Newsflash: Mortgage Industry Still Broken

I feel really fortunate to have (so far) escaped the fate that a lot of my twenty-something peers have faced in this rough economic climate. I graduated from college in 2007, just one year before the entire economy went down the crapper. Had I decided, like many of my friends, to go straight to graduate school, I probably would still be unemployed.

This whole crisis revolves so heavily around the housing market. Now that I’m in “up to here” with this kind of stuff, I can completely understand how financially illiterate people get suckered in to borrowing more than they can afford. So let me make a bold statement: the mortgage industry has learned nothing from the housing crash of ’08.   (Literally bold, get it?) And now to defend this admittedly safe statement with some experiences that I’ve encountered during my four month tenure as a homeowner.

1. Nobody’s reading the mortgage paperwork.

I can’t tell you how many documents we had to sign, send, resign, and resend because they were magically disappearing.  Before she got fired, the mortgage broker at our bank must’ve moonlighted (moonlit?) as a magician, because she was swell at making herself, and everything we gave her, vanish. At closing we had to sign documents we’d already signed several times. We had to sign paperwork stating that there were smoke and carbon monoxide alarms on every floor knowing full well that there weren’t. Stuff like that.

Because I never met her, I am left only to imagine what my mortgage broker looked like

2. Our loan has already been turned into a mortgage backed security.

By the time our first mortgage payment was due, our original bank had already sold our mortgage to Wells Fargo. We couldn’t even pay it because we didn’t have the new payment info. I understand that debts can be bought and sold, but holy moly!  We try to buy a foreclosed house, no one is capable of filing paperwork. They want to sell a mortgage, suddenly everybody has superhero-speed paper filing capabilities.  We chose another lender over Wells Fargo because we’d found a lower interest rate elsewhere. Then they bought our mortgage even though we got a lower interest rate someplace else. Is it really cheaper for them to do business this way? I welcome an explanation.

I don't get what people think is so complicated about this.

3. The email that I received today.

You don’t have to read the whole thing (below); I’ll sum it up for you.  They’re offering me a home equity loan, even though I have virtually no equity in this house. I’m pretty much an open book, so I’ll put it out there. We have 3.5%  equity plus two mortgage payments. That’s nothing. I may very well be retired by the time we pay off this house as it stands right now. And not only that, but they say that it can be “the key to financing recurring…expenses”  How financially irresponsible is that? Not only would they allow me to borrow what very little money I just gave them, but they’re encouraging me to spend it on reoccurring expenses? Like what, my credit card? If that were honestly my best financial option then I shouldn’t’ve been approved for this loan 6 months ago!

I’m not quite sure how to articulate the unsettled feeling I got opening that email, except to say that this is everything that is wrong with our country.

 


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