recent years by dishonest lenders and agents who saw their chance to fleece buyers and took it.
I don’t know what the best solution is – perhaps a mandatory 24 hour period to review all documents? – I only know that the loophole is there and it has been exploited in recent years by fraudsters.
Actually NVmike,
My attorney has seen the forms hundreds of times and they are mostly standard stuff that is required at local and state levels. So if your attorney is worth their expense they should be knowledgable of what is normal processing of documents and when it differs. What you are paying them for is to point out when there is something out of the ordinary, like a change in terms.
Some of what I have read recently regarding the subprimers and AltA folks is that they had loans switched on them at the last minute. Truth in lending requres a basic summary of the loan costs and terms, not a jargon filled verbose document that is written in legalese.
Why does a closing have only 30 minutes to finish?
Is there a law I don’t know about?
If I wanted to spend 3 hours looking over my closing documents, who’s going to stop me? & how?
Why are we comparing a contract to borrow half a million dollars over 30 years with a “Click Me” button on a screen for a program we might use for ten minutes?
Even if my lawyer is too busy to go over all the documents that I will have to live with for the next 20, 30, or 40 years, I don’t think it is too much to ask him/her to give me a few hours to go over the documents and understand them at my leisure. Why can’t I grab the documents, go to the library and make sure I understand what I am getting into?
I don’t think a couple-of-hours investment is a very big deal compared to something I am getting into for the next 20,30,40 years.
I have always requested a copy of the closing docs 48 hours in advance of signing. They will belly ache about it and say it is impossible but then I tell them if they don’t closing will take 8 hours because I am going to read everything and double check all the math before signing.
When you are thinking, “I’m gonna make $100,000 on this thing in the next three months”, who needs to read anything?
BTW, I have found math mistakes on the closing docs.
Twist,
Schumer is a guy who got 1600 on his SATs so he thinks he is smarter than the rest of us + therefore, knows what is in our best interest. He is the typical liberal.
He is the same Schumer who years ago want to regulate cereal prices bcs they “were out of control.” In his mind, there is ALWAYS a role for the govt bcs we regular folks just can’t think for ourselves – certainly not as clearly as he can!
BTW, to NVMike and others, yes, we all may have clicked the “I accept” button w/o reading it — the key point is we are RESPONSIBLE for our actions. Everyone who signs a mortgage doc has 3 days to review (or have a lawyer review) it and they can back out. Furthermore, they can (as I have) insist the docs be forwarded to them in advance for their review. Or, they can just take their sweet time at signing + refuse to sign if they are pushed too hard.
People have to be responsible when they make what for most is the single largest purchase of their life.
schumer is a man who was elected for public office in 1974 and HAS NEVER HELD A REAL JOB. he, like all liberals, wants to save you from yourself with the money of those who take risks and work hard.
he is a pathetic joke who wouldn’t get elected dog catcher outside of the northeast and san francisco.
Agree and disagree twist.. I think that as others have pointed out, it’s hard to understand some of the more complex products. Although, if going with one, some due diligence and research is appropriate.
For those without net access, an attorney would probably be a good bet, if not a very trusted real estate professional to at least help point you in the right direction so you can ask the questions.
I think a lot of this is “don’t look so it won’t sink in” mentality where you know you’re going into tricky water, but you think that if you hurry up and sign without too much thought it will all just go away and get better.
It’s like buying a car – they get you so used to the “what’s my monthly payment” thinking, that you forget to ask about the actual loan amount..
Unfortunately life holds no guarantees. Mr. Twist and I once purchased a home near Albany, NY. There were three attorneys present, ours, the sellers and the banks. We go to sign the docs, and I discover that although my name is on the loan docs, only Mr. Twist’s name was going to appear on the deed.
I complained to my attorney, who said to just sign everything, he’d have his secretary fix it when he got back to the office. It didn’t happen.
I now have a policy of insisting on seeing the docs in advance, reading them through carefully at closing [I had a doc changed on me once and I didn't notice- I won't do that again.]and I won’t arrange my schedule so that the move happens fifteen minutes after closing- I need time to walk away and redo the docs if anything is wrong.
I’m not saying it all should be on the buyer- I’m all for prosecuting predatory lenders and those that use “bait-and-switch” tactics. I’ve talked to people who said they didn’t read their docs at all before they signed them though- then complained when they got shafted- and personal responsibility needs to figure in here somewhere.
