The XBroker

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 ;)

Master of the not so obvious…

FTC study finds mortgage disclosure forms confusing.

I need to be a little more conscious of what I consider the ‘duh’ factor in some 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 mortgage IQ of the test pool (and probably 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 addendums for ARM’s and ‘exotic’ programs.) 
  

Improved disclosure methods are a step in the right direction, but it’ll probably be years before these prototypes or versions thereof actually make their way into an updated RESPA…Thick bureaucratic red duct tape will see to that.  Ironically, these proposed changes are advertised as measures to educate and thus protect the consumer…which is the same as saying they’re created to disarm the mortgage professional. 

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