Robert J Shiller, in the business section of the New York Times (1/18/09), remakes the point that he forcefully made in his book, Subprime Solution: How Today’s Global Financial Crisis
Happened and What to Do about It, that the government’s bail out mode should include providing basic professional advice to the populace. It is the lack thereof that has caused many to suffer from poor financial decision making. The claim is that only the wealthy can afford to see a financial planner. Everyone should have that opportunity-even if it means that the federal government must subsidize fee based financial planners.
Clearly, financial literacy is lacking in this country. In my seminars I ask how many people learned about finances, mortgages or about credit issues in grammar school. No hands go up. How many learned about these things in high school? No hands go up. How about college? Maybe a few hands go up. That is why seniors have to be particular about the individual they hire when it comes to obtaining a reverse mortgage or any mortgage for that matter. The borrower needs the confidence to know that they are doing the right thing. Often it is ignorance coupled with the influence of the borrowers’ own assemblage that will determine the direction chosen. The senior borrowers’ own coterie are also usually ignorant on this topic.
You see, as we grow up, we are expected to know about these things. Suddenly, becoming an adult includes magically obtaining knowledge in these critical areas. Those that are fortunate will have heard and maybe learned some of this key information from their parents. Most of us however will have learned about this stuff through direct experience. Again, that is why taking the time in the hiring process becomes critical. A good loan officer, make that a great loan officer will provide the bundle of information that seniors never received. A great loan officer will also help the senior borrower distinguish between forward mortgage concepts and reverse mortgage concepts. A great loan officer will be able to simplify the argot.
In his first inaugural address, President Roosevelt declaimed, “The only thing we have to fear is fear itself.” When our seniors become consumed with fear, they become paralyzed. Inaction takes over. In my view, this is the seminal reason why this industry isn’t seeing the kind of closed loan numbers we should be seeing. More and more seniors are saying that they do not have confidence in banks. This kind of thinking morphs into no confidence in mortgage brokers and mortgage bankers.
The banks were counting on this ignorance and playing upon that ubiquitous desire to partake in the American Dream. This extended to refinancing the home as well. What was forgotten along the way was that one had to earn the right to get a mortgage; sadly, many believed that getting a mortgage became a right.
The credit card companies for too long have stuffed their unwanted and unsolicited credit card offerings down everyones throats. They make it harder to declare bankruptcy (yes, they wrote the legislation) while adhering to their insidious practice. And as usual the consumer takes it on the chin. Many of our elders have likewise taken it on the chin.
Perhaps, Mr. Shiller is on to something. But, why wait for adulthood to learn this financial stuff. Teach it in our schools. If we don’t, our schools will continue to graduate soon to be adults with low financial IQs.
ignorance coupled with the influence of the borrowers’ own assemblage that will determine the direction chosen. The senior borrowers’ own coterie are also usually ignorant on this topic.
Posted by: credit cards | May 18, 2010 at 02:55 PM