How Steve Jobs Would Have Fixed The Mortgage Mess

The passing of Steve Jobs came too soon. It didn’t matter if you were a fan of Apple products or not, no one would deny that Jobs radically changed the worlds of computing, music, movie animation and product design — and all for the better. Our condolences to his family and friends.

Unfortunately, there’s no Steve Jobs in finance. That’s a shame because could you imagine if Jobs had turned his attention to mortgages for a day? The world would be a very different place.

As a start, you can imagine that all loan applications would have been on gray paper with easy graphics to guide the process.

Lines would have been spaced widely apart so that people with difficulty writing could be accommodated.

And information would have been clearly outlined — how much was being borrowed, the interest rate, whether fixed or adjustable and if there was a prepayment penalty.

The payments to lenders, brokers, closing companies and everyone else would have been clearly shown. And while it might have cost a little more to use a Jobs loan application it would be worth the price in terms of clarity, efficiency and design.

In effect, by designing forms everyone could understand Jobs would have transformed the lending and closing process. People would have discovered that the sale commission for title insurance might be 60 percent or 70 percent of the entire cost. They would see how brokers divide commissions and they would see the cost of taxes in one section. There would be no “gotcha” clauses.

Steve Jobs never hid his prices. He changed more and there were always cheaper competitors out there. But that was okay. People were willing to pay a little bit extra because they got something more for their purchase.

Right now the Consumer Financial Protection Bureau is trying to re-do the basic Good Faith Estimate of Closing Costs or GFE, the single piece of paper which is most important for mortgage borrowers. It took HUD 14 years to revise the last edition, the one which came out in January 2010. Now it seems as if the CFPB will be able to do the work within a year or so.

I suspect a cleaner and more readable GFE would please Mr. Jobs and it sure would have been good for the rest of us. After all, if people knew the real cost of financing they would not have been sucked into high-price subprime loans or “affordability” loan products such as option ARMs or interest-only mortgages. With clear information, a lot of people would be in their homes today and many would have avoided foreclosure.

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