Borat, I’m in no way suggesting that loan officers are not greedy or predatory. Some definitely are. But the nature of aggressive salesmanship is a factor is all businesses. This is similar to the many foolish people who buy cars above MSRP but who is to blame for that? It’s a tough world out there and if you’re stupid you just don’t survive, end of story..I can’t feel sorry for stupid people!
What I am saying is that the consumer who fell for it is the biggest idiot of all and is in no way accepting that responsibility. A VERY big purchase like a home or a refinance requires VERY careful thought and due diligence by the consumer. Apparently this consumer was completely idiotic and signed whatever was presented in front of them after the loan officer finished with the sweet talking.
Secondly, some (not ALL of course!) loan officers in this business are totally inexperienced (never experienced market declines before) and themselves believe that a NegAm can work due to 10-15% annual appreciation offsetting the negative balance. If homeowners have thought the same way by extracting all their equity why can’t LOs think that way too by suggesting NegAms?
FINALLY, I have personally seen a NegAm contract. The DISCLOSURES ARE VERY CLEAR IN SIMPLE TERMS. This is a Fair lending requirement. You can only be excused for your stupidity if you can’t read English, even then you should’ve got a translator before signing. Most of these morons DIDN’T CARE when they signed, they just wanted the lower payments NOW thinking property will appreciate later. So they have nobody to blame BUT THEMSELVES!!!
Predatory sales is not something new, it’s been around since the dawn of man. It’s individual responsibility to research and guage what is good for them.
