True Confessions, Part 2

When we last spoke together (just to you. nobody else.), I wrote on how bad it was talking to homeowners who are in trouble with their mortgages and how the word "foreclosure" comes up in almost every conversation when I talk to new clients looking to refinance. Foreclosure is now a budget strategy for most people because they have no where else to turn. By no fault of their own these troubled homeowners do not have any other options because they now owe more than their house is worth and therefore can't get financing to help bring their payment down.



Because the values here in the Detroit area have plunged so much, most of the people I talk to are upside down, owing much more than their house is worth. So, without a government "bailout" for people who are on the brink of foreclosure, we are going to see a whole bunch of trouble.



And I mean a whole bunch of trouble.



On the other hand....



One of the coolest things I get to do is help first time buyers get financing. I'm not saying that it's fun securing a mortgage payment for these folks for the next 30 years, what I'm saying is that it's satisfying to help people get their part of the American Dream: Home ownership.



While thousands of home owners are struggling to keep their home, we still have people wanting to buy their part of the dream. Because whatever size house they buy, it will be their castle. As a participant of many closings, whether it was my own or a client's, I'm still amazed at the amount of paperwork we need signed. I have never seen so many people sign documents that they have no idea what they are signing. The closer at the table shoves a document towards the buyer, gives a 10 second overview of what the doc is all about, and expects a signature. In the meanwhile, the buyer(s) are confused with all the text on all the docs and are wondering to themselves "Should I be reading all this stuff?"

The most important documents are the mortgage and the note. All other mortgage related documents are either disclosures (CYA) or final editions of documents the buyers signed at application.

I wonder.......Do you think that much of this sub prime loan mess was due to miscommunication at the closing table? And that if the note and the details of note were explained in great detail, instead of being rushed over because of the great amount of closing docs, do you think that buyers with sub prime mortgages would understand what they were getting into?

Well it's too late to wonder.

However....IF...down the road if the housing market gets better (can it get much worse?) and we revert to some "imaginative" mortgage lending again, maybe we can take some extra time at closing to explain what a buyer is really getting into.

Hopefully, it won't scare them right out of the closing.

If you have any comments on this article, I would love to hear what you have to say!

Feel free to comment below.

Thanks for reading!

Dan Tenchall
Great Lakes Mortgage Funding

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dan@glmf.com