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Tuesday, September 18, 2007

Mortgage Broker Bail Out!

Picture courtesy of FHA

Years ago you actually had to qualify for a mortgage and you had better have more than zero down to get a mortgage. The mortgage industry is corrupt and the loans they are qualifying people for are a sham from the start. Federal mortgage insurance is letting them screw over the American people by telling someone that works part time that that person can qualify for a $180,000 mortgage with nothing down. Teaser rates and low entry mortgage payments is no better than stealing candy from every American Baby!

This issue has my blood boiling because my family and I were in fact victims of this crisis. Even though I work full time at a good job and at a decent wage, the wife works part time at a more than decent union wage, we lost our home to the criminals in the mortgage industry. We lost our credit, we lost our pride. We lost our home. Other extenuating circumstances contributed to our situation but the game plan was the same during a refinance of our existing home loan. I take full blame for my own financial stupidity and trusting the people that were supposed to help my family but in the end just buried us.

Over at the Houston Chronicle they have this to say about today’s government bailout created by the used car salesman of the housing industry…

House moves to help struggling homeowners
Associated Press

WASHINGTON — The House today approved a plan to expand federal backing of mortgages in hopes of helping struggling homeowners avoid foreclosure.
The bill, which passed the House, 348-72, would allow the Federal Housing Administration, which insures mortgages for low- and middle-income borrowers, to back refinanced loans for tens of thousands of borrowers who are delinquent on payments because their mortgages are resetting to sharply higher rates from low initial "teaser" levels.

The measure, which exceeds limits favored by the Bush administration, is Congress' first stand-alone bill in response to the mortgage-market tumult of the summer, which came amid a rising tide of defaults and foreclosures. The Senate last week passed spending legislation that includes $200 million to provide aid to nonprofits and other groups that offer counseling and information to help homeowners avoid foreclosure.

House Republicans sharply objected to a $300 million-a-year fund for grants for affordable rental housing and homeownership assistance for low-income families, which would be financed from FHA revenues — a plan also opposed by the Bush administration. But House Republicans mostly were swept along in the vote for the bill, whose overall thrust they endorsed in the face of the mortgage crisis.
- Houston Chronicle

Even with the Fed cutting the interest rates one half point it is not going to fix the problems that were created over the last ten plus years by the mortgage brokers of America. All of the schemes and plans to access the lucrative market of housing lending have been played out and for the next three to five years the foreclosures will continue.

I’m sure you know of someone that you can’t believe that they qualified for a mortgage. Maybe a child, a brother or sister, your best friend and the list goes on. What qualified them for the loan was the closing costs that were paid to the people that wrote the loan and sold that same loan within weeks of the closing. Once the loan is sold it is no longer the brokers problem and the commissions made to close the loans are huge!

First they make the kill by luring people in search of the American dream and owning a home. “I can get you into this house and if we have to fudge the numbers a little to get it done, we do what we have to do.” All the potential home owner really heard was “I can get you the loan.” Having the keys to that house is the dream and in that dream comes the people out of the woodwork of that home to make more than a few thousand dollars per loan that they close.

With all the deals that they have they can qualify anyone for a loan and the result is what we are seeing everywhere across America. Bogus adjustable mortgages that reel you in to thinking that you can afford the house payment. No principal payment for X amount of years and the list goes on and on. Everyone qualifies! Or do they? Over at they have this to say about it…

U.S. Home Foreclosures Soar in August
Tue Sep 18, 2007 6:13 AM EDT

LOS ANGELES — The number of foreclosure filings reported in the U.S. last month more than doubled versus August 2006 and jumped 36 percent from July, a trend that signals many homeowners are increasingly unable to make timely payments on their mortgages or sell their homes amid a national housing slump.

A total of 243,947 foreclosure filings were reported in August, up 115 percent from 113,300 in the same month a year ago, Irvine, Calif.-based RealtyTrac Inc. said Tuesday.
There were 179,599 foreclosure filings reported in July.

The filings include default notices, auction sale notices and bank repossessions. Some properties might have received more than one notice if the owners have multiple mortgages.

August's total represents the highest number of foreclosure filings reported in a single month since the company began tracking monthly filings two years ago.

