Elizabeth Warren Wants to Simplify Your Mortgage Paperwork

When I saw that Elizabeth Warren had begun her duties as President Obama's consumer-protection watchdog by holding a forum Tuesday on simplifying mortgage paperwork, one of the first things that popped into my head was a neat trick that a few mortgage professionals liked to pull back in the heady days of the home-loan boom.

When a customer insisted on a fixed-rate loan, but the mortgage workers could make more money by selling her an adjustable-rate one, the folks handling the paperwork had an easy solution. They positioned a few fixed-rate loan documents at the top of the stack of paperwork to be signed by the borrower.


They buried the real docs -- the ones indicating the loan had an adjustable rate that would zoom upward in two or three years -- near the bottom of the pile.

Then, after the borrower had flipped from signature line to signature line, scribbling his or her consent across the entire stack, and gone home, it was easy enough to peel the fixed-rate documents off the top and throw them in the trash.