Who is responsible?
When listening to this story on subprime lending, I felt great sympathy for the woman but could not agree with the lawyer’s statement at the end.
The full interview is here.
A salesperson/lender who does not reveal the small-print of a good deal, is being dishonest and preying on the ignorance of other people. At the same time, it is hardly unfair to say that a person should be reading what they sign. If they don’t understand the small print, why not ASK questions.
The way I see it--- the majority (perhaps 55%) of the responsibility falls to the customer who signs without reading.
What do you think?
That said, I am in favor of laws that require credit card/financial agreements to be written in clearer language and that require all fees be clearly stated in--a sort of “standardized mutual-fund prospectus format” for any lending instrument.
Also this is yet another story that further convinces me that high-schools/colleges need to be teaching a basic money management course. Better to learn with play money first!
On a related note, I thought this was a good summary of the subprime lending.
- Interviewer: Did you realize the loan [payment] was going to go up after two years?
Lady: No, I did not.
Interviewer: Did they [the lenders] tell you though?
Lady: No, they did not.
Interviewer: Was it written on the loan documents that you signed?
Lady: I did not see that.
Lady’s Lawyer: Can I just add something. I think it is really unfair to say to any homeowner or consumer you should be reading your documents and determining that you have a 2/28 adjustable rate loan without a tax and insurance escrow that creates the following risks. You know that is a very sophisticated analysis that’s required to understand how you are being put in a situation of inevitable foreclosure.
The full interview is here.
A salesperson/lender who does not reveal the small-print of a good deal, is being dishonest and preying on the ignorance of other people. At the same time, it is hardly unfair to say that a person should be reading what they sign. If they don’t understand the small print, why not ASK questions.
The way I see it--- the majority (perhaps 55%) of the responsibility falls to the customer who signs without reading.
What do you think?
That said, I am in favor of laws that require credit card/financial agreements to be written in clearer language and that require all fees be clearly stated in--a sort of “standardized mutual-fund prospectus format” for any lending instrument.
Also this is yet another story that further convinces me that high-schools/colleges need to be teaching a basic money management course. Better to learn with play money first!
On a related note, I thought this was a good summary of the subprime lending.