Getting to the point of my post… Who the hell is screaming for the heads of the Mortgage Corporation’s across America on Capitol Hill? Anyone home? Somebody should call an exterminator for the Congress because there seems to be an infestation of crickets when it comes to the lending industry. I wonder why? Democrat’s and Republican’s both own this mess one hundred and ten percent but the ones that really own this self created crisis is the lending industry. As they walk away from it laughing all the way to their own bank the Congress will spin this as a crisisproblem for the American family. In the end the American tax payer that still has a job and a home will pay for the thievery of gentleman and woman disguised as a mortgage broker in wolf’s clothing.

These predatory lending practices should have been stomped on by the government years ago but they chose to look the other way. Millions of Americans have already lost the American dream and millions more will follow in their footsteps because they never saw the used car salesman standing in front of their future home and dream.

Watch the political spin. It should be pointed at the lending industry but that will never happen because that would point to the people that are supposed to pass the laws to not let this sort of thing happen.


Cross posted at Bring It On!

*****HT Schoem Mortgage has linked to this original post via Bring it On!

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Anonymous Tom said...

Sorry to hear about your financial problems. All too many people are in the same situation.

I think I heard recently that the average American has a savings rate of -0.5%. While that may be bad financial planning, I wonder how much poor economic conditions and the lending industry contributes to this.

I remember in college you could get a candy bar if you signed up for a credit card. Granted, lots of people filled out the forms with fake info just to get the candy, but how many actually went ahead and got the card? And this was 15 years ago! I can't imagine it's any better now.

And now we hear about a potential recession brewing. Kind of makes me glad I'm a full-time student right now...

6:16 AM  
Blogger Papamoka said...

Thanks Tom. Extenuating circumstances had to do with a child in the hospital for ten months. Life happens. We move on.

7:22 PM  
Anonymous Anonymous said...

Foreclosure is very rampant today and as far as I have known these corrupt people has to pay for their evil works. Sorry to hear about your story regarding your financial problems. Well, now you should be careful with your decisions. I'll share with you an article, "Stop Foreclosure! Know What To Do", maybe it could somehow help you or others that might read this. Anyway, thanks for sharing this story. Great post!

12:11 PM  
Anonymous Anonymous said...

Bummer you lost you're home. I've done mortgages for a long time. There are so many disclosures that have to be signed. I explained, re-explained,etc.. People know what they are getting into. ARMS are actually good vehicles for some. If people are using them to just magically afford a home in the hopes that in a few years they'll all the sudden be in a better financial position when rates start to climb as are almost always warned documented and agreed to, then shame on them.
People make all kinds of shit up when applying for a home, some times we catch it sometimes we don't but the lies will eventually catch up to you. When they do, which for many is about the time their ARM expires all the sudden they want to blame the same person that was their best friend three years earlier that got them in the house.
Just like the stock market and the tech crunch several years ago. Everyone couldn't get enough of tech stocks no matter how much their brokers warned of diversifying. Then when the bottom fell out all the sudden all the stock brokers were scum and it was their fault, so the government bailed people out.
People should really take responsibility for their own ignorance, I guess sometimes it just helps you sleep better at night to blame someone else.

8:56 PM  
Blogger Papamoka said...

I take full responsibility for my stupidity Anonymous. I don't take full blame when the brokers pointed out appraisers that would value our home at higher rates to get the funds we needed to get out of the crisis that just buried us deeper.

I do not think for a minute that all mortgage brokers are used car salesman but the industry is rampant with the same mentality.

We lost our house, we lost our credit and we eventually were forced to file bankruptcy and still lost our home. What happened to the broker that wrote the loan? Nothing.

9:15 PM  
Anonymous Anonymous said...

Having done some research into living conditions I have made the decision to move to the US! Apart from the medical care (which having just watched the film Sicko I am slightly concerned about) I have decided that there are more positives then negatives and am therefore very excited about the prospect of moving.
However I am concerned with purchasing a house, are mortgages over there the same as there are here? Do I need a large deposit and having spoke to a few people online I am concerned I wont be able to find a company to give me mortgage broker bonds.
and if I cant can I buy a house? Also I am familiar with the term surety bond so is a mortgage bond just a guarantee I will pay on time or is it more?

4:19 AM  

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