Posted on 08/20/2007 9:56:04 AM PDT by 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.
(Excerpt) Read more at money.cnn.com ...
McMansion exception?
Idiots who want to save money. Right now the spread has come down, but it saved me a half of a point over 5 years when I did it, which more than justifies it. I have never stayed in a house more than 3 years. You can live in a bomb shelter with a security blanket if you wish. You have to base decisions on reality. You can't just make blanket statements and call everyone an idiot who does not agree with 'your reality'.
Not only do they have them BUT many "Interest Only" loans DO NOT EVEN REQUIRE PAYMENTS WHICH COVER THE INTEREST!
THE UNPAID INTEREST IS ADDED TO THE PRINCIPAL EACH MONTH!!!
Just when I thought I'd heard everything.
You base all your decisions on a paranoid reality. Just because a rate is adjustable does not make it more likely you will lose your home. For the first five years, it is less likely if you have a lower rate. Why do you insist that your reality applies to everyone???? It is STUPID to pay extra for a rate when you know you are gonna move. STUPID. End of discussion.
When the rates are at historic lows which way will they go? Up. I for one will not gamble my family’s future on an ARM.
A 5-year ARM is FIXED for FIVE YEARS! I really don’t care which way the rates are going if I move anytime before then. Get it?
So? Like I said I could have sworn on a stack of bibles I would be out of my current house in under 5 years, that was 6 years ago. Life does not always follow your plans and why take a chance this big with your family? Get it.
There are some really flakey mortgages out there and many are hiding within AAA rated CMOs courtesy of "generous" securities rating agencies! Is it any wonder that hedge funds (and other entities), when forced to account for what the value of their "TRUE ASSETS" is, no buyers can be found (thus giving their assets a immediate ZERO value?
It will be many months (hopefully not years) before an accurate picture of the extent of this problem will be revealed!
Just wait until all these "genious" portfolio managers are exposed as either careless idiots or outright crooks! All this after they collected exhorbitant fees for placing their clients' assets in "Gilded Junk"!
What more do banks need to do? Read the disclosures to the applicants? And they best get it on tape or else the shysters will go after them.
No but in 10 years you could be paying 24.875%. Now that sounds high.
So, there are millions of people who do move within 5 years, but because you did not, everyone is stupid. Got it.
And how many will get burned by not being able to move or not wanting? The risk is way to great to play with something so important to you family.
Wow: Talk about a mile wide broad brush.
There are excellent ARMs provided people got them for the right reasons. I know someone very well who has a 7/1 ARM with a 4% interest rate that doesn't reset until 2011, by which time he planned on downsizing anyway, since the kiddies will all be done with college then, for several years. In fact, when he realized that money was essentially free in 2004 when he took out the mortgage, he borrowed more than he actually needed, and still has over 65% equity in his home.
You are right, as always! ;-)
5% fixed is one thing when your talking about a 175,000 dollar piece of real estate.
It’s quite another if it is a 375,000 piece!
On a 5 year Arm, I would say real close to zero. You have zero tolerance for risk and see fear everywhere.
Not zero, but I do not take cances when I do not have to. And I figure many will side with me afte rhte next 2 years.
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