Why can't process be more like buying a car?
All the abuses discussed above involve strategic deviations from lenders' posted prices. Mortgage spec abuse means a price adjustment larger or smaller than the adjustment called for by the model used to calculate lender's posted prices. A lowball price is one quoted to a shopper that is below the lender's posted price. A lock abuse is a lock price that is above the lender's posted price at that time.
None of these abuses are prevented by the mandatory disclosures contained in Truth in Lending or the Good Faith Estimate. The remedy is to provide mortgage borrowers with direct access to the posted prices of mortgage lenders. Stay tuned.
The writer is professor of finance emeritus at the Wharton School of the University of Pennsylvania. Comments and questions can be left at www.mtgprofessor.com.
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