Mortgage meltdown: The lawsuits

http://money.cnn.com/2007/08/16/real_estate/here_come_the_judgements/index.htm?postversion=200708201 ^ | 8-20-07 | Les Christie,

[Hydroshock]

NEW YORK (CNNMoney.com) -- Earlier this year, a Wisconsin couple won a judgment against Chevy Chase Bank that said the bank deceived them over the terms of their mortgage.

The judge ordered Chevy Chase to rescind the loan and certified the lawsuit as class-action, which could potentially release thousands of other borrowers who felt misled.

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According to their attorney, Bryan and Susan Andrews believed they were getting a loan with a fixed 1.95 percent annual interest rate for the first five years. What they got was an option adjustable-rate mortgage (ARM); the 1.95 percent rate only applied for the first month and rose every month afterwards.

"The second month, the interest rate was about 5 percent," said their attorney Kevin Demet. "After a year it was about 7 percent and now it's in the 8s."

The bank said it clearly spelled out the loan terms, but the judge found that Chevy Chase violated the Truth in Lending Act (TILA), which mandates that mortgage documents must be clear and understandable. Chevy Chase is appealing the judgment, and did not respond for comment for this article.

[TChris]

The bank said it clearly spelled out the loan terms, but the judge found that Chevy Chase violated the Truth in Lending Act (TILA), which mandates that mortgage documents must be clear and understandable.

It is impossible to make an idiot-proof mortgage. They just keep making better idiots.

[goldstategop]

I have a fixed at 5.87% 30 year. I find it hard to understand how someone signed for an ARM without knowing what kind of mortgage terms they were agreeing to.

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus

[Calpernia]

ping

[Eagles Talon IV]

By the time the bank gets done with the appeals process the plaintiffs will be dead of old age.

[Hydroshock]

Agreed, but I expect to hear more of this. I remember reading of a county in TX were the banks could not foreclose on any property in the depression, the sheriff would not do it adn the county judges would not take part init as well. In a year or so will any jury find for the bank in these cases?

[Moonman62]

We have to maintain the FR theme that anyone who got an ARM is an idiot who deserves whatever bad thing happens to them. /s

[Southack]

So did they give the house back when the loan was rescinded, or did the Judge just decide to use THE LAW to give away homes?

[montag813]

What they got was an option adjustable-rate mortgage (ARM); the 1.95 percent rate only applied for the first month and rose every month afterwards. "The second month, the interest rate was about 5 percent," said their attorney Kevin Demet. "After a year it was about 7 percent and now it's in the 8s."

Say what you want about shyster lawyers, that is one pretty f**ked up "loan".

[Hydroshock]

ARM’s are bad option whenever the interest rates are at 30 to 40 year lows. Guess which way they will go?

[TexasCajun]

"Didn't know I owned a bank, did ya? "

[montag813]

We have to maintain the FR theme that anyone who got an ARM is an idiot who deserves whatever bad thing happens to them. /s

The only problem with people taking that blame-game tack is that no less a personage than Alan Greenspan urged Americans to take out ARMs in Feb. 2004.

[Hydroshock]

That is why my wife and I are working to be debt free.

[TexasCajun]

I understand they even have interest-only mortgages available?

[Always Right]

ARM’s are bad option whenever the interest rates are at 30 to 40 year lows. Guess which way they will go?

If you plan on staying in the home for a length of time. Since most people move after about 3 years, a 3-year or 5-year ARM is a better deal. If you are not gonna take advantage of the last 25 years of the fixed rate, why pay the premium on it?

[Aquamarine]

A bank offered a young man I know a no down payment 110 percent loan on a fixer upper with interest only payment first two years. Never heard how much the interest rate was but am guessing in the 20's.

It's a disgrace what they're trying to do to young people who have no idea.

[Hydroshock]

“If you want to make God laugh tell him your plans.” I planned to sell my house in 5 years when bought it. I will be in next month and probably it will a year or 2 until we do move. If then. ARM’s are for idiots, and that will soon be the mantra of many by this time next year.

[DCPatriot]

And imagine.... you claim brown eyes too! ;^)

[VOA]

We have to maintain the FR theme that anyone who got an ARM is an idiot
who deserves whatever bad thing happens to them. /s

Well, calling everyone that takes an ARM "an idiot" is a bit
too sweeping.
But, while waiting in the doctor's office this morning, I read
a "Money" magazine article on ARMs.
The investor (in Florida) they interviewed said he'd made a killing
via ARMs. And that people who take out ARMs are "idiots".

I was a bit suprised that someone making $$$ off the product would
slam the buyers so directly.

[Hydroshock]

I remember in the late 1980’s in the oild bust a lot of people lost their homes. Many had ARMS. I ahve always looked at ARMS and insane, particularly when we have 5 to 6 percent fixed out there.