Sounds like they both flunked sex-ed class.
"Honey... I'm pregnant."
Posted on 04/21/2008 5:54:51 AM PDT by governsleastgovernsbest
"What is mysterious, what is mysterious about the phrase 'variable rate'?" --George Will, This Week, March 30, 2008
Mystery is in the eyes of the borrower--and the MSM. The term "variable rate" in a mortgage might seem straightforward enough to George Will and our erudite NB readers, but to a college-educated homeowner--and ABC's Kate Snow--it's apparently a real brain twister.
Snow hosted a segment on this morning's GMA dedicated to determining how the various presidential candidates' proposals would address the problems of sub-prime borrowers. As is the MSM's wont, ABC focused on a single sympathetic case, that of the Cruz-Rivera family in Philly.
View video.
(Excerpt) Read more at newsbusters.org ...
I notice there are several comments here about the ONE piece of paper in the many, many pieces signed. Kudos to all who are so quick as to catch that ONE piece of paper in the stack of several hundred, you are truly outstanding.
And while all those who are so intelligent that they would NEVER get caught in such a situation are reading this I'd like to offer a little insight of what you, as a superior being, should look out for: I recently sold a house, I acted as my own selling agent. I received a copy of the settlement statement 24 hours before closing, the first time I had ever seen a statement before going to the table to sign, and there were numerous errors on it. The amount of the errors: $3000+ So let the sellers beware too.
Completely different story here.
“When Yajaira Cruz-Rivera and her husband sat down to close on a home loan more than three years ago, she was confident they wouldn’t be victimized by a predatory lender.
After all, she said, they had done their homework, had planned for contingencies such as a job loss or medical emergency and knew what they could afford.
She told a U.S. Senate panel, in town yesterday to investigate predatory lending and the foreclosure crisis, that she and her husband wanted a conventional, 30-year mortgage with an interest rate of 6.5 percent, which worked out to a monthly payment of $925.
That’s what they thought their mortgage terms would be when they closed on a single-family house in Northeast Philadelphia in February 2005.
But 10 days after closing, their lender, New Century, sent the Riveras new loan documents.
She said the lender told them that the calculations on their monthly payments - including payments for insurance and taxes to be escrowed - were incorrect and that the interest rate had to be readjusted to 10.5 percent, increasing their payment to $1,235 a month.
Later, the monthly payments jumped to $1,671 a month, when an adjustable-rate note was added by a new servicer, GMAC, Cruz-Rivera said.
“What happened to us is pure, plain fraud,” she said. “There’s no other way of saying it.”
Cruz-Rivera’s story came to light during yesterday’s local hearing of the Senate Banking Committee.
Cruz-Rivera, 37, a maternity nurse who lives with her husband and four children on E. Howell Street near Harbison Avenue, said that GMAC recently modified the terms of her family’s mortgage but she still wants to be “restored wholly to what I once was.”
At least Cruz-Rivera still has her home - for now. For many other Philadelphians, the situation is more grave.
...”
I only had one bad experience with a loan. I got a variable rate loan on a car while I was in college. I knew it was variable. The only part I didn't know to check was that the introductory rate quoted had absolutely nothing to do with the index rate plus the spread. After three months the rate jumped from 9% to 14%. I went back to the loan documents, checked what index was quoted, found it in the Wall Street Journal and realized that I had been screwed. I will never make that mistake again.
She said the lender told them that the calculations on their monthly payments - including payments for insurance and taxes to be escrowed - were incorrect and that the interest rate had to be readjusted to 10.5 percent, increasing their payment to $1,235 a month.
If true, then they should have an open-and-shut case in court.
Does the lender have to pay for the debtor to go to night school?
Does the lender have to pay for the debtor's counsel?
Does it stop with home lending or extend to auto lending? How about credit cards?
If you meant "fully disclose the terms of the contract" I agree with you. But as for "interpreting" the contract and its ramifications, the debtor needs to set a little money aside for an attorney to explain anything they don't understand.
Adjustable-rate mortgage documents, including the Promissory Notes, are always clearly marked as such. I wonder when the first story will hit the "borrower didn't understand because he/she cannot read English" angle.
Love the “Register To Vote” shirt. Can’t tell if it is union issued or not.
Does this woman really believe she has the credibility to advocate for competent voting?
