I know they like marshmallows.

Wow, DJ, that's awful! It seems intended to take people's money and then take the house.

However, I do find myself wondering how the person is really harmed. I mean, they will lose the house, but they got to live in a house they couldn't afford for a few years and pay rent below what the house was worth.

(Not that I'm defending this practice. I'm sure having your house foreclosed on is extremely traumatic, no matter how little you paid to get in there.)

eta: Crazy natter juxtaposition of the ethics of sub-prime lending and bread puns!

Did you know alligators like cheerios?

A fact probably discovered by tax-funded goverment researchers.

I'm with sarameg and megan, too. For the past five years, I've had friends and family urging me to buy a condo. "It's cheaper than renting! You don't have to put down 20 percent! There's lots of places going up--you can find one really cheap nowadays!"

I kept telling them that I couldn't afford it, I'd have no money for a downpayment or a cushion if something went wrong with the place or if my fees were increased. Now, they're all telling me I was right to rent.

However, I do find myself wondering how the person is really harmed.

For one, their credit tanks, and credit reports are being just for everything from employment to auto insurance these days.

I spoke to [redacted] the [redacted] this week and she told me about a new product she is seeing called Option Arms.

The way the work is the borrower is given a payment coupon with three different payment options; a 30 year amortization (the high payment) an Interest Only (the medium payment) and a Negative Amortization (the low payment) Many borrowers will opt for the lowest payment, the negative amortization.

The lender will allow the borrowers to pay this until they hit 115% loan to value. At that point the lender requires a full payment based on a 30 year amortization. The borrower can't afford this new payment and since they now owe 115% of the value of the home they can't sell or re-fi and they lose the house

By any chance is this Countrywide? I ask because one of the loan payments I have processed in the past was like this and we had to be really careful as to which amount got paid.

I'm kinda with megan. Just how much responsibility doesn't lie with the person defaulting? Do we give a pass for stupidity? Easily intimidated by fast talking people so you sign fast? It's not fair that some people were bamboozled. Unfortunately, it was more or less legal. So fix the industry so that can't happen anymore and prosecute the less legal aspects.

I don't consider myself stupid and yet, I believe I'm in this boat. Not asking for a pass. Just asking you to be gentle about passing judgment. Things happen.

I'm done with school for the next three days! Whee!

I'm kinda with megan. Just how much responsibility doesn't lie with the person defaulting? Do we give a pass for stupidity? Easily intimidated by fast talking people so you sign fast?

The whole homebuying process is scary, complicated and intimidating. Terms like "rate lock" "option period" "earnest money" freak people out. Everything is on a tight schedule. It's pretty easy to convince someone that they'll lose their option money, plus whatever fees they've paid for an inspector if they don't stop dithering and sign.

It's not stupidity, it's misinformation or outright lying. I put probably 90% of the blame for owner-occupied forclosures on companies looking to close a bunch of loans quickly without giving their buyers the information they need.

It's not stupidity, it's misinformation or outright lying. I put probably 90% of the blame for owner-occupied forclosures on companies looking to close a bunch of loans quickly without giving their buyers the information they need.

Yeah, its not referred to as "predatory lending" for nothing.