Confusion, Obfuscation, Misdirection or just a plain old Scam?

Blatant scamming by a mortgage professional. I don’t care how the correspondent for the Times reads it, I see it for what it really is: a scam.

This is my opinion, of course—my IMHO—but one based on what I know of this biz in which I work and the many less-than-scrupulous “pros” who’ve been prowling like hyenas these past couple of years.
The article at NYTimes.com focuses on the despicable ARM loan, specifically those short term fixed ARMS (2/28’s being the most notorious) with low teaser rates fixed for a while before a conversion to an adjustable rate. Many, many, many of those loans are adjusting now. Many more will adjust in the fall according to statistics cited in the article.

But, I digress; back to the scam part.

The blatant scamming mortgage slimebag part is the story of the California business consultant who, when contacted by the Times correspondent for a background interview with homeowners with ARM loans, doesn’t even know she has an ARM loan! The Times correspondent received this woman’s name from aforesaid scamming mortgage slimebag when queried as to a list of ARM customers.

Sorry, but I don’t believe the mortgage person for a second when he responds sheepishly that she just didn’t realize the fact she had an ARM not a fixed rate mortgage.

WHAT!?!

How could a business consultant misunderstand something so basic, so important and so apparent in the black & white of the closing documents?

By way of answering that question, I provide the following background:

I heard a story recently from a paralegal who closes loans for banks. The story was of a closing where the borrower was signing docs for an Interest Only ARM loan. The borrower asked the paralegal if what he was reading on the Note was correct because he was told by his mortgage “professional” that he was getting a fixed rate, regular amortizing loan.

When the paralegal acknowledged the truth apparent to the borrower’s own eyes, the mortgage person put his boss on the phone with the paralegal. The boss proceeded to tell the para to “shut the hell up.”

The para was then asked to leave the room. After a fifteen or twenty minute conference behind closed doors between the borrower and the mortgage “pro” the documents were signed and the closing completed. Apparently the mortgage pro convinced the borrower that he was in fact getting a fixed rate loan, NOT an I/O ARM!

What do you think of that? I’d say it is pretty obvious how that business consultant “didn’t realize” she had an ARM loan. She was told by her trusted mortgage advisor that she was signing for a fixed rate loan.

The Times correspondent puts the whole mess down to an “…honest misunderstanding in which the broker believed that he had explained the terms of the loans more clearly than he had.”

Oh, rubbish!

The borrower has her closing documents, including the Note. Did she not ever READ the Note at the closing? Or was she just told, “Sign here, here, here, and HERE.”

I’ll bet dollars to donuts she didn’t have an attorney representing her at the closing. Oh yes I would.