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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,

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 ...


TOPICS: Business/Economy
KEYWORDS: applesonly5cents; depression; despair; doom; dustbowl; grapesofwrath; lawsuits; lawyers; mortgage; realestatebubble; speculation; subprime; vulturegram
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To: Always Right

Yeah. Irrational fear of a floating rate debt product. ARMS can offer excellent value to those who understand them. The same people would say “Stocks are risky and should be avoided!” LOL.


41 posted on 08/20/2007 11:28:19 AM PDT by dashing doofus (Those who are too smart to engage in politics are punished by being governed by those who are dumber)
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To: Hydroshock
Every speculator who intended to flip a house before the interest-only loan rolled will be lined up for handouts of taxdollars now that the market has softened and they lost their get-rich-quick gambles, after Bawney Fwank's hearings on the "mean ol' Lenders" is done.

Heads up taxpayers: you are going to be paying other peoples' mortgages soon!

42 posted on 08/20/2007 11:52:06 AM PDT by traditional1 ( "A liberal is someone who feels a great debt to his fellow man, which debt he proposes to pay off)
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To: Realism
No but in 10 years you could be paying 24.875%. Now that sounds high.

Certainly does, but mine has an ultimate cap of 12%. Even if it didn't, my principal is low, so the buydown is appreciable. I would never have taken out this ARM if I'd been borrowing a substantially higher amount of money.

43 posted on 08/20/2007 3:31:46 PM PDT by grellis (Femininists for Fred!)
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To: Always Right

When we bought our first home our plan was to perhaps stay there for 5 years, but after 5 years, we were not ready to make the move into a new home. We finally moved 17 years later.


44 posted on 08/20/2007 6:28:52 PM PDT by psjones (u)
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To: Hydroshock
Well if the judge felt the document was not clear, there is a good reason to give an out to the borrower.

There is some duty of the lender to make the terms in common English perfectly clear.

If they are dealing in some language, they are equally responsible for perfect translation and clarity of those terms in whatever language.

45 posted on 08/20/2007 6:33:14 PM PDT by A CA Guy (God Bless America, God bless and keep safe our fighting men and women.)
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To: A CA Guy

Agreed, to a point. I would make sure I understood, and if not I would hire a lawyer to represent my family and myself.


46 posted on 08/20/2007 7:07:43 PM PDT by Hydroshock ("The Constitution should be taken like mountain whiskey -- undiluted and untaxed." - Sam Ervin)
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To: Aquamarine; ExSES
THE UNPAID INTEREST IS ADDED TO THE PRINCIPAL EACH MONTH!!!

Just when I thought I'd heard everything.

I believe that there are 2 types of ARM loans. One has a cap on interest increases. These say that the increase in interest can't exceed some fixed percentage each year. Another, nastier sort of ARM caps the increase in your payment per year. For instance, it may limit the increase in your (minimum) payments to a fixed percentage. However, it makes NO MENTION of any interest rate increases. So, if the interest rate increases at a greater rate than your payments, you go into negative amortization, meaning that every month you go further into debt.

Unfortunately, many people don't understand the difference between the 2 types of ARMs.

Mark

47 posted on 08/20/2007 8:41:49 PM PDT by MarkL (Listen, Strange women lyin' in ponds distributin' swords is no basis for a system of government)
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To: goldstategop

That’s what the bitch is about.


48 posted on 08/20/2007 11:32:46 PM PDT by jwh_Denver (http://www.youtube.com/watch?v=1k08yxu57NA&NR=1)
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To: Always Right

“I really don’t care which way the rates are going if I move anytime before then.”

Unless of course when the market tanks where you own the home. Think MI and then think of how screwed the folks with ARMs are in MI.


49 posted on 08/21/2007 8:42:58 AM PDT by CSM ("The real question is, why don’t we hate them?" - Veto! (8/9/2007))
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To: CSM
Think MI and then think of how screwed the folks with ARMs are in MI.

LOL--me!!! When we refinanced our primary mortgage with an ARM, we did so knowing that we'd have the house on the market within 18 months. One year after our refinance, our house went on the market--and it is still there, over 18 months later!

We're not screwed, though. I was very careful to make sure of what we were getting ourselves into, and that we would be able to afford the rate increases if the real estate market tanked, which it did, spectacularly.

