Avoid being tricked by your mortgage broker

In the past year we have seen what has occurred when people purchase real estate in New York that they cant afford. Foreclosures in many parts of New York city have skyrocketed, credit ratings have plummeted and dreams houses have turned into financial nightmares. For the vast majority of these cases, the mortgage was the instrument that allowed people to purchase properties they couldn’t afford. The problem is that many of the people that signed on the dotted line never really knew what they were signing. Again, the caveat here is that you didn’t “know” what you were signing. There are others out there who were perfectly aware that they were over leveraging and thought nothing bad could happen because prices would rise no matter what. Tough luck for them.

For the others who truly didn’t, and don’t know, what “points” and “fees” are, and who didn’t know their payments would increase so quickly and substantially, there is a solution. Us. By us, I mean our firm and the few other attorneys out there who take serious time explaining every detail of a mortgage document to their client. Our firm believes it is our responsibility to make clients aware of what they are signing. That’s why we tell our clients that included in our fee for a Real Estate purchase, is a meeting with the client, and his/her mortgage broker (if they decide to come).

This isn’t some sort of infomercial for our firm. Instead it’s what we truly believe needs to be done in the industry to help people understand what it is that they are signing. Lawyers don’t receive more compensation if you decide to sign a 30 year loan or a 15 year loan. We are, and should be, neutral parties who explain to a client what their financial obligations will be. Ironically many attorneys do not do this. Instead, they will discuss the Contract of Sale with a client. A document that is more boilerplate language than anything else. While a contract of sale is critically important, it is, in this attorneys humble view, not as important as a document stating that you will pay a certain amount of money for the better part of your life. Lawyers can and should go over mortgage documents with their clients before they sign them. It is our responsibility to make sure people aren’t surprised at the closing by the amount of fees and charges they have now incurred. Just my two cents.

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