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Is Our Economy Suffering Because People Were Too Stupid To Read Their Home Loans?

Mesothelioma causes, treatment and diagnosis discussion

Is Our Economy Suffering Because People Were Too Stupid To Read Their Home Loans?

Postby dyvyr » Mon Apr 10, 2017 11:36 am

I don't think stupidity is the reason.
I actually don't think the fine print is the only reason, but to address the fine print question"

A buyer goes through a stressful escrow period, committing to say 30 years of debt and huge monthly payments.
A normal escrow period is 30 to 45 days.
So lets say the buyer has 30 days.
During that time, he (she) must shop for a lender, apply for a loan, provide in depth paperwork, have the home inspected, maybe by a pest inspector, a home inspector, a roof inspector, a septic inspector, a structural engineer, a surveyor, a mold inspector, an asbestos inspector, a radon inspector - depending on what is initially discovered.
Any repairs or adjustments have to be negotiated during escrow.
The buyer has to review the title report and make sure the home is indeed on the correct parcel.
That there are no liens, or unacceptable easements, no zoning conflicts, no code violations....Then the buyer has to weigh all of the findings of these inspections and decide if this home is the right one.
all the while, the buyer is likely working to keep income happening.
Hopefully, lots of income because none of these inspections come cheap.
The costs are piling up daily.
The buyer also has to come up with - usually, at least 10% down payment and often 20%.
Also, the buyer has to cover title and escrow fees, and insurance.
And hire movers, pack a lifetime of "stuff", find new schools for the children, maybe train at a new job (In which case the loan is even more difficult to obtain).

During this time, the lender will provide the buyer with a general idea of the loan, subject to many conditions.
Finally, escrow docs are ready, as well as loan docs and the buyer goes to the title company.
Often, this happens at the very last minute with the seller threatening to cancel the deal, or the loan docs ready to expire.
At the title company, the buyer is met with one or two stacks of loan documents, each over thirty pages, possibly 50 pages each.
The escrow officer gives a general explanation of the "boiler plate' details and surely will go into more detail if asked.
He or she may not even know what each page actually means offhand without stopping to really consider.
The docs are just emailed or fed exxed or faxed to the title company and prepared for signing.
When it comes to the fine details of the loan, these are things that have never been fully explained to the buyer (despite disclosure laws) due to the final loan details not being solidified prior to closing.
At this moment, when the buyer sees these details and says "wait a minute, I never agreed to this.
What if I refuse to sign this?" The answer is often "then you can not buy the house." I know.
I have seen it happen.
It is not always the case.
But it does happen.
And the tremendous pressure, the last minute unveiling of the documents, the difficult to understand wording all contribute to the buyer just caving in and signing.
Seriously, the wording sounds like an English courtroom scene.

This moment is like asking someone who's loved one is being prepared for emergency surgery to sign admission papers prior to treatment.
Granted, no life is at stake, but the emotional pressure is phenomenal.

If we want real reform in loans, I think the buyer should have three days to consider the final loan docs before signing instead of 30 minutes give or take to sign about 50 pages of serious legal commitments.

I believe the law in some states is that the buyer is entitled to 24 hours to review the docs before signing, but in my experience, that was never the case.
More often than not, loan docs came in with hours to spare before the big threat of the loan expiring.
A buyer never even saw the docs before the signing appointment.
If a buyer pushed, often, the loan could be extended, but most buyers do not know this.
They are truly pressured.
Not by escrow officers, but by the timing, the underwriters, by needing to get back to work so they dont lose their jobs from all this extreme distraction and often by the sellers clamoring to close the deal.

The whole thing is ridiculously buyer unfriendly and needs to be redesigned so that a buyer really, truly understands beforehand.
In an escrow, there is timing for everything, including loan disclosure.
But there should be a loan mediator involved to make sure the buyer really understands the terms.
The mediator should have no affiliation with a lender, realtor, seller, buyer or title company.

Oh, yes, some will say, there are already laws in place to protect buyers.
Disclosure laws.
Yes, there are.
Ever watch cop tv shows? The ones where they are required to mirandize a suspect? But only if the suspect is a suspect, right? So they can ask them all the questions they want as a witness without reading them their rights.
Until they SUSPECT them.
Well, isn't that handy? I don't know how true this tv stuff is, but you get the idea.
- darn, I ran out of room - lucky you!
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Is Our Economy Suffering Because People Were Too Stupid To Read Their Home Loans?

Postby Ludano » Mon Apr 10, 2017 11:37 am

Yea pretty much the faulty loans being handed out and the predator lenders, besides the fact that people try to live way beyond their means when they don't deserve to because they haven't worked hard to earn money that people who really deserve it should get.
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Is Our Economy Suffering Because People Were Too Stupid To Read Their Home Loans?

Postby Botulf » Mon Apr 10, 2017 11:38 am

No, put like that it is not racist at all. However it seems in this country that you cannot mention anything that is seen as being politically sensitive without being labelled as racist - so that is where the school was coming from. They are wrong - but it's the wooly liberals and the current government which have allowed this to escalate. Now most people are scared of even identifying a race for fear of being told it was irrelevant to say the nationality/race of a person!
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Is Our Economy Suffering Because People Were Too Stupid To Read Their Home Loans?

Postby Adika » Mon Apr 10, 2017 11:40 am

in the years leading to 1929 they did the same thing to people.
people were given credit to buy stocks.
so ordernary people got rich with no investment.
this iS never sustainable in large numbers....in the years leading to 2008 people were given 80/20 credit (no money down) to buy houses (a form of a stock) and well the same thing happend. CRASH!!!

also, most here blame those who took out the loans for this huge fiasco....they were not the real problem: banks knew who they were lending to.
why give money to people who will not be able to pay back??? why give out so many of those loans??? its 99% the banks fault.

