The American Public always seeking the American Dream; the house, the car, the career, a couple of kids and everyone is peachy. The American Dream to own. The American Dream comes with a price and always has and it’s called responsibility.

How many of us have applied for a loan of any sort and tweaked the numbers of our income a bite to show we made more than what we did? How many of us have written on an application for a loan that you have lived at the same place for two years when you knew you had only lived there for one? How many of us have been blinded by the pure knowledge of extra cash coming into our pockets that we didn’t consider the terms of the loan we were getting?

When you are in need of funds to get the creditors to stop calling you because you have extended yourself why beyond your means; is your concern the terms of the loan? I answer no. Your main concern is getting the creditors to stop calling and if putting another mortgage on your home is the only way to do it; you will.  You’re looking for that instance relief from the pure hell your living in and you’re not focused the long term issues. America has become the land of instance gratification. We must have it now and we can but at what cost.

The American Public in general is concerned with getting on with their lives and putting food on the table. We want professionals in this case the mortgage business to handle the fine print. We want them to provide us with instant funds to cover our surmounting debt. We want these professionals to have our best interest at heart. The American Public forgot one basic rule. Trust no one and that theory was proven by the Catholic Roman Church Scandal back in the eighties.  Can you trust your priest not to touch your son after service? God gave us one thing that we forget to use daily; free will.

The American Homeowner signed the loan documents with the terms spelled out completely at the closing table. Homeowners willingly gave up their right to read all the terms while they sat at the closing table and did not review the loans terms. Homeowners also have the right to resend the terms of the loan within three days of having signed the documents. Seldom actually resend and few if any read the materials about the loan and choose not to. Why because be blindly believed what the mortgage professionals told us was in the papers we signed.  We wanted the instant gratification of getting out of your problem debt or getting into that new home before the baby is born.

The President and Congress are looking for someone to blame. Wall Street investors are looking for someone to blame and the fact of the matter is; we have someone to blame. Everyone involved.

• We can blame Congress during the Bush Administration for relaxing the rules.
• We can blame Mortgage Lenders for using loan products that were predatory in nature.
• We can blame Wall Street Investors for investing in mortgage pools that were risky.
• We can blame the Realtor and The Real Estate Companies who sold the properties.
• We can blame Loan Officers that sought out unknowledgeable homeowners.
• We can blame Brokers that did not manage their staff.
• We can blame Appraisers for valuing property incorrectly.
• We can blame Closers and Title Companies who didn’t inform the borrowers of what they were signing.
• We can blame everyone involved in the mortgage transaction; however we need to blame the homeowner as well. No one is more qualified to understand your financial situation more than you. It was the homeowners’ responsibility to read and understand the documents presented.

So in the end; who is to blame for this mortgage crisis? American Greed.

First of all let me enlighten you on our coin operated Congress that changed proprietors while leaving the money game in in place.  The trick has been to talk like reformers while doing no reformation.  Despite almost three trillion dollars in bailouts to Wall Street there is nothing that Geithner or anyone else has done that would prevent them from backing the economic Titanic up and bashing it back into the same Iceberg.  They say insanity is doing the same thing a second time while expecting different results but this is ridiculous.

In truth despite all the ballyhooing about the rising Dow, thanks to thirty years of Globalization it has about as much relevance to the lives of average Americans and our economic status as if you compared a high school play to Broadway.  In lieu of this economic propaganda, I have taken government statistics that are much more relevant to our status and when you are done reading the Middle Class financial averages you will also be able to decide if prosperity is just around the corner.

First of all in the first quarter of this year housing prices declined another 19.1 percent.  Since the family home is Middle Class America’s largest asset this is huge loss of wealth.  By the way, the latest mortgage crisis is that as many as 600,000 senoirs in this economy are having trouble paying their mortgages.

Just yesterday ( June 4, 2009 ) unemployment figures were released that showed the nations unemployment rate was at 9.4 percent.  That is the highest in 25 years. This would be bad enough but it is essentially a cleaned up statistic because it convieniently leaves out those who have stopped looking altogether and those who are working part- time because that is all they can get.  Add these figures to the mix and the real deal is about 16.4 percent with something on the order of 25 million Americans either out of work, no longer looking for work or underemployed.  We have lost 6 million jobs since 2007.

