A few years back, when home prices were soaring and creative mortgages came on the scene, I sneered. I thought, these people are so selfish, and so ignorant! Interest only loans? You've got to be kidding me! 0% down? What are you thinking?
It's not as if I was well off, or even had a sound financial portfolio. But I figured, if you don't understand how a mortgage works and sign on the dotted line without understanding what's in the document, you deserve whatever comes your way, you selfish dummy.
Well!
The closing of the house we just purchased finally went through yesterday. After I breathed an enormous sigh of relief (don't ask, long contract with lots of drama), I reflected on the financial transaction that had taken place. My husband worked as a senior manager in a bank for almost a decade. We both have PhDs. You'd think if anyone wouldn't make a mistake, it'd be us. Actually, there weren't any mistakes at the end of the day. However...
In these last few days coming to closing, the performance of professionals in the financial industry did not impress us. It took five business days for them to produce a balance sheet for closing that didn't have errors. And what's worse than this taking the amount of time it did is the fact that we, not the professionals, were the ones who found most the errors. During the five days, at least three different people from the loaning institution or the title company (doing the closing) assured us that there were no errors. Errors totaling upwards to $5,000. How did we find these errors? Well, like I said, my husband was a banker in a former life. Several hours of pouring over the numbers, inquiring about the correct amounts for taxes, calculating and recalculating prorated amounts, and keeping a careful accounting of every single amount that was escrowed in every direction imaginable turned out to be worth his time. I'll be clear: I was not ME who found the errors. I would no doubt have overpaid on some amount or forgotten some amount that should be credited to me. In fact, not only WOULD I have done this, I DID do this when I sold my house two months ago.
When I sold my home out of state a couple months ago, I reviewed the closing statement carefully. I went through every line. I checked every calculation. I checked with the realtor, I checked with the mortgage holder, I checked with the cooperative resale manager, I checked with the attorney at the closing office. And when I walked out of that closing, I was happy as a clam. It was not until six hours later, when I was already 200 miles away on my way back to Michigan, that I realized my error. We closed on the 26th of the month and I had already paid for the entire monthly fee to the housing cooperative. The buyer was supposed to have reimbursed me the prorated amount for the remaining days in the month. I completely forgot about it and I never got my money. So I basically donated my fee to the buyer.
Duh.
Altogether this leads me to conclude that I most certainly should rethink my smug haughtiness of pre-realty dealings. Does it follow that a person deserves what they get for entering into a mortgage contract or real estate sales contract unfavorable to them? Is it always the case that the contractee should be held 100% responsible for the less than favorable treatment they may receive at the negotiation table? Should an individual necessarily be savvy enough to read legal documents and convoluted balance sheets and city and county tax codes, or rich enough to pay all the professionals needed to represent them in deciphering all this information, in order to realize the dream of home ownership?
In my recent experience, those whose job it was to make sure all the i's were dotted and t's were crossed essentially did their job poorly. The institutions and organizations that these professional represent have ethical and sound practices. Now I ask you, what do you think would have happened in a circumstance where the professionals were not so inclined to perform their duties ethically? What if they worked for a bank that had concocted the very product they were selling so it make them a lot of money if peddled to just the right naïve customers?
So I've moved into the camp of those who yell "Save Our Homes!" I didn't lose my home, I didn't fall behind on the payments, and I survived the housing bubble with my credit intact. But it could just as easily have happened otherwise. In fact, it did happen otherwise for millions of people. This is one in which I now believe we must keep our eyes focused firmly on main street and screw wall street.
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