“The most dangerous place in Washington is between Chuck Schumer and a TV camera.”
—Bob Dole
Agreed with the above. The whole “30 minutes to sign” thing is bunk. Sure, there are fraudsters out there, but I’m willing to bet that the ratio is 1000:1 of get-rich-right-this-second borrowers to fraudulent lenders. Maybe 10,000:1, or more.
My very first Post.
You are expecting people that go an entire year not reading a book…to read a contract. Last year 25% of Americans read zero books.
http://abcnews.go.com/US/wireStory?id=3507898
So yes…that is a LOT to ask.
Snark
My second post…
Remember…the majority of the subprime applicants should of never been in a position to sign loan docs. Lenders, Escrow Officers, and others were lucky they (the applicants) could read the Map Quest directions to the Escrow Office. The web of greed at all levels pushed them through the paper work. This is the crime scene…in the end the Eron type Executives need to be identified and punished.
OK, let me get this straight. Schumer says, “You can’t expect average folks to read the fine print and understand.” The implication is that this assertion is outrageous.
But then twist says, “I don’t have to understand all the jargon to understand what I’m signing.”
That’s inconsistent. And you know what? Many, many borrowers trust the mortgage broker to explain the fine print. Mortgage brokers often have titles such as “loan consultant,” “mortgage planner” or “mortgage consultant” on their business cards. It’s unreasonable to believe that no one should be suckered by brokers’ attempts to pass themselves off as borrowers’ fiduciaries. You can yell all day that consumers should understand who brokers work for, but your message won’t get through to everyone.
Then twist admits that she made the mistake of trusting her attorney regarding the name on the deed.
Then twist admits that “a doc changed on me once and I didn’t notice- I won’t do that again.”
So twist has made at least two mistakes at closing — errors that could have been costly; she doesn’t say whether they were or weren’t. In the event of divorce, the first one could have been a big deal.
But twist thinks that other people shouldn’t make errors. She made some mistakes, sure, but she’s not dumb. Other people who make mistakes, they’re dumb, and they deserve all that’s coming to them. That’s the attitude that she conveys, and it’s self-righteous and it stinks.
To top it off, Evinx says, “Everyone who signs a mortgage doc has 3 days to review (or have a lawyer review) it and they can back out.” That’s absolutely untrue for purchase mortgages. Yet Evinx passes himself or herself off as a knowledgable person who has little empathy for people who make mistakes, or who believe things that are untrue.
Self-righteousness is unattractive, y’all.
Queequeg -
Great handle, were you inspired by “Ex-American Home Mortgage branch manager going to prison” on the sidebar? Starbuck’s, on me, if you’re ever up my way
Lots of confusion about Schumer in the blogoverse today. Tanta had to come to his defense at Calculated Risk.
Well, this time around the realtors used fiduciary as a sales tactic (NAR’s policy is they aren’t). Next cycle, it’s for real.
that’s really unfair & illogical of you.
no one needs to understand legalese to understand the words “prepayment penalty”, “ARM”, & read through an amortization schedule.
for anyone who doesn’t already understand those terms & doesn’t take the time to ask an attorney at the closing, then there are no laws in the world that can protect them from their own stupidity/greed/etc…
& that’s not self-righteousness. it’s what should be common sense.
& yes, the 3 day recession period is not true for purchases, only refinances.
Queequeq-
Yep I wasn’t careful enough. I shouldn’t have gone through with closing when the docs weren’t right. The problem wasn’t my lack of comprehension- it was my lack of care. [By the way, I'm on record as being a reformed idiot- not someone too brilliant to ever make mistakes.]
My attorney should have been more careful- so should I. Ultimately though I came to the conclusion that the signature at the bottom was MINE- it was my responsibility to get it right. I’m not going on national TV to say how I’m a “victim.” I am however, owning up to my mistakes and encouraging others to do the same.
I want to see the crooks prosecuted- but I want to see folks responsible for their actions as well- including me.
I see, Queequeg – people should not be held responsible for the documents they sign. Sure. Let’s think of all the reasons — some people have poor vision so they can’t read the fine print. Others don’t have the education so they cannot be expected to comprehend the docs. Oh yeah – 20% of Americans cannot locate the US on a world map – so surely they do not even know where they are buying a house. Some people are just too busy, they simply don’t have time to read the docs.
And then there are people who are not well versed in written English (immigrants from Albania thru Zambia and all countries in between) so surely they should not be responsible.
