Earlier today, I heard an NPR feature on the subprime mortgage crisis. They interviewed one guy who was in trouble with his mortgage, in arrears and facing foreclosure. They asked him what his stated income was on the application, and he said he had no idea. When they told him it was $16,250 a month, he burst out laughing — the year he applied for the mortgage, he’d only made $35,000 all year. He had literally no idea that number was there.
This brought a fundamental question up to me: how did that number get put on his mortgage application?
I’ve never applied for a mortgage, but it seems to me that there are only two possible explanations for how that number was filled in: either the applicant wrote it in, or the mortgage agent did. And if we take the applicant at his word, he didn’t put it there, so that leaves the agent.
OK, so the broker wrote it in. How did he get that number? More importantly, how did the applicant not know about it?
Again, two ready answers spring to mind: either the agent wrote it in after the applicant signed the forms, or the applicant simply didn’t notice the numbers when he signed it.
If the agent filled it in after it was signed, then we have a clear-cut case of fraud here against the agent. They put in numbers that they had no business putting in after the document was signed, and therefore ought to be on the hook — both financially and criminally — for the fraudulent mortgage.
If the applicant simply didn’t notice the numbers, then it’s a clear-cut case of negligence on the borrower. I’m sure somewhere in the application process there’s a form that says “I have read every single detail of this agreement, agree to every part of it, and attest that the statements I have made are true” or something like that. If he did sign that, and there was a part of it he didn’t read, then he’s screwed.
As I’ve said, I’ve never applied for a mortgage. (Never had the financial wherewithal, and besides as a single guy with no real ties anywhere, it seemed unnecessary. Just rent an apartment and let the landlord deal with all the headaches.) But I have signed other significant financial agreements (leases, car purchase agreements) and in each case, I read the penalty clauses for my failure to live up to my obligations to pay. And when I did have those failures, I knew precisely what to expect and sucked it up. It wasn’t fun, I didn’t like it, but I knew about it going in and didn’t think I had any business whining.
Maybe that makes me a freak, but when I hear about people who are running into serious trouble with their mortgages (yes, even some dear friends of mine), I don’t go into convulsions of outrage over it. I offer sympathies (and in one case, some assistance), but I don’t go blaming the system or the mortgage company for “screwing them.”
There’s an old saying: “you can’t con an honest man.” It’s not 100% accurate, but it is true far more often than it’s not. Most cons and scams are based on the victim having a little bit of larceny in his soul, and thinking that they might get something for nothing. (This is the basis of the Nigerian 419 scams, for example.) And if these people are being victimized by bad or fraudulent mortgages, then I’m fairly comfortable in assuming that most of them either knew that there was bogus info on their application (either by their own hand or their agent), or should have known by simply reading it carefully (and, perhaps, consulting a disinterested expert) before they put their signature on it.
I know if I signed a contract that put me on the hook for six figures of money, and tied me up for a couple of decades, I’d read every goddamned word of it, and run it past at least one professional, to make sure there were no lies, no surprises, no loopholes, and no blank boxes to be filled in later on the thing. And if it did end up blowing up in my face, I wouldn’t be looking to blame anyone besides myself.
I guess I’m just a freak that way.