From March to April of this year wages went from $16.56 per hour to $16.51 per hour for a loss of five cents.  You all know gas prices are now going up sometimes that much in a single day. The Consumer price index rose 0.02 percent in April as wages fell.

You might remember that we have been told to compete in the Global economy we need to go back to school to get the high wage high tech jobs of the future.  The only problem is that 6 of the top ten jobs created required no college and the four that did required nothing higher than a bachelors degree.

I don’t want to be a nay-sayer but these things do not depict the the rosy improving future we have been hearing about.  We have done nothing about creating products that would create wealth for this nation. Economist Joseph Stegletz has already said that America has sunk to where our economy is similar to that of emerging nations ( third world country) and if he were in charge of the IMF and America came seeking a loan he would deny it because there is gross inequality in income distribution and astronomical debt that cannot be sustained.

That is not cause for breaking out the champagne.  If this really was Titanic and not a useful analogy, the operateive phrase might not be who is your broker it might be how long can you tread water.

A borrower exercising his or her right to cancel has been very rare in the closings I have done. I give you one example where borrowers did exercise their right to cancel where the federal right to cancel law because of the South Carolina Predatory Lending Act of 2003. The South Carolina law requires a “net tangible benefit” to the borrowers for doing the “re-fi.” The borrowers were changing an ARM (variable rate) to a fixed rate mortgage. The predatory lending act prohibited them from going from one variable rate to another, even if the new variable rate was lower and the original interest rate would stay for a longer time. The mortgage broker could only get them a fixed rate that was higher then their current variable rate, even though the low variable rate was going to expire soon. The borrowers could not afford their higher payment and canceled the loan two days later. I assisted them with filling out the paperwork. I referred them to our credit union client and they assisted the borrowers get the money they needed with a second mortgage. As usual, the good intentions of laws mess things up. In this case, the right to cancel was a good thing. The borrowers had three days to think about it and exercised their judgment.

Of course, 99.9% of the time, the right to cancel is an annoyance. The loan officer sometimes forgets to tell the borrowers (or they forget) that there is a three day right, i.e. I can’t get my money today. So they get grumpy at me since I am the one with them. It holds up the plans they have for the money. The borrower has to come back to the office three days later to pick up their check. The borrowers are often paying off other debt and the mortgage loan is a lower payment and a lower interest rate. Home improvements or repairs are delayed a week. They are often consolidating multiple debts into one. Waiting three days to proceed is not in their best interests, but they still have to wait. The right to cancel is not good in the vast majority of loans. As usual, when government interferes with the freedom of contract, it is a bad thing.

I do not think that the 3 day right to cancel is necessary in South Carolina. Of course, the whole reason for the right to cancel is consumer protection. But of course, as I told you in my earlier column, South Carolina requires that an attorney perform a real estate closing. The biggest reason the South Carolina Supreme Court requires this is for consumer protection. The attorney is the gatekeeper between a borrower and a bad loan. It is not the attorney’s job to advise a borrower whether to take a loan or not; it is his job to explain the legal significance of the loan. No borrower leaves my conference room without understanding the documents and significance of their loan product. If the borrower cannot decide to take the loan then and there, then hr or she simply should not take the loan period. Three extra days should not matter either way.

The three day right to cancel applies to re-finances, mortgages that are not purchase money. In thinking about the mortgage crisis, most of these “bad mortgages”, “subprime mortgages” were for the purchases of houses. I am not suggesting that the day right to cancel expand to purchases; I am saying that bad mortgages come from purchases just as they do from re-finances and we do not have a right to cancel for purchases. It is inconsistent to have a right to cancel for re-finances, but not to purchases.

Even though I may sound like it, I am not necessarily in favor of completing getting rid of the right to cancel. However, I am certainly in favor of modifying this law. Certainly, the right to cancel should not exist and is not necessary if a borrower is getting a lower fixed interest rate and not getting any “cash out”, even if it is with a new lender. If a borrower has dealt with a certain broker or a certain bank before, the right to cancel should be allowed to be waived. The right to cancel is an example of government interfering with the freedom of contract. Let the market sort out bad banks and bad loans.