Here is The Normal Press Spin On Non conventional Mortgages - is this Right?
“So Sad They Were Bad”
Exotic mortgages bring higher stakes
Kirstin Downey | The Washington Post
January 16, 2007
WASHINGTON — At 64, and looking toward his retirement next year, Willie Lee Howard agreed to refinance his duplex in Washington, thinking that a fixed-rate loan would help stabilize his finances.
What Howard got instead was a mortgage he did not understand. Baffled by the loan documents he was mailed after the closing, he consulted an AARP lawyer and learned that he now had an interest-only loan, a new and controversial kind of mortgage. Howard was told that under its terms, his mortgage balance will rise instead of fall and that he will need to refinance in 10 years, when he may be too old to work.
“This is a bunch of junk they done to me,” said Howard, a construction worker.
Larry’s Commentary: At age 64 or 24 a loan can be a bad thing or a good thing. The most condemned product, even by me, the Option Arm or Negative (NEG AM) ARM can be a Godsend. More than once I have sold this product to single mothers, recently divorced, with teenagers that need some stability. Moving means new schools, new friends, and that which is wrapped around moving. The neg am product was the only way they could afford to stay. I would sell it again in these circumstances.
However, some crooks, and I use this word a lot lately, prey on people. A new young hotshot joined a firm I was working for and was assigned the cubicle next to mine. It didn’t take long to figure out he was preying on old people. He would sell the negative AM product as a fixed. He was quickly gone as I exposed his tactics to the owner. The last I heard the feds had him in their clutches.
If you gain anything from this site you will learn to be dubious of miracles. There are products that specialize of course. But the too good to be true quote applies so very much to mortgages.
I will tell you what to do. If it seems too good to be true, email me and ask me. I will undress the facts clearly and bluntly. You can count on that. Larry Cragun
You’re right Larry. A loan is just a tools. It can be used properly to do a specific job, or it can injure the user when used improperly. See my recent post on Creating Affordable Payments using the Pay Option ARM.
There are really incompetent and unscrupulous people in the mortgage business, and we certainly need to weed them out and instruct the consumer on ways to avoid them. On the other hand, the media never acknowledges the pilot error involved with the abuse of “exotic” mortgages.
Did the consumer really believe they were entitled to a 1% interest rate. What happened to common sense!?
Yeah baby
The most important thing for a consumer is to find someone that they trust. I really recommend using someone who you have received a personal recommendation about. As an appraiser, I work with many lenders but only recommend two.
What kind of loan a person needs is based entirely on that person’s context. A reputable loan officer will explain, based on context, exactly what kind of loan they are recommending and why.
Good point Chad.
It is sad when bad things happen to good people because of bad people. Can we just run over the lenders with are cars?
People need to go into finding a lender and a loan with their eyes wide open. In your town they should call you for a referral.