I have to say that if the couple was not informed that their rate could nearly double, and likely would double, and what that rate would be, that the lender was not being forthcoming. Even with gasoline, we’re being told months ahead of time what the shocking gas price will be. With something as important as a mortgage, the borrower SHOULD BE FULLY INFORMED, and that is the lender’s job. I’ve been shaking my head for years at all the promotions for variable rate, low introductory rate, zero down payment mortgages. I don’t feel sympathy for lenders or politicians that mislead us about this. It was one thing when typical household incomes were stable or increased yearly. It is unconscionable now.
I’m sure they were fully informed, and signed anyway.
What we need is a much bigger nanny state to protect stupid people from the results of their stupidity. A much, much bigger nanny state.
>> With something as important as a mortgage, the borrower SHOULD BE FULLY INFORMED, and that is the lenders job.
I have no doubt that the terms of the deal were fully and accurately documented in the contract that the borrower signed. The details may have been in the fine print. But I’m pretty sure there was something to this effect printed in BIG print:
THIS IS A BINDING CONTRACT. READ IT BEFORE YOU SIGN. CONSULT AN ATTORNEY IF YOU HAVE ANY QUESTION ABOUT SIGNING IT.
Are you saying that it is the lender’s job not only to write the contract, but also to read it for the borrower? What else is the lender’s responsibility? Must they draw pictures for the borrower?
I disagree. I cannot make you informed.
I can make information available, I can make sure it's complete, I can avoid tricking you or lying to you, but I cannot make you informed.
Unless there's evidence that the lender somehow failed to disclose something here, then it's the buyer's fault if they are not informed.
It would be highly illegal for a lender to represent a contract as fixed rate, when it is not.
Unless they did that (and the "journalist" her didn't bother to ask that), then it's the borrower's fault that they thought it was fixed-rate.
On the other hand, it's just the "journalist"'s word that they thought this, the video doesn't show her saying it, it's just a voice-over. So how much do you trust THAT?
“With something as important as a mortgage, the borrower SHOULD BE FULLY INFORMED, and that is the lenders job.”
Every time I have ever bought a house or refinanced one there was always at least one sheet you have to sign that explains the rate, amount of payment, the conditions of the loan, and in the case of variable rates, the factors the rate is linked to and the max it can go up and how fast. EVERYTHING WAS DISCLOSED. I’ll bet in 99.99% of these cases the owner signed a similar document.
Exactly. Who *doesn't* know by now that variable rate loans reset at some time in the future?
I notice there are several comments here about the ONE piece of paper in the many, many pieces signed. Kudos to all who are so quick as to catch that ONE piece of paper in the stack of several hundred, you are truly outstanding.
And while all those who are so intelligent that they would NEVER get caught in such a situation are reading this I'd like to offer a little insight of what you, as a superior being, should look out for: I recently sold a house, I acted as my own selling agent. I received a copy of the settlement statement 24 hours before closing, the first time I had ever seen a statement before going to the table to sign, and there were numerous errors on it. The amount of the errors: $3000+ So let the sellers beware too.
Does the lender have to pay for the debtor to go to night school?
Does the lender have to pay for the debtor's counsel?
Does it stop with home lending or extend to auto lending? How about credit cards?
If you meant "fully disclose the terms of the contract" I agree with you. But as for "interpreting" the contract and its ramifications, the debtor needs to set a little money aside for an attorney to explain anything they don't understand.
Adjustable-rate mortgage documents, including the Promissory Notes, are always clearly marked as such. I wonder when the first story will hit the "borrower didn't understand because he/she cannot read English" angle.
Even with gasoline, were being told months ahead of time what the shocking gas price will be.
You are joking of course. Right?