Hey Queequeq, why don’t you just list for us those who should be responsible? Is there anyone? Or are we a country of 300 million victims?
This “logic” now must extend to car leases + purchaes, life insurance policies, homeowners policies, auto policies, student loans, credit card documents, bills of lading for deliveries, — where does it end Queequeq?
I will repeat, Truth in Lending requires a dumbed down version of what you sign to be put in plain english.
http://en.wikipedia.org/wiki/Truth_in_Lending_Act
The issue here as I see it is when previously agreed upon terms get changed at the last minute or somehow does not get communicated to the borrower. As I said earlier Schumer means well but is late to the game and a little over the top in his patronizing way.
Twist, I must disagree with you on this point. While you and I have advanced degrees, the vast majority of the populace does not. And even within the educated population I would argue that some people haven’t a clue about how to read such documents. That is generally what the professionals are there for. This does not include the RE agent (who works for the seller), unless they are a buyers agent. That is again why you hire an attorney, which was advice i got from a national broadcast radio show I listened to for many years with Bruce Williams on it. He was a general advice guy on legal issues and business issues. Alot of common sense and not so common, I gained listening to him. He was like having a very competent father for advice.
BTW, he used to be a businessman in my hometown and I knew him remotely for his political work as a mayor in one of my neighboring towns. I think he is still on the air. he has a website using his name
I hope I don’t have the final comment on this thread, but…
disclaimer: I am not a loan officer, mortgage broker, or have any financial or other “ax-to-grind” interest in the mortgage industry.
Here is my three-point plan for addressing the foreclosure situation:
1) The borrower is to blame.
2) It is the borrower’s fault.
3) The problem lies with the borrower.
Waaaah, I was sold a wonky mortgage. Waaah. COME ON, people. Everything in this country is for sale, and everybody knows it. Did, you honestly think, Mr. 2/28, that your $500 monthly payment on that $400,000 mortgage was going to last forever? I contend, with all respect to the senior Senator from New York, that if you don’t have basic math skills, you shouldn’t be privileged enough to own a house. That’s right, home ownership is a privilege, not a right, and if you botched the deal, you don’t deserve your house. Having your mortgage reset isn’t fine print, it’s the first question people should ask their loan officer (who, incidentally, is not your friend, he is in business for himself, DUH). “Am I going to only pay $500 a month for 30 years?” If the answer was yes, litigate or call out the posse. I’m guessing the question was never asked, because you frigging dufuses (dufii?) were tripping all over yourselves at the prospect of “owning” a home. Welcome to America, 2004-style. A mortgage is not ever a lemon-like manufactured product. It is a contract. And the borrower is to blame if he didn’t understand the contract, regardless of the time spent reading the contract.
I yield the remainder of my time back to twist.
Metro-
Don’t get me wrong-I would love to see the docs simplified and written so that mere mortals could comprehend them. I also want to see the crooks accountable for what they are doing.
I would prefer to do business with people who understand the contract they have with me- how can I be sure they will perform as agreed if they don’t know what they’ve agreed to? It is in the best interest of lenders and buyers alike to make the whole closing process more comprehensible.
That said-I may have a Master’s degree, but I have to tell you that one of the most sensible folks I’ve talked to was the hot dog man at Home Depot. He was telling me that he and his wife have a smaller, older house- but he resisted all attempts of people to talk him into taking cash out or “moving up.” He and his wife wanted a comfortable retirement, so they are paying their house off early. I’d be surprised if the guy had much in the way of an advanced education- but he was long on common sense.
I don’t know if he understood every word at closing- but he knew not to buy more home than he can afford. I suspect that piece of knowledge will protect you from 90+% of the things that can go wrong at closing.
I guess I view the situation like an auto wreck where one driver was speeding and the other was making an illegal u-turn. Yeah the speeder was guilty- but should he bear all the blame for the accident?
For me, this boils down to the Golden Rule- If someone signs a contract with me, I’d hope they’d do what it took to understand what it was about, or not sign it. I wouldn’t be real sympathetic if the the other party came back and said, “It had too many big words, I didn’t get it, but I wanted your goods or services, so I signed it.”
That just doesn’t seem like a good excuse to me.
I agree with you completely with everything you just said Twist. My point is by law all of those point are supposed to be simplified in an easy to read format for borrowers. Some of the stuff I read and I am sure you have as well claims that some people were kept ignorant of this.
Metro-
That should fall under predatory practices- I agree that is unacceptable.