Foreclosures on the rise

A report came out today that said foreclosures were up 93% over last year. 93%!!! That's scary. Now I have a beef of this on both accounts. Many people will take the old school approach and say - well it is the borrower's fault - they should have known what they got themselves into before they signed anything.

Well being someone who is in this industry, I can tell you with certainly that that is a load of crap. Have you ever seen the documentation a loan officer puts in front of you to sign - not only for closing but prior to? Do you know how long it would take one to read and understand all the legalese?

Does a borrower understand what basis points are, how much the interest rate truly is for and what it means to have 2% plus prime? What is the prime rate? How can one find that number? What fees are paid to the broker, the lender, why does the appraisal have to be paid for up front and outside of the loan if in fact the rest of the settlement services can be included in the price of the loan? When will the loan reset? How much really does that equate to when it adjusts? Why would I have a prepayment penalty and how much is it? What does negative amortization mean? What is escrow? Impounds? How does Mortgage Insurance benefit me, do I need it and can I get out of it? What is RESPA? What is a kickback? Why is there 200 pages of crap I have to sign?

Is anyone lost yet? And that was basically the layman's terms I used. And really, what happens if a borrower objects to something in the document? It's not as if the bank is going to alter the language for the consumer to satisfy them, more like - if you don't like it then go somewhere else. meanwhile the borrower just wants the house.

SO I don't feel the issue is primarily on the side of the buyer and it is "buyer beware". How the heck is a buyer supposed to beware when the system is setup against the buyer in the first place......

And no the government should not be bailing out all these lenders either. Part of the irresponsiblity that the lender had getting wrapped up in too much greed and not enough fiscal responsibility. They should not be rewarded for bad management.