Aug. 14th, 2013

abqdan: (Default)
As I plow through the daily email exchanges with realtors, finance guys, escrow officers, and sundry others, I keep thinking "It shouldn't be this difficult".

I haven't bought a property in a while, and it seems to me that the paperwork is now even worse than it was before 2007. It seems a lot of completely meaningless paperwork has been added to give the semblance that everyone is paying 'due diligence' to the process, when actually it just duplicates work and generates useless disclosures and information. Case in point: we had a home inspection done, which any sane person does before buying any property. The inspection wasn't too bad - it called out some minor repairs. The inspection also included a zillion exclusions as to what the inspector hadn't done or couldn't do. Hot on the heals of that report, we receive an "Agent's Visual Inspection Disclosure" where our realtor has to walk through the property, essentially noting the same things the inspector did, minus any technical content - which of course is excluded.

The whole title issue is duplicative too - a preliminary report sent via our realtor, and a second copy (with different attachments, oddly enough) sent through our escrow person. And yet both reports originate from the same title company - so how do they end up with different attachments? And aside from reading through the quasi-legalistic gobbledy-gook, the report tells us nothing - because the same company is going to issue the title guarantee, and they wouldn't do that if there was a problem with the title.

Back in England, they had a smart idea - the national Land Registry. All titles recorded in a central database, and you just get a copy of the title with a real estate transaction. No-one needs to research or guarantee it - it's a national database with laws prohibiting false information. This could not be adopted in the US of course - it would kill a huge industry. In fact, I'm convinced the huge mountain of pointless paperwork is a conspiracy between the real estate industry and state governments to keep those jobs going.

Financing is just as bad; we received two disclosures yesterday that are 'mandated'. A Truth In Lending and an Itemization of Amount Financed. These documents, in trying to give you as much information as possible about how the transaction works, end up being completely confusing. So much so, that they come with a thick set of notes explaining why what the document says isn't what is going to happen. For example, the TIL shows a box labeled "Amount Financed" which is considerably less than "Loan Amount". Here's the explanation in the attached notes:

Q: Does this mean I will get a smaller loan than I applied for?
A: No. If your loan is approved in the amount requested, you will receive credit toward your home purchase or refinance for the full amount for which you applied. In the example above, you would therefore receive a $50,000, not a $48,000 loan.

Why do they show "Amount Financed" as less than the "Loan Amount"? Who knows?

The government may think they've added a layer of protection after the sub-prime disaster; in actuality, they've simply added a layer of meaningless paperwork.

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abqdan

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