Tuesday, August 21, 2007

Because People Shouldn't Have to Understand Contracts Before Signing

ContraCostaTimes.com - California consumer advocates urge moratorium on foreclosures This is so stupid, it just had to come out of California.
Consumer advocates on Tuesday called for a moratorium on home foreclosures, warning that California is facing a tidal wave of foreclosures over the next year as more homeowners are hit with payment increases brought on by subprime loans and risky mortgages.
No, duh.

So people signed up for mortgages they can't afford, but that isn't their fault, so the state should step in and protect the poor helpless citizen from those eeeevil bankers.

If you can't afford the house you're in with a 15-year standard mortgage, then I don't think you can afford your home. Once you have decided what you can afford, there ARE reasons for using different financing.

But buying the biggest house you can afford based on an interest only loan, or a 30 year loan, or a variable interest rate mortgage with negative amortization (which based on the teaser rate is guaranteed to increase in cost) is NOT a good idea. And if you don't understand what any of this means, you shouldn't be signing a mortgage document without a lawyer explaining it to you.

I blame the Real Estate industry. The banks were just plain stupid. The Real Estate agents knew what they were doing. This isn't the first time that things like variable rate mortgages have been popular. This isn't the first time that people have faced balloon payments they can't afford. In, short, this isn't the first time that real estate agents have sold people houses they can't afford.

If you don't understand contracts, don't sign them.

If you don't understand lending, don't borrow.

If you don't understand anything, move to California; they will recognize your right to be an idiot.

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