It’s all over the news. The mortgage industry is a mess and too many of our neighbors are going into foreclosure. ABC2 News Investigator Tisha Thompson realized most folks don’t really understand what the heck everyone is talking about…literally.
After 34 years in the same house, Bill Jones is getting ready to move…
“It’s a lot of memories,” he says. “A lot of memories.”
Against his will.
“Exactly when we got to go, I don’t know.”
After a two year legal battle, Jones is about to go into foreclosure. "What should have been an ordinary business transaction has turned into a nightmare.”
Jones says it all started when he tried to refinance his mortgage two years ago. “They promised me a 30 year conventional loan at a fixed rate,” he says.
But he ended up with an adjustable rate mortgage with an exploding interest rate. “I’ll be paying about twice what I was promised.”
Jones says he only figured this out after he deciphered all the words in his loan agreement…after he signed the documents.
We got hold of a basic contract for a traditional 30 year mortgage. Its one of the simplest contracts out there. But read a typical clause:
“'Lender may, at lender's option, without giving notice to or obtaining the consent of borrower, borrower's successors or assigns of or any junior lien holder or guarantors...”
After reading it three or four times, we still don't know what it means. So we brought it to the experts:
Maryland Department of Labor, Licensing and Regulation Secretary Thomas Perez, the man in charge of Maryland’s mortgage laws…
And Congressman Elijah Cummings (D-MD) who says, "I call this lawyer talk."
Both are powerful lawyers and both men had to stew over the document before they could explain it us. "Basically what this saying is that the lender can extend the time you can you will have to make a payment,” Cummings says. “I would know that only because I'm a lawyer. The average person wouldn't have a clue."
Both agreed we become easy targets because most of us don’t know what the words in our loan agreements mean.
"That is not fair and that is not legal,” Perez says. He believes the complicated language is the main reason why our ABC2 News Investigation found Maryland Latinos were three times more likely to end up with a high-risk loan than their white, non-Hispanic neighbors.
"I don't think I have limited English proficiency and I had a heck of a lot of trouble interpreting this,” Perez says. “I've met way too many people who did have limited English proficiency and it was precisely that language barrier that allowed them to be taken advantage of."
But Perez admits he can’t make lenders use plain English in their documents. "At the moment I can't force the lender to do this."
He and Cummings are still encouraging lenders to use simple English in their contracts. "We need to simplify these documents as best we can," Cummings says.
But Bill Jones says it’s already too late for his Pimlico neighbors. "People have had to move after 30, 40, 50 years because they took out loans they didn't understand. I think it should be made simple where people can understand it. We're not trained mortgage bankers, finance agents, were just normal folk."
