Confessions of an Ex-Mortgage Lender

From Businessweek via MSN Money
September 20, 2006 12:00 AM ET
Confessions of an Ex-Mortgage Lender
"The Durham [N.C.]-based nonprofit Center for Responsible Lending estimated in July, 2001, that predatory mortgage lending is currently costing Americans more than $9.1 billion each year."
"...Ted Janusz, who spent an interim period of his career learning the ins and outs of mortgage brokering as a loan officer in Columbus, Ohio, and he'll admit that what is really going on here is a game of subterfuge being played at the expense of borrowers with low credit ratings."
>Click HERE for complete story.

If I'm reading this right, and that's $9.1 billion in 2001, what is the amount that people are being bilked today, given the introduction and common usage since 2001, of so many more risky exotic mortgages?
After you've read this story, read Option ARM's, The other shoe
and see if you don't think that lending industry practices need to be looked at a lot more closely.
A first step in the right direction might be to have a committee (maybe Jimmy Carter could head this one up) come up with a one page boilerplate language exceedingly simple disclosure, in bold print
-THIS IS WHAT YOU ARE AGREEING TO, AN EXPLANATION OF YOUR LOAN TERMS, THE RISKS AND THE COST-
And a requirement that this one page disclosure be given to the consumer when they first apply for the loan with the requirement that they review it, initial each clause and sign at the bottom stating that they fully understand what it is they are agreeing to.
And if at any time up to close of escrow, there are any changes to any of the terms that they initially agreed to, that this same AGREEMENT, now amended to highlight those changes, be presented to them for review, initials and signature.

Yes, while I believe it is the consumers responsibility to fully understand what it is they are agreeing to - have you ever tried to read thru and make sense of a package of loan documents. I also believe that it is the responsibility of the lender to fully explain the terms, costs and risks of the loan. In many cases neither of those things are happening.
As a result many consumers are  ending up with loans that are not what they thought they were. They are either being duped by those in the lending industry that are slick scoundrels and/or they do not take the time to read all the fine print. Instead they are relying on what the lender tells them, and signing the paperwork, not very smart-but true, only to find out that there's a bunch of fine print, and OOPS!,they've agreed to something else, and usually that something else is going to cost them a lot more money.
These important details must be in plain, simple and easy to understand language.