I remember when I prepared to buy my first home in 1997, people said it would be a laborious process. To this day, I cannot figure out what people were referring to as laborious. The mortgage officer provides the list of all documents that need to be submitted. I submitted the documents in 1997. If there were questions, I answered them. If there were glitches, I took care of them expediently. During my closing, figures drastically changed from what was on the original good faith estimate. I interrupted the closing to ask for an explanation. No explanation could be provided. All stakeholders in the room were looking at one another. I announced verbally that no person sitting in the room would get paid if my closing figures didn’t reflect the good faith estimate. Somehow the stakeholders in the room restated my figures back to what was provided on the good faith estimate and I moved into my first new home. My loan was approved and the home buying experience was simple.
Below, I am proposing a solution that involves accountability and responsibility from all three stakeholders involved in the mortgage process.
Proposed solution: Consumer perspective
a) Whether it’s the purchase of a first home or the 20th home, each loan applicant should be required to explain their home loan either verbally or in written form to a third [regulatory] party. The third party will have the final loan documents in hand and will simply ask a series of questions and receive the answers to assure the applicant explicitly understands what they are engaging in.
b) I understand, as the consumer, we are required to provide a lot of personal information. However, I learned a simple principle buying my first home – don’t allow the relationship with the other stakeholders to become too familiar and personal. Keep the entire home-buying process an objective, business relationship.
c) Since the home buying experience is emotional, the person looking for the home should invite two additional, non-related people to review the final home selected and the financial terms of the transaction. These two people should be objective and have a c-o-n-s-i-s-t-e-n-c-y in making sound, wise financial decisions in their own lives.
d) If consumers aren’t responsible to complete the documentation for a new home or foreclosure modification, they have chosen to suffer needlessly. So the banking industry can accurately report to the federal government, they should state the metrics at the beginning of the process. For example, your loan can be modified in a minimum of 30 days or a maximum of 90 days. If you do not complete the requirements on time, you will be reported as part of the American population who had access but chose not to meet the necessary requirements.
e) It’s a fact that almost half of some ethnic groups appear to have poor financial literacy, which should be learned at home. Since it is not, before any consumer receives a loan, mortgage, credit card, gas...