Posted by Becca_FL on 5/30/06 10:29pm
Msg #123131

How much of this have you seen?

2/28 amoratized over 40 years AND the borrower is lead to belive it's a 30 year amoratized loan. Low and behold when they see the baloon payment due and payable in thirty years, I'm always asked "what is this or huh." I'm getting tired of pointing people through the note and directing them to call their LO. Why do the LOs do this? Are they that desperate for a sale? Somedays, I just hate what I do. Today was full with desperate people, Lis Pendenses and people needing mony to buy another bussiness TODAY.

It is a sad day when the bulk of my business these days is due to people unable to pay their current mortgage, but this is what I see more and more. Many of the people I see had no idea that they had an adjustable rate or escrows were not being held, etc.. Huricane season is just two days away and two loans that I closed today had last minute insurance issues and could not close at EOM.

I love my direct broker deals & the Chase deals that I do, too bad they are not what they used to be. Hello Yale, Option One and Ocwen. It's a shame this is what we have to look forward too.

Reply by NCLisa on 5/30/06 10:42pm
Msg #123134

I am expecting the Chase loans to hit a downward spiral soon, with the way Chase has started doing business in the last couple months. They are now sending out a $20 check with halftoned fine print on the endorsement stating that if you cash the check you have automatically signed up for credit protection that could cost you $550 annually (and it's actually worthless), the their CC dept has stopped allowing customers the make more than one payment per billing cycle. I hate to see a good company go sleazy.

Reply by Ndwa on 5/31/06 12:20am
Msg #123143

Did one today exactly like your mention, 2/28 interest only on a 40 yrs amortized balloon payment. Borrower was 85 yrs old. They got the best of her with a 3 yrs prepay penalty. The broker is her former accountant's neighbor in CA who he referred. She wanted to take out a reverse, but they talked her out of it. All I could say was that she has 3 days to cancel. It took almost 3 hrs to sign a 150 package and from the look on her face, I don't think she want to sign another stack.

Reply by Becca_FL on 5/30/06 10:50pm
Msg #123136

Yuck! Typos & too s/b to...sorry...

place "that" between shame and this.

What a night!

Reply by MichiganAl on 5/31/06 2:52am
Msg #123147

I do loans like this almost every day for a sub-prime lender. There's nothing wrong with them as long as the l.o. has been clear about the purpose of the loan. I see these loans for people who need to lower their short term payments while trying to improve their credit. Many of them are paying off 7 or 8 credit cards. They're saving hundreds of dollars a month in payments and in interest and improving their debt ratio. No one else would do the loan for them. They're so happy they're practically in tears. They don't care about the 40 year amortized balloon because they know they're going to refi in two years when the fixed portion and prepayment expire. They just need a year or two to get back on their feet. Even when the l.o. doesn't do a good job of explaining it, I can show them the terms in a way that they understand and are comfortable with it. When I show them the TIL, I let them see that the balloon is due in 2036. They say, "we won't have this loan in 2036, we're refi-ing or selling in a few years." Then they realize they've answered their own concern.

I used to freak when I saw balloon loans. Now I see people getting help that no one else would provide, and I see how relieved they are. I love doing these.

Reply by Joe Ewing on 5/31/06 9:29am
Msg #123170

Me being a career insurance agent and trained financial planner helps me understand what's being done on behalf of the client. So I'm with you Al and as you can imagine I see this a lot of this in So Cal. The Loan Officer in a way, becomes the financial planner a hero of sorts.

Credit card companies... Discover is a good example will continue to raise their limits like birthday gifts. Even when a client has a late payment history. $10,000 is a $400 monthly payment and that mostly just pays the interest. 30 days late the Discover starts calling morning , afternoon and evening 20 - 40 times a day. In some cases if they have 3 phone numbers all 3 phones will ring simultaneously. This relentless harassment stops the day the payoff happens.

High unsecured debt = low credit score. Secure Credit Card debt = higher credit score = future better loan. Forget everything if the borrower starts collecting credit cards 6 month in.
And that is the ugly side. When I see a pre-payment penalty added to a payoff I know the score.

Reply by Missy_Lulu on 5/31/06 2:18pm
Msg #123255

The problem here is if this is there last ditch effort to stay out of bankruptcy.
If they refi to consolidate high interest credit cards with their home securing the loan, they have just taken unsecure debt that would have been washed away in a bankruptcy and made it secure debt (secured by their home).

Reply by PAW on 5/31/06 6:28am
Msg #123149

I've been seeing a lot of the 40 year amortized/payable in 30 years/balloon loans since November of last year, primarily for new home purchases. Most have been either a 2/28 or 5/25 ARM, but even a couple have been fixed rates. These are okay for those who intend to invest in their property, but want to live in it for 2 to 5 years or are hedging on the rising interest rates to again lower in a few years. There seems to be a lot of optimistic buyers out there. Since these are mostly title closings, we make sure the buyer is well aware of their loan parameters, and if necessary, they call their loan officer for details.

Reply by KS_king on 5/31/06 9:39am
Msg #123173

I had one lastnight with 15yr balloon on 2nd and was not disclosed on Note. There was a seperate balloon notice. I usually go over HUDs and Notes on both loans first when doing piggy backs but didn't see the seperate balloon notice and an hour later into the signing came accross the notice and brws said STOP. They were already POed with their LO because they originally wanted a single 15 yr fixed with escrow and of course they got a 30 yr 80/20 and no escrow. The surprise balloon was the last straw.

Reply by Bob_Chicago on 5/31/06 9:50am
Msg #123180

Have bwr look at TIL early in signing. Balloon payment......

adjustable rate and pre-payment penalty (if any)
will be disclosed there.
If you are going to have a problem, better to have it before
you wasted a lot of time with w-9s and 1003s

Reply by MistarellaFL on 5/31/06 9:57am
Msg #123186

That's why I have a certain order to present the docs

NORTC, HUD, Note, Mtg/Deed, TIL.
If these are correct, everything else is a piece of cake.
It has saved me much time to get these particular docs addressed 1st.

Reply by Becca_FL on 5/31/06 10:14am
Msg #123194

Same here, with a little change

HUD, Note, 1st payment letter, TIL, RTC, Mtg and then the rest. Presenting docs in this order (or a similar one) will save tons of time over the course of the year. Another thing I do (thanks PAW for this little tip) is give the borrowers the HUD to look over while I jot down their ID info in my journal. Then I ask "would you like for me to go over the SS with you now or do you have any specific questions?" 70% of the time they say no and I've saved 60-90 seconds.

Reply by MistarellaFL on 5/31/06 3:37pm
Msg #123280

Who says we don't give out good info to newbies :) n/m

Reply by Becca_FL on 5/31/06 9:47pm
Msg #123359

For REAL! :) ........... n/m

Reply by MelissaCT on 6/2/06 11:26am
Msg #123660

Re: Same here, with a little change

I do the exact same -- HUD while I'm writing. Similar starting order -- Mtg deed either at beginning, after the #'s are looked at, or at the end (due to witness required). Saves a LOT of headaches in the long run. I also tag (post-it note or flag) any docs in bwr's copy that bwr was especially interested in while we're signing or of interest later (how to request copy of appraisal, questions for LO to be answered, etc.). Makes for easy reference for bwr after I've left -- OR I'll place those docs on top of their stack.

Reply by KS_king on 5/31/06 9:58am
Msg #123188

I'll be darn!!!

Duh!!! Never thought of that. Thanks Bob.