FTC study finds mortgage disclosure forms confusing.
Master of the not so obvious…
I need to be a little more conscious of what I consider the ‘duh’ factor in the mortgage news. My initial pass was "Really now…It took a government study of 800+ consumers and a 282 page report to ‘discover’ this? Then I read the "Examples of Respondent Comments on Selected Issues" in the documents appendix, starting on page 195 (in Acrobat Reader), things went from duh to disturbing.
Reading how the test pool interpreted the current Truth in Lending Act and Good Faith Estimate documents demonstrated unequivocally that the mortgage IQ of the status quo is staggeringly low…which has laid fertile ground for potential deception and misinformation by the mortgage professional for over 30 years now. Moral responsibility doesn’t run high in this industry…
The report goes on to suggest ‘Prototype’ disclosures (page 257). Given the current TILA and GFE documents and then shown the prototype (or vice-versa), it’s no surprise the consumer pool was enlightened by the prototype. They are easier to read, because they actually do read, with words, so there’s less room for a mortgage professional to glaze over and/or dance around the hard numbers. However, the new documents still fall short in the quest for greater disclosure and consumer acumen:
The ‘Settlement Service Package section’ needs to be broken down into line item detail.
How taxes and insurance are determined (Reserves Deposited with Lender) needs more explanation/clarification.
Any and all Yield Spread Premium needs to be disclosed, with no consideration if the originating professional is a broker or a banker.
All examples used a 30 Year Fixed product, except one, a ‘10 Year Balloon’. No Adjustable Rate Mortgages were addressed. (The report does mention an intent to produce addendumsfor ARM’s and ‘exotic’ programs.)
The Inman News site and blog are chock full of good information, especially since they picked up some new talent (Joel Burslem) and added other sage contributors like the REBlogChick, Pat Kitano, and the two hardest working guys in the Blogosphere, Joe and Rudy of Sellsius.
Ying-Yang Posts. Brad (Inman) penned two posts: Glass Half Empty and Glass Half Full. Although I wasn’t mentioned in the Capital, Brains, or Passion subsections of the Glass Half Full post, I’m an optimist…He just must not know that I’m a sponsor at Real Estate Connect in San Francisco yet, which certainly takes capital, brains, and passion 
Anywho, good articles reflecting on the paradox between the depreciating real estate market verticals while copious amounts of cash is being invested into real estate related technology. Its a buyers market out there and I’m all in…
Buy low, sell high. It’s such a simple strategy yet few people follow it. Go ask 10 people on the street if they would buy real estate or stock right now and I’ll bet you (if I were a betting man) that at least 7 out of 10 say buy stock…Wrong move. If you’re into the stock market, cash in some of your recent winnings and start buying real estate..it’s on sale to the tune of 30%-40% off. Think I’m joking? Call me (actually email me) and i’ll personally show you a dozen properties that are sitting on the market right now with at least 30% equity in them in the Dallas area.
Why don’t I buy them then? Logical question…Becasue Im one of those guys in the real estate technology arena…How did you think I could show you a dozen properties with that much equity..?
X-Out
