AgentMortgage

Mortgage reform falls short on disclosures

Some are nonsensical and do nothing to help borrowers

The real estate event of the summer
Connect with other top producing agents at Connect SF, Aug 7-11, 2017

The existing system of mortgage disclosures in the U.S. has long been a disgrace. Borrowers are inundated with garbage disclosures and often the few pieces of critical information they need are either not there or concealed by the garbage. As an illustration, a large proportion of the consumers who took option ARMs (adjustable-rate mortgages) during the go-go years leading to the crisis believed that the initial interest rate, in many cases as low as 1 percent, held for five years. In fact, that rate was good for only the first month. Borrowers taking option ARMs received a booklet about ARMs in general, a description of all ARM programs in which they expressed an interest, and historical or worst-case examples of how ARMs work. But the one piece of information they needed to avoid a horrendous mistake was not there. The default rate on option ARMs today is horrendous, and it is expected to be higher next year. Too many cooks: A major reason why government-mandated mort...