From most things bad comes fear, and then well...crap. I'm talking about the latest development in the real estate market; something called the mortgage loan inspection. For about $275 you can have someone literally comb through your loan documents and potentially identify any problem areas, including those be darned predatory lending practices which have been partly to blame for the whole recent credit crisis. After the housing market all but took a dump and as thousands of homeowners face certain foreclosure (including many whom seem to have not understood the meaning of the word variable when used to describe their interest rate, but that's for another day) this would seem like a great idea. In fact, it could even be considered a smart move. It is but one more layer of protection for the potential homebuyer, because essentially if something does go wrong with the loan the homebuyer can point fingers at the inspector for failing to see problems. And why not, right? If you've followed any of the news at all on the subject, and there's been a ton of it, you'd be well aware that there have been lots of underhanded maneuvers and other shenanigans going on in the mortgage industry, and a ton of misinformed (and yes, some gullible) buyers got caught in a fine mess. Having some form of protection against such things may have saved many homebuyers from the frustration and despair they face now.
But here's my problem with that kind of thinking. It implies that people who do underhanded and bad things are free to continue on with their underhanded dealings so long as no one, like say a mortgage loan inspector, will be at the closing table to catch them in the act. It implies that bad contracts are going to be wholly binding heedless of how ridiculous or clearly fuzzy the terms, and that if someone comes before a lender that they determine to be gullible or otherwise uneducated or unprotected, then they (the lenders) have every right to take the buyer for the ride of their life.
We need not be protected by paying someone a fee. That's what we have lawmakers for. That is what we elect our officials to do. We put them in office to secure our interests as Americans. We want them to set forth laws that help to make our lives better. And yes, to provide us some form of protection from things like obvious predatory lending practices. After all this recent turmoil in the credit markets that's exactly what our legislators in the House and Senate should be doing right this very moment; focusing on the problems that got us in this mess and closing the loopholes which made it possible for predatory lending practices to occur at all.
Mortgage documents should be clear, concise and understandable. They must be fair and correct. To be anything less should put the lender, as opposed to the borrower, at risk. At some point people have got to become less agreeable to adding costs to their homeownership experience and stand up and say, if you intentionally try and screw me over and I can ultimately prove it, you are going to be held accountable for it. Enough said. This ridiculous extra inspection will only stick around if we, the consumer, is willing to bear it. I see no reasonable need for it. The law should be clear as well. It should be the only protection we need.
If the contract plays foul it should be moot. If that were the law and the lender was held to that, so would the need for an additional inspection, and additional cost, be moot.
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