New federal rules for home loans

http://www.latimes.com/classified/realestate/news/la-fi-harney19-2009jul19,0,1179820.story an article about the new federal rules for home loans.

Government is almost always working like a committee designing a horse; it usually comes up with something resembling a camel.

For some reason our politicians are blaming the lack of disclosure for home loans on our mortgage mess. Are you kidding me? Have you bought a new home or taken out a mortgage lately? I would be surprised if there weren’t at least 80 pages of documents to be reviewed and disclosures to understand. Do we need more disclosures?

Do you think most people read and understand the information they already recieve? Not! So instead of trying to simplify the documents and disclosures for the important considerations, the new regulations that go into effect will probably add another 20 pages of disclosures all written in legalize and written in a way that many of us do not understand.

There are only two things that most people care about when they buy their new home:
1) What is the money down?
2) How much a month is it going to cost me?

Borrowers also need to understand if they can pay the loan off early without penalty, if the interest rate is variable and if so what the formula is and how high can it go? And what happens to the home if the borrower can no longer afford the payments and defaults on the loan? But very few borrowers get that far and another 20 pages of documents is not going to get them that understanding.

A big problem we had was that too many borrowers were lying to the banks about their income on their loan applications. But none of the politicians want to talk about this dishonesty. The politicians and media would rather bludgeon the banks and the mortgage companies (who also did plenty of damage) but were not the only culprits in this ongoing drama.

Let’s ask our politicians for more honesty, more simplicity and to get out of lives. And please why not simplify and clean up a few of our existing messes before they create more.