Submitted by Jim Anderson, Dec 12, 2007 04:07

Dear Mark,

I agree totally with your comments. A bail out is a bad idea. However, I have a different critical perspective on the problem. I am a lawyer in Massachusetts. During the past few years, I handled precisely two of these adjustable rate mortgage closings. In both cases, I shut down the closing and refused to go forward. In the first closing, the mortgage broker had blatantly lied to the borrower - a man who barely spoke English. She even phoned me at the closing. She essentially admitted her deceit, but asked if I couldn't just "smooth things over." No - I could not. I stopped the closing and gave the man detailed instructions on how to void all aspects of the transaction. In the second such closing, once again the mortgage broker had blatantly lied to the borrowers. She had misrepresented the loan as being 'fixed rate.' She then got on a conference call with the borrowers and myself and argued: "Yes, this is a fixed rate. It's fixed for two years." [before the adjustable clause would kick in.] "That's what is meant by a 'fixed rate' mortgage." This broker had absolutely no shame. She was so furious that I stopped that second closing as well, that she called my employer and the lender's chief office and told them that I "had 'pissed off' the borrower because of my 'rudeness.' And that they had walked out on [me.]" Little did she know that the disgruntled borrowers were sending a Blackberry message simultaneously to my boss and the lender informing them of my gratitude for protecting them and of the fraud perpetrated by the broker.

Besides my experiences, however, I can tell you more about why this bank situation has occurred:

It is BECAUSE of the same Nanny state that is coming to the bail-out that the borrowers thought their deals were legitimate. The Nanny state has so damned many 'consumer protection laws' - and many apply to closings - that the borrowers naturally think they are getting what they bargained for. However, they cannot read the sophisticated documents. Thirty years ago, a refinancing transaction or sale of real estate involved the signing of approximately three documents. It now - because of required consumer protection law statutes - involves at least twenty-five detailed documents [some of which go on for several pages] and in some instances involves up to thirty to forty documents, all written in dense legal language designed [ha-ha] to "educate the consumer." So [pardon me] goddamned much valuable time is spent at closings - sometimes up to two hours on a plain old refinancing mortgage - signing all this 'protection' crap that is totally irrelevant to protecting anybody - that the parties hardly have time to breathe, let alone read the damned paperwork. AND, because so many of these documents have titles such as "Truth in Lending", etc., the borrowers are SURE that the ENTIRE transaction is so thoroughly regulated by Nanny that they can rely on the oral representations made by unscrupulous mortgage brokers.

Over and over I have heard pundits saying, "Hey, they should read the damned documents. They should accept responsibility." Yeah? Well - you absolutely need a law degree to read the 'consumer friendly' documents. Secondly, the sheer volume of paperwork in these closing files is so ridiculous that people finally 'glaze over' after an hour of non-stop signing. People throw away time reading and signing sworn affidavits that literally state that they 'swear' that 'the name they've used on the documents' is the name they actually use when using their name. I have sometimes been required to sign notarized affidavits that I, as attorney, swear that they swore that their names were their own names - despite the fact that I was the notary he took their sworn statement.

The Nanny state has turned closings into such a damned horror show of paperwork and convoluted documents that are headlined with words like "Truth," "Disclosure," etc., that these poor bastards actually think that the really important stuff [i.e. whether or not they've signed on to an adjustable or fixed rate mortgage] MUST be legally regulated as well. Soooo......surely NO one could lie to them about what kind of mortgage they were getting, so they just sign these dozens of documents.

Before we entirely blame the borrowers, we must also cast a hard eye on the idiots in the Capitol and the State Legislatures who are constantly passing more crapola laws requiring more crapola documents to be signed at closings when - in fact - the three documents signed some thirty years ago would do the job very nicely.

Sincerely,

James W. Anderson, Jr.

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