22 October 2014
Placed under the microscope, mortgage agreements, home loan agreements in the East, are able to throw up three valid lessons for an equitable tomorrow.
One, just because something is being followed by the entire industry does not make an arbitrary procedure a borrower-accommodating practice. The blame needs to be squarely placed at the doorsteps of morbidly disinterested mortgage-illiterate borrowers, who have neither the time nor the inclination for collective bargaining. It is high time mortgage-buyers took interest in upgrading their mortgage-literacy.
Two, just because the mortgage regulator is slack, home loan players should not adopt a philistine approach towards mortgage-buyers. For the sake of fair play, mortgage banks and corporations should draw up home loan agreements that are fair, both to the mortgage-seller and the mortgage-buyer. Why shouldn’t draft mortgage agreements be approved by the lawyers of both the parties? If home loan products can be tailor-made, why can’t home loan agreements be customised?
Three, mortgage players should ensure that home loan draft agreements are given to the borrowers much before disbursal. Why, draft agreements should be given to potential mortgage-buyers right during the prospecting and pre-selling stage, perhaps as a part of promotional literature. Potential mortgage-buyers should have the right to demand and get a copy of the same.
So, the moral of the story: it is high time mortgage-buyers looked beyond financial parameters such as interest costs, mortgage rests and pre-payment penalties, and got guided as much by qualitative non-financial factors such as quality, transparency and friendliness of mortgage agreements. It is never too late for mortgage transparency and mortgage governance to become the supporting pillars of mortgage-buyer democracy.
Just comparing interest rates of mortgage-sellers in the market alone does not make home loan borrowing smart. Knowing your rights as a mortgage-buyer does.
22 October 2014