Admittedly, there is a great deal to criticize about the mortgage industry, especially from the years 2000 to 2007. During these years, lenders and investors lent money to people who did not qualify for government insured “prime” loans.

In essence, the idea was simple: investors made home purchase loans and equity loans to people whom those traditional banks would not lend to. In exchange, these investors charged a higher price (called an interest rate). Since there was less supply for this financial product, naturally the price would be higher. The subprime borrower would also avoid paying an insurance fee to protect the bank, which many prime borrowers are still forced to pay.

In essence, for a higher price, investors would provide an opportunity to many consumers whom would normally be declined by banks. Unfortunately, two features of these loans seem to have made the opportunities devastating for many families.

The first option was the variable rate option. Many unsophisticated consumers chose a rate that would eventually increase, because it saved them a few dollars for the first two years. Additionally, many of these same consumers chose to pay their insurance and taxes on their own, rather than to have the mortgage company collect these costs on a monthly basis.

Once the variable rate began to increase, many families could no longer afford to pay their mortgage. Those who did not “escrow” monthly payments for taxes and insurance, were often unable to pay the lump sums of taxes every January, and this also caused problems.

These miscalculations on the part of borrowers and lenders led to many problems, but there were also downright unscrupulous behaviors that led to some of these problems. Some loan officers pushed the variable rate loans so that the borrower could come back before the loan adjusted and pay another fee in order to refinance. At the top end of the mortgage chain, the greatest overnight wealth was created when some investors figured that many people would default. They took out bets against massive pools of borrowers, in expectation that they would fail.

It is very easy to look at these terrible product features, and the unscrupulous practices and arrive at the conclusion that the entire concept of subprime mortgages should be outlawed. Since about 2007 most of the subprime products have been largely unavailable. They went away not because of regulation but because no investors were interested in taking on this sort of risk.

The reason I write this piece is that Wells Fargo has recently (and quietly) rolled out some products that could easily be considered subprime. Purchases with only ten percent down for people who have credit scores of 501 were commonplace during the subprime heyday, but they have been unheard of since late 2007…until now.

Sure, interest rates for subprime mortgages were 2% to 4% higher than prime rates, but consider the following:

Question: What is the interest rate for a renter?

Answer: 100%

Get it?

I am the first one to blame imperialist corporations for everything from migration patterns to the environmental poisoning of our communities. However, I am also the first to say, that until we achieve self-determination, we should make ourselves as independent from these people as possible. Home ownership is one, small step toward that.

We should reform the subprime industry. We should outlaw variable rates for unsophisticated borrowers, and we should require escrow, but we should not outlaw opportunities for those whom banks consider untouchable.

I have seen funds from subprime home equity loans send children to college, pay for medical treatment and set up businesses perhaps blocks away from where you picked up this newspaper. I have seen people purchase homes who otherwise might still be renting apartments.

Some of these consumers have failed, even with fixed, escrowed loans, but I don’t think that it is in our best interest to outlaw the chance to succeed (or to fail) based on the unscrupulous practices of the industry.

In retrospect, the whole mortgage crisis was caused by a crisis of knowledge. Many borrowers were not informed or experienced enough to select certain features of their loan. We need high school classes on financial literacy.

In the meantime, let us outlaw predatory practices and the flawed features of subprime mortgages. Let’s not kill all hope that someone with damaged credit can borrow against his home to pay for an operation. Let’s not kill the possibility that cash earners (of which there are many in our barrios) will eventually be able to buy their home, instead of being at the mercy of their landlord.

The Office of Attorney General sums up the scam pretty well:

In Texas, a notary is someone licensed to witness the signing of legal documents. In most Latin American countries, however, a “notario” implies that the person is a licensed attorney. Texas law specifically prevents notaries from providing any type of immigration service unless they hold a separate license to practice law.

In a common scam, a person obtains a notary public license in Texas yet presents themself to Spanish-speaking clients as a “notario publico” or licensed attorney who can help the customer with the immigration process.

Many con artists charge hundreds or thousands of dollars to allegedly provide legal assistance in processing INS applications. However, in many cases, the scam artists disappear with the money; charge high fees for filing unnecessary documents; or perform poor quality services that jeopardize clients’ cases.

The above linked article describes one of several prosecutorial efforts against notaries public.

Through my activism, I have spoken to one lady in particular who lost five thousand dollars to a notaria who disappeared. This notaria promised a quick resolution to getting a deported felon papers because her relative was supposedly an agent with immigration.

Unfortunately, we have seen faulty work in many areas of the law, including faulty contracts and real estate work. My father has helped people who thought that they purchased a home through notarios.  These clients were greatly disappointed when they found out that a “Bill of Sale” does not count as a “title transfer” on real property. It really leads to a big mess and a big loss of money for the unsuspecting clients.

At times, out of economic convenience, the clients seek out notarios because they tend to charge a great deal less. As the saying goes, “a veces lo barato sale caro.”

I had someone come in yesterday asking me to fill out some immigration paperwork. Instead, he got a thanks for his confidence, and a lecture on the difference between a notary and an attorney. Many times, people listen and are appreciative of the information. Unfortunately, this compa seem disturbed that I wouldn’t fill out his paperwork and give him a notary stamp for twenty bucks. My last piece of advice to him was to seek a licensed immigration attorney (my father does not practice in the area of immigration), and that for his own sake, to not go to a notary. In one ear and out the other for this compa.

If you deal with La Raza on any financial matters, I urge you to please be aware of this confusion. In Mexico, I understand that a notary is a special designation or rank of attorney. Many people have been taken advantage in this country by incompetent and predatory notaries public.