BANKS: dont loan money to people who can't pay. especially in large numbers....if you do it again this will happen again.
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Is Our Economy Suffering Because People Were Too Stupid To Read Their Home Loans?

Postby Nario » Mon Apr 10, 2017 11:41 am

Exactly, we have too many cry babies concerning there home loans. They want to blame Bush but you stated it perfectly they were to lazy to read there mortgage paperwork and Americans are partly responsible for the financial mess our country is in. Yes I have a mortgage and no I wasn't dumb enough to get an ARM loan.
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Is Our Economy Suffering Because People Were Too Stupid To Read Their Home Loans?

Postby Konstanz » Mon Apr 10, 2017 11:48 am

Im sorry but there's alot more to It then you seem to know,

alot of people are loosing there homes with good loans to due to loss of a job, or other reasons, Due to the housing market construction has gone nowhere, I worked 6 days a week for sometimes 14 hours a day, then all of a sudden Im down to 1 day a week and five hours that day, since there is no building going on, so don't just blame people for getting crappy loans, and have you ever really read mortgage papers and understand everything about them,

alot of the mortgage brokers would tell people anything to make a sale, and the chance at a dream home for your wife and children is hard to pass up.
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Is Our Economy Suffering Because People Were Too Stupid To Read Their Home Loans?

Postby Eldred » Mon Apr 10, 2017 11:50 am

In part however it was the government that had a hand in this too. Mostly dems since Jimmy Carter(the worst pres. ever unless Obama gets in)started this in 1977 with the CRA. Bill Clinton expanded the bill and basically forced banks to lend to people who never should have gotten homes. The dems have defended Fannie and Freddie time and time again. ACORN strong armed banks with intintimidation fear,and humiliation tactics.

Bush warned Congress,they did nothing,McCain warned congress then tried to get a bill passed that would have put a stop to this train wreck,congress didn't listen. Especially the dems who just kept lining their pockets with Fannie and Freddie money,accused inspectors of racism and lynching because they brought to light Franklin Raines unethical practices of cooking the books. Franklin Raines is a man who is on Obama's housing board collected 90 million dollars in 6 yrs. from Frannie while Frannie showed him making around 1.6 million a year.
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Is Our Economy Suffering Because People Were Too Stupid To Read Their Home Loans?

Postby Bodua » Mon Apr 10, 2017 11:51 am

our economy is suffering because of the greedy *** rich this was not only home loans but credit card debt and car loans most people lost their homes because of the adjustable rates they had no idea their jobs would go out and also in all fairness i know teachers and nurses that works with me lost their house these was not stupid people i feel blessed i bought my land then had my house built by my brother and farther who are contractors my house is paid in full but there are good people that got caught up in this .
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Is Our Economy Suffering Because People Were Too Stupid To Read Their Home Loans?

Postby MacBean » Mon Apr 10, 2017 11:52 am

No, although it didn't help.

The bailout ( in simple terms) is because of the deregulation ( by 3 Republicans, Gramm-Leach-Bliley Act of 1999) that allowed commerical banking and insurance companies to buy out smaller private banking and mortgage companies.
This act overrode the previous Glass-Steagall Act of 1933, which prevented this from happening.
Then, these larger lenders bought up the mortgages for more than they were worth in the first place, and never got paid for most of them.
Image an insurance company that never collects premiums but still has to pay out for claims.
The bulk of this was cause because the larger, commercial banks were too stupid to read the their deals.
They paid way more than the mortgages were worth.
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Is Our Economy Suffering Because People Were Too Stupid To Read Their Home Loans?

Postby mariner36 » Mon Apr 10, 2017 11:57 am

No, The economy is in the shape it is in because during the past thirty years the political parties have sold the political process to the highest bidder. The candidates are chosen not by the people but by which one will get financial backing by the corporation. No voter or group of voters can come anywhere near the monetary vote of a small number of executive running the corporations and it is these few powerful and moneyed people that out vote all of the ordinary citizens in choosing who will run and who will have the money for the propaganda to convince the people to vote for their candidate. No one gains a powerful elected office without the enormous financial backing of a very small number of corporate executives. The laws that use to protect the people from the robber barons has been systematically been striped away in the name of trickle down economics. Almost every state has laws on the books that make usury a criminal offense and required these corporations to abide by the laws of the states in which the buyer lived. These laws were bypassed by the representatives of the corporations. Now instead of knowing the law of the state in which the buyer lives you must now know the law of the state that the corporation is headquartered in and the corporations moved to the states with lax consumer protection laws. So although the state the buyer lives in still has a law on the books that makes charging more than say 10% interest on a loan a criminal offence the corporations can now charge 36%.The law of the state required that the corporation had to face judicial review of the contracts they made but now the corporations can now require that disputes go to arbitration instead and the corporation hires the arbitrator. the decision of the arbitrator does not have to be ruled either by law or by president so in a dozen identical cases can and will result in a dozen differing decisions. In the states the courts decision was subject to appeal to ensure the decision was both legal and fair. arbitration has no appeal.

This continues endlessly. The election process was sold by the political parties and bought by the corporations. There are now virtually no laws to protect the people because the laws were rewritten by the politicians to protect their financial backers instead of the people.It did not matter whether the people read the contracts they were signing because they could not be expected to know the law of a state they do not live in that was chosen by the corporations specifically because of its lax consumer protection laws. The present mess the economy is in now belong totally to the greed of the corporation and the get reelected at all cost politicians that changed the laws to give the entire economy to the 1 or 2 percent of those hoarding every cent they can get their hands on while the rest of us live on the same income we were getting 30 years ago while the cost of living went through the roof.
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