“If only there was someone out there who could read complicated legal documents and advise me on them... oh, wait, that’s called a lawyer.”
....absolutely!!....if you know real estate law, then you can act as your own lawyer at settlement and save the money....if you DON’T know the law, then you damn sure better get a real estate lawyer....the lawyer’s fee is the LEAST expensive part of the deal.
OH MY GOD! You label anyone here that says the buyer should beware, should have legal representation, should read the document clearly, fully, several times as some kind of snobby elitist. Then you bitch about how enticing the lending companies advertise and how the current lending companies are on par with loan sharks. Horse hockey. Some bad loans were made but more often than not the borrower lied about their income/ability to pay. Then you admit that you acted as your own council in selling a house a noticed numerous errors. That is you were aware enough to catch some errors but still seem to cling to the idea that legal representation is unneccessary.
Since you were the seller how were you not chiefly involved in the creation/finalizing of the closing documents?
Overall your post is both self-defeating and puzzling.
Pepperdog’s concerns are valid re: the reams of paper one has to go through at a real estate closing. However, the final responsibility lies with the buyer to know what’s going on (in English).
As one who has looked into purchasing real estate property (Italy) or sold it (Hong Kong), I can say the buyer in the USA is usually provided with a lot more information and disclosure than overseas (this was over 10 years ago).
During the purchase of real estate in Chicago, I brought a real estate attorney to go over every single piece of paper. With corrections to documents the meeting with the seller took five hours. With so much money involved, it seems only common sense to bring along someone who can understand the documents and the language. In Italy, no documents were in English and I didn’t expect them to be.
I bought my first house at 21 with a variable rate mortgage. Even as 21 year old non-college educated guy I knew EXACTLY how long until the first rate adjustment, how much it could go up each year, how frequently it could adjust and what the interest rate was tied to.
If I’m buying something that costs four time my annual income I’m going to be careful.
Even with gasoline, we’re being told months ahead of time what the shocking gas price will be.
You are joking of course. Right?
But are you bitter about it?
Sounds like they both flunked sex-ed class.
"Honey... I'm pregnant."
They didn’t go to court over this? Wow!
The borrower SHOULD be informed. But like anything else you buy, the promotions are misleading. When I read something like FREE or LOW INTRODUCTORY RATE, I STOP READING. But I know people with near genius IQs that are still tempted by it. If people really understood what they are getting themselves into, they wouldn’t go for it in the first place. Would YOU have gone for these mortgages? Whether or not there are LEGAL obligations, many on the board here also talk about MORAL obligations, and they don’t stop with sex.
When I got mortgages, there was a blizzard of points and extra costs, and many papers to sign, and fast talking bankers glazing over details.
My position is that these people should have known, but they didn’t. I don’t think they went in thinking about the government bailing them out for the most part.
The media of course wouldn’t do stories about the downside of these mortgages because these mortgage companies were providing a huge portion of their advertising revenues.
I don’t think this is a Left Wing or Right Wing viewpoint or issue. It is a MORAL issue.
One more thing, whether or not the government bails the borrower out, real estate prices will fall, and that affects ALL OF US. If there were a LEGAL obligation for the lender to EDUCATE, all of us would benefit. Apparently, a MORAL obligation is not enough.
As far as legal representation, it is not required nor encouraged where I live, other than a title opinion and title insurance which is handled by the title company.
And would you deny that the loan companies are not enticing unwary and uneducated people with such inducements as no verification of employment, self certification of income, low introductory interest rates, cash back, 125% financing etc.? Do you think these inducements are not effective? Do they not gently suggest the borrower not worry about ability to repay? And what about the investors, is the lender really living up to his responsibility to them?
It should be obvious that the companies, who spend millions on advertising and mailers, are getting significant payback from these efforts. And not from sophisticated buyers represented by “council”.
I think your dismissive attitude of how I handled my business is based on laws that exist where you live. Every state has different laws regarding real estate sales and transfers. What you view as a necessity is not always what is viewed as necessary in other places.
I certainly did not think of myself as acting as my own “council”, I am smart enough to get legal council when needed. I acted as my own real estate agent. I did submit expenses to the closing company but the errors I discovered were placed there by the closing company, not by the selling broker and not by me.
Sorry if I confused you, but we're even now as your post puzzled me too :^)
Evidently many here don’t think MORAL responsibility is applicable to business deals. Strange isn’t it?
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