Buying a House- Post Housing Crisis
My husband and I have just had the joy of purchasing a beautiful home in Arizona. We have been lucky enough to take advantage of great interest rates and low home prices. However, I was astounded by how little things have changed, and how it appears we, and the housing industry as a whole, have learned nothing from our mistakes.
Yesterday, I got a call at 2:30 telling me to show up at the title company at 3:30 to sign our final documents. It was estimated it would take about 45 minutes. When I showed up a very nice employee of the title company put a stack of more than 100 pages in front of me to sign, I was dumbfounded. Are we really still doing this?
It is quite obvious to me that homeowners are not expected to read what they are signing. When I protested that I would certainly not sign the largest purchase of my life without reading it, I was met with blank stares and mildly annoyed looks. As we pawed through the documents we found no fewer than 15 errors and inconsistencies. Overall, we were being charged more than $2500 in fees that should not have been there. We were asked to sign documents that were contradictory and inconsistent. The employee of the title company said it had nothing to do with her, it came from the bank.
We had the HUD I ammended, but were not able to get through all the documents and ended up taking them home to finish. We were asked to sign documents giving the bank or loan officers the ability to fill in inadvertently blank lines and we were asked to sign a document guarateeing if there were errors in this paperwork we would fix it within 30 days. SO, if the bank decides we owe them more money, we have already agreed to pay it. There were pages of terms and conditions that started at number 16 and went to number 42. Where were conditions 1-15? No one knew. We made a phone call to the loan officer, who said we had gotten them previously.
By the time we left this morning, everything was signed and our questions were answered. Many of the inconsistencies between the documents came down to required estimates that didn’t match the final totals. (which, by the way, will only be final after we close).
Here is my beef: Home owners are consistently slammed for not fulfilling their obligations under the contract they signed when they purchased their homes. Home owners signed up for balloon payments, adjustable interest rates, and pre-payment penalties. These contracts are the definition of an adhesion contract. That means:
A standard form contract (sometimes referred to as an adhesion contract or boilerplate contract) is a contract between two parties that does not allow for negotiation, i.e. take it or leave it. It is often a contract that is entered into between unequal bargaining partners, such as when an individual customer is given a contract by the salesperson of a multinational corporation. The customer is in no position to renegotiate the standard terms of the contract and the company’s representative usually does not have the authority to do so. While adhesion contracts, in and of themselves, are not illegal per se, there exists a very real possibility for unconscionability.
While these are enforceable, they are hardly fair. We must be out of our house by Saturday. If we don’t sign the documents, albeit there are inconsistencies, we won’t have a place to live. Thankfully, my husband has experience with such contracts and I went to law school and they let us take the documents home. The vast majority of people do not have those luxuries.
My bottom line: The home buying proccess has not been reformed. The MOST IMPORTANT STEP is that both parties know and agree to the terms and conditions of what they are signing. Creating more documents required for closing has NOT accomplished this goal. Contracts should be simplified, consistent and prospective home owners should be allowed ample time with the contract as a matter of course, not expected to show up and sign something they are seeing for the first time.