I attend various industry group meetings to learn about trends in lending. One of the big hot buttons in California is the "suitability" of the newer loan programs. Many borrowers obtained financing with terms that are difficult to understand. The "teaser rates" of the early part of the decade are starting to adjust and borrowers are getting "trapped" with a higher payment.
Those borrowers are crying foul; they say that they didn't understand the loan disclosures.
Libertarian-leaning man that I am, I questioned whether those borrowers shouldn't have hired an attorney, CPA, financial advisor, etc, to explain the risks and rewards independently of the loan originator.
"Caveat Emptor !" and all that libertarian-leaning mantra, right?
Well, it turns out that there is a sub-group of the financially clueless who actually may have a case; they didn't understand the loan paperwork because English is not their first language. Their first language is Chinese, or Vietnamese, or Spanish, or Tagalog, or Russian. In California, it can be a number of different languages because we are a land of immigrants. It's one of our strengths in The Golden State.
Good loan originators have solutions to that. We have an arsenal of already translated loan disclosures for all of the aforementioned languages except Russian. The borrowers still need to execute their loan disclosures and loan documents in English but we'll give them a good translation if they want it. I think that makes good business sense and offer it on every loan application now regardless of what their first language appears to be.
I don't want that practice legislated, though. I'm against that kind of legislation; not for the reasons you might think. I don't have an "ENGLISH ONLY" bumper sticker on my pick-up truck. I don't even have a truck. I'm against a legislative mandate because of we need to have uniformity in business dealings in this country. It inspires confidence in our markets for investors.
I've owned property in Puerto Penasco, Mexico. The closing documents were in Spanish and the developer was wise enough to offer an English translation to them. I spent an extra $800 and had the closing documents translated by an independent source. The translations were slightly different, different enough to cause me pause and clarify a few issues about my loan. That turned out to be a VERY good practice because I negotiated some more favorable terms.
I'm not a xenophobe. I find the "speak English only" movement in America laughable. In Europe, people speak 2-3 languages and I think it's wise for Americans to do the same. I'm moving in that direction at age 41 and pushing my five year old daughter to do so. Our European cousins have it correct; American's should pursue more than one language in the spoken form.
Business, however, is moving to English as the official language world wide. California should do the same.