Does The Average Person Understand Their Own Mortgage?

  The average person still to this day has no clue as to how obtaining a mortgage works, I mean the nuts and bolts of the deal.  It seems that 95% of people who ask for mortgage advise ask their friends and family members and not mortgage professionals.  I have spoken with many people from the consumers to underwriters and everyone in between and still find it odd that people think what they want to think right or wrong.  I have outlined in earlier posting that there is no difference between and bank loan officer and a broker loan officer today.  The average person still thinks that it was broker’s that are to blame for the mortgage meltdown.  Well broker’s do have there share of the blame but so do bank’s, underwriter’s, loan processer’s, bank loan officers, real estate agents, wall street, every 401K that has a real estate component, our own Government and every home owner that agreed to take on a risky mortgage.

   The media rolls out people almost daily to show yet another family that is losing their home.  All of this negative news begins to wear on you and now that we have had a steady diet of it for roughly three years we have begun to think differently.  Some of us now, for whatever reason, think that the Federal Government should fix this.  Well they should fix what they can but they can not provide housing for people.  This is the old story of give a man a fish today and he eats today.  Teach him how to fish and he eats for a lifetime. 

  Here is a good example of how the media is used to confuse people in my opinion.  Those of you that live in California have seen the countless TV ads for Governor and Senator.  My political point here is this; much like the lack of how a mortgage is constructed in the eyes of the public is much like the Senate race is going in California.  One candidate shipped jobs out of the country and bought jets.  Has anyone bothered to ask why the jobs were sent?  I do not mean the lead by the nose emotional answer but really got the details as to why it was done.  The answer is clear but we do not want to face it.  It is Government fees, tax burden, regulations, permits, licensing or whatever else you want to call it.  Has anyone given any thought to the new 3.8% sales tax that is coming in January 2011 to all home sales?  It is for healthcare.  The same healthcare that 70% of us did not want….imagine that!  Is this going to help home sales?    

  All CEO’s first job priority is to make the company that they are working for the most profitable as possible.  And for those of you that say profits before jobs well you are damm right!  I would love to see any of these people run their own company for a while and then see what they have to say.  This sense of entitlement is what is hurting us all today.  If we all do our part then everyone will benefit.  The system is not perfect and some will work harder than others and if they choose to do so then they should be rewarded for it.  Our system allows for anyone to earn more money for their hard work and if you are not willing to work more than someone who does then you get what you get.    

  Many people agreed to take on home mortgages that were ticking time bombs and they only heard what they wanted to hear.  The odd thing is that as time goes on we are finding out the truth about these time bombs, which is most of these mortgages were done by bank loan officers.  Even today there is a bank in America that I spoke to that jumped out of the stage a tried to put a big citi sells job on me before I chased him away.  And that is “our APR is the same as our rate.”  Well add in the SRP and the APR is unbelievable.  And yes all of this was done to benefit the consumer…..or was it? 

  Do not take my word for it spent some time and look it up.  Here is a head start but please do not stop here – http://www.bankersonline.com/tools/georgia_worksheet.pdf.  Where is the SRP?  We all know it but we choose not to face it.  The fact is the higher the rate on the mortgage note the more money can be made when the bank sales the loan.  All banks sale their loans or plan to sale them at some point.  If they did not then they would not use Fannie or Freddie guidelines. 

  There are a few banks that portfolio their loan and these loans can still be sold, but not at the profit margins that the banks are making today.  If you are looking for a loan ask a loan officer to factor in the SRP into the APR and see what happens.  Most will tell you that SRP is not factored into the origination cost.  While if is not part of the origination cost then how do they know what rate to offer?      

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