Lender accepts stated income and loans 100% on an adjustable rate at a low start level for two years.
After two years, payment increases dramatically and owners can't make payment.
They try to refinance, but value of the house went down and they can't refi enough to payoff original 100% loan.
They default and get foreclosed.
Texas: Bought house 2 years ago on stated income, not one piece of documentation. 30 year fixed at 5.75, 20% down. Original company kept trying to get me into a house that costs more than twice as much. Loan sold 3 times-now with Countrywide. Keep getting calls from them-”they can ‘restructure’ my loan to give me lots of cash and percentage would probably only be 6.25” Also recd form letter from their CEO saying they were good company, etc. Apparently they are trying to counteract all bad publicity. Not sure what would happen to my loan if they go under. Son and daughter-in-law bought great house 3 years ago for $170,000-not uncommon in Houston suburbs-their loan co said they qualified for $800,000 with zero down. They said no, many of their friends said yes - two have lost their homes to foreclosures. Buyer beware!