Clarifying foggy financial agreements
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Do you think mortgage disclosures convey meaningful loan information to homebuyers?
- No (65%, 44 Votes)
- Yes (35%, 24 Votes)
Total Voters: 68
If you answered “No,” comment below to tell us what’s missing or wrong.
Want to know the first step in creating better-informed consumers? Better disclosures!
Professors at Harvard, New York and Oxford Business Schools examined the results of the Consumer Financial Protection Bureau’s (CFPB) newly required disclosure on credit card statements. They found consumers who received revised credit card statements comparing the effect of making minimum monthly payments to that of making larger monthly payments responded by making larger monthly payments more frequently than those who were not provided with the revised credit card statements. So far, so good.
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About The Author
Sarah Cantino
is lead editor for the Landlords, Tenants and Property Management and Real Estate Property Management books.
Because buyers don’t want to read the documents. Very simple. The “government” is under the impression that all buyers sit around reading these things. They don’t.
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none of my clients understand what they are signing, way too confusing!
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I don’t want to confuse different issues – of course the documents provide the information borrowers NEED to have but like the others mention, they have to actually read it. If they are too confusing it’s up to the agent to educate them, that is if they understand the docs themselves, which is repeated throughout the article.
I can’t believe the author has the audacity to claim that “Disclosures hardly included information beyond the fact that funds were used to buy a home”. If you only read your name and the property address, sure, that’s all you get out of it. Who in their right mind invests hundreds of thousands of dollars on anything at all without reading the fine print? As far as I’m concerned many of these now-dead mortgages were scams from the beginning, get house, get inflated valuation not to long thereafter, remove equity, spend said equity money on other stuff, repeat. It was like running a Ponzi scheme on yourself. Why isn’t anyone talking about investigating the borrowers who took advantage after advantage with nary a thought as to who would be holding the bag in the end?
All this nonsense over the past few years about loans adjusting to dollar amounts that borrowers couldn’t afford? – every Reg Z both initial and at time of funding lays out the scenarios over the out years and does so in a worst case scenario. Never has an old quote been more appropriate – you can lead a horse to water but you can’t make them drink.
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Most folks do not read the fine print. Some folks read everything. Some will even ask you questions. Some folks actually understand what the read. All agents know this.
Personally I think the mortgage loan disclosure statement is about as it’s going to get. Of course it will be revised in the future because someone needs to do it, to keep their job. It summarizes the costs very well and explains the mortgage the best it can.
But, let’s accept the underlying reason for financial disclosure in the first place. Consumers were getting cheated (by their broker, lender, and seller) because they didn’t have the experience or knowledge to get a fair shake. Borrowers, buyers, and renters need our protection. I’m glad they do. If they don’t think so, I take the opportunity to remind them that they do. It’s one of the sales tools I use to justify my existence.
Granted, it takes time to explain disclosures (not just the MLDS); so, let’s accept one other thing. Do you even ask your clients if they would like some explanation about the MLDS, or any other disclosure for that matter? Or do you say, I’ll just leave the MLDS to the lender or mortgage broker to explain. Odds are you do. How many of us can actually explain the disclosures we deal with?
Agents don’t protect their clients and ask if they understand what they have just signed because the agent has an eye on the commission, and at the bottom of it all, really doesn’t care about protecting the client or even doing a thorough job. It takes time to explain disclosures (not just the MLDS) and most agents are too lazy to explain them.
AGENTS UNITE. TAKE IT UPON YOURSELF TO EDUCATE YOUR CLIENT. CARE ABOUT YOUR CLIENT AND GET A PEACEFUL NIGHT’S SLEEP.
geeze, i hope this comment doesn’t have too many spelling errors
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Couple of errors. Line 2… they read. Line 3 as good as.
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Vince: No, the buyers initial those disclosures to get the doc’s, and the wait, done.
Greg: Yes, exactly correct.
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Most people don’t take the time to really read what they are signing an dmost forms are laid out to not be understood.
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