Story Submitted by a Middle Class Hard Working Mother:
As one of the "ignorant" buyers who fell for the oky doke, I'd like to make a few small comments. I'd like to give a voice to the middle class, hard working single mothers out here who have been slapped in the face with the reality that they could possibly lose their home in the near future.
No biggie for the banks, who get the chance to sell it again.
But a nightmare for the children and hard working Americans who have to wake up in the morning to the reality that all they've worked hard for is gone.
I live in a "minority" neighborhood that is bombarded with solicitations to refinance from unscrupulous brokers 24/7 -- that means all day long.
We go in to see mortgage brokers like a tourists goes to China. We don't speak the language nor do we understand it.
We rely on them to explain the fine details of the loan to us, so that we can make an informed decision.
Sure, many of you blame the buyer for being ignorant but to do the amount of research that would be necessary to read the extremely difficult language that makes up a loan document would qualify us as bankers ourselves.
Those ARM loans are tricky!
We foolishly trust that the broker will do THEIR JOB -- most people would and do.
I consider myself to be pretty smart but I can't read Chinese! I might be able to -- if I was taught. The mortgage broker should offer Lending 101 for his clients & fails at his duty.
At a closing you're handed a doc. which is 2 inches thick & told to sign here there & everywhere.
My PP penalty was hidden at the very top of the 2nd pg of an addendum or rider. The 1st pg contained a para that took up less than one third of the page & it simply explained that there would be no PP penalty paid for extra principal payments. They stuck a small paragraph on the 2nd page which stated that I'd pay six months worth of penalty if I tried to refinance before three years = $27,600.
I swear, I never saw this paper at closing. Never. Nor was anything said.
MY TIL statement said NO PENALTY.
This 1st yr I've been charged $12,000 in negative amortization. CW will make $56,000 in interest in three years. Nice work!
My gut instinct told me something was very, very wrong. My loan brokers did some fast talking & even more bullshitting & made a small decrease in the margin to get me to close on this loan. I was just this close to walking, even though I didn't understand it all. Something just didn't feel right. Not even a year later, they were calling me to do it again!
It was that call that prompted me to take a good long look at my loan docs. Lo & behold, there it was, the hidden PP penalty.
The brokers never said a word about it. Nor did the LO or the Title officer, or the insurance agent. No one.
America is a capitalistic society and the middle class has always been the enemy. The rich love the poor, who they use to keep their pockets fat.