Yet in mortgage lending, an ordinary layperson is supposed to understand the 100 pages of legal and financial documents representing his or her family's soon-to-be shelter. Do you sign a document forgoing your legal rights to product quality when you receive a doctor's prescription? The legal system reflects that consumers are protected in medical matters.
The average homebuyer is not an expert in finance or loan products. They are relying on the mortgage broker or lender not to swindle them, but to advise them. Lenders and brokers are the experts. They should be held personally liable for withholding information or irresponsible counsel- just like a medical professional. After all, your financial health is at stake.
For example, lethal financial instruments like NegAm mortgages (zero down, low interest teaser rate balloon loan) or NINJA loans (no income, no job, no assets) were marketed to people deliberately without regard to their personal welfare or the economy as a whole. These dangerous financial products led to a defaulting mortgage epidemic that we continue to suffer from three years later. They should be outlawed under Lemon Loan Laws or pulled from the banking shelves like Vioxx.
As the laws of finance stand, who is responsible? Not the "experts" who hawked products they knew were deadly. But the lay public who were tricked by smooth talking, profit seeking mortgage "professionals" who would sell you anything in order to build a castle in Palm Beach.
A brilliant Madoff-Ponzi-like scheme without any legal protection or recourse for unsuspecting victims. The homebuying public were like lambs to the slaughter in the subprime decade. They didn't know what hit them until the housing bubble created by unethical lenders and finance pros burst. Unlike Madoff, however, your mortgage broker or lender may have ruined your financial health, but he won't go to jail.
Why? Because there is no adequate law protecting consumers from financial industry predators. Isn't it time we created one?
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