50 posted on 08/21/2007 9:20:10 AM PDT by grellis (Femininists for Fred!)
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To: grellis

Thank goodness you used a very reasonable approach. I’m not saying that everyone that does an ARM is “stupid.” However, it is a risky proposition for many and I think the variable of “planning to sell” a house within a couple of years is a variable that is to easily influenced by markets like what is in MI right now.

I have a friend, and fellow FReeper, that relocated out of state. He bought his house a few years ago (I think 6 years ago) for $145ish, then pulled a little equity out so that his current mortgage balance is about $152K. His vacated home is currently on the market for $138K.

The market is a mess.....let’s hope it turns around soon.


51 posted on 08/21/2007 10:52:40 AM PDT by CSM ("The real question is, why don’t we hate them?" - Veto! (8/9/2007))
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To: Hydroshock
The point of required straight talk in contracts by law is that you supposedly do not need a lawyer.

I play RB with a mortgage loan broker as of late and am making a new friend. I have been told by him that there has been terminology being used by some to make slick loans that hurt the clients.
He is a straight up person, didn’t do any, but got into a long conversation of what the problem was and what his business has been guilty of doing.

They have been trying to be slick and IMO we are going to see lots of successful lawsuits because of the slickness, in many cases it will not be due to a lack of proper vigilance by the borrowers.

Stuff has been going on based on the lecture to me.
I felt bad for people hearing about it Hydroshock.

52 posted on 08/21/2007 11:48:15 AM PDT by A CA Guy (God Bless America, God bless and keep safe our fighting men and women.)
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To: A CA Guy

I would never think of entering to such an important long term contract without having a lawyer I trusted look it over for me.


53 posted on 08/21/2007 11:51:12 AM PDT by Hydroshock ("The Constitution should be taken like mountain whiskey -- undiluted and untaxed." - Sam Ervin)
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To: Hydroshock
You are more experienced and sophisticated than most.

I think with generations of one parent households, less educated folks and being offered an opportunity to get into a house they thought they couldn’t afford... they snap at the contract.

What they are not as wise as you to figure out was that the language fooled them. They indeed could NOT afford the house they are in and for the average person the contracts are deceptive.

The whole point of straight language in contracts by law is that common folks can read simply what is going down and they shouldn’t have to find a $400 dollar an hour lawyer to look it over and dumb down for them what is happening.

This will turn on what is expected as plain language for a common person. The law requires plain language. If it is plain language for a law graduate, that might be too high of a standard to survived regarding the judicial systems and their contracts... IMO.

Going to lunch, have a great day.

54 posted on 08/21/2007 12:04:40 PM PDT by A CA Guy (God Bless America, God bless and keep safe our fighting men and women.)
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To: A CA Guy

In all honesty a commonly used contract like these should be written in 7th grade english so people can understand them.


55 posted on 08/21/2007 12:16:36 PM PDT by Hydroshock ("The Constitution should be taken like mountain whiskey -- undiluted and untaxed." - Sam Ervin)
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To: Hydroshock
I agree with you, but in 4th grade English, not 7th grade English.
56 posted on 08/21/2007 3:14:44 PM PDT by A CA Guy (God Bless America, God bless and keep safe our fighting men and women.)
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To: TChris

How do you prove that Chevy Chase bank in fact decieved you, and you’re not just stupid?


57 posted on 08/21/2007 3:15:45 PM PDT by RockinRight (Fred Thompson once set fire to a crowd of liberals simply by puffing his cigar and staring real hard)
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To: Hydroshock

How do you define “clear and understandable??” What you or I consider understandable might be different than someone else. You can’t idiotproof everything.


58 posted on 08/21/2007 3:16:43 PM PDT by RockinRight (Fred Thompson once set fire to a crowd of liberals simply by puffing his cigar and staring real hard)
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To: montag813

It’s a negative-amortization loan. There’s nothing wrong with it IF YOU KNOW WHAT IT IS AND HOW TO USE IT. Hint: if you have a decent net worth and wish to improve it, then this loan might be a way to go.

If you’re living paycheck to paycheck, can barely afford the “starting” payment, and have little or no cash reserves, stay away.


59 posted on 08/21/2007 3:18:28 PM PDT by RockinRight (Fred Thompson once set fire to a crowd of liberals simply by puffing his cigar and staring real hard)
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To: TexasCajun

Oh, NOW I get the joke. LOL


60 posted on 08/21/2007 3:19:28 PM PDT by RockinRight (Fred Thompson once set fire to a crowd of liberals simply by puffing his cigar and staring real hard)
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