One couple in a CNN article (I think it was CNN, I can't find it now) said that after they signed all the paperwork they discovered that the paperwork had been changed and they had signed for a different, more riskier, loan than what they had agreed to. They didn't read through the paperwork as they signed it, they described it as a "mountain" of paperwork and I'm sure they never imagined that someone would do something like that without telling them.
Yup. And you get so many documents at closing. (As a side note, I'd suggest closing as early in the day as possible).
Then in a print article I read about a woman who remortgaged her house and her payments skyrocketed and she discovered her monthly income was listed as double what it was in reality.
This too. It wasn't mostly the borrowers overstating their incomes, but the brokers.
I keep wondering how that can be legal, but I guess after you sign the documents the brokers can say it's legal binding and you've agreed that everything in the contract is accurate.
Another nice "trick" is having a glaring error in the closing documents, so you send the package back. Then when you go through the second closing, you are so frustrated you just want to be DONE and you don't read to make sure that what you were told is correct and matches the documents in hand.
Should all this have been a big red flag - hell yes. Do reasonable people still screw up - hell yes.
Plus, I think there was a sort of "pack animal" mentality when it came to these types of loans and lenders. A lot of people were getting them at the same time and everyone felt good about it. And a lot of unethical and even some ethical lenders got caught up in being sucessful at this and started pushing them. One friend of mine in Los Angeles had great credit and still had to push hard not to get roped into one of these types of loans. A lot mortgage people are ruthless and are, in the end, sales people. They have to sell the mortgage to make their money and a lot of them don't care how they do it.
Sometimes, it is the consumer being excited that on $75k a year, they can with these types of loans "afford" a $650k house. But a lot of the times, at least in my presonal experience, it's ruthless mortgage brokers who maybe not outright lie, but twist the words so in the end, a good consumer gets fucked.
Very few people ever want to default on anything they're buying and feel like shit when circumstances happen and they can't live up to their obligations. If it were a handful of people, I'd be a little skeptical, but there are millions of people in these types of loans and helping them out now is going to make things better for all of us in the long run.
(I might make an ok Commie. Plus, I love red.)
For $500 a month that car had better give good road head while I'm listening to my books on tapes on the long drives.
Well, according to Ramsey (who, if you don't know, has a radio talk show where he helps people get out of debt), the
average
car payment in the US is $484/month. He has a little spiel about how if you invested that for X number of years it would grow to $2 million and "hope you like the car!". I don't buy everything he says (he big into tithing for one, and believes you should pay cash for everything), but he's really helped me work out a budget and how to stick to it.
Thanks for the clarification. That was how it read. I already feel like an idiot.
Please do not feel like an idiot. It can happen to anyone. My best friend who is really excellent with money got screwed on a refinance.
The whole homebuying process is scary, complicated and intimidating.
Isn't that what having a lawyer is for? I mean, I'm sure I don't understand the whole dealio, never having done it myself, but that's why you have agents to represent you and stuff, right?
So for predation to work, you either have to have forgone legal/financial wingmen (I guess they probably are spendy), or you have to ignored your wingmen, or your wingmen have to have been dummies, or your wingmen have to have been predators too. Does that sound about right?
I think that predation and unwise borrowing and borrowing that seemed safe at the time are three different things, although they all overlap some. Me, I have been reading the papers and realizing that I
could
have bought a house, if only I'd had a way higher risk-comfort than I do. And if I
had
bought a house, I might be up shit creek, now or eventually. (Or not, I don't know.)
(My risk-comfort, for mortgages, is something akin to the old "my income 3x". I told this to my now-condo-owning Flatmate, and she said, three weeks before the current crisis, "Oh, that's outdated now. You can borrow more than that.")
Isn't that what having a lawyer is for? I mean, I'm sure I don't understand the whole dealio, never having done it myself, but that's why you have agents to represent you and stuff, right?
I don't know that that many people employ a lawyer for a home purchase. I could be wrong though. I'm thinking of the five or six people I know that bought houses and the only one that had a lawyer was a lawyer.
but he's really helped me work out a budget and how to stick to it.
That's the big one with me. He nationally syndicated?
