Posted by Charm_AL on 4/10/07 9:49am
Msg #184441

reading...

http://www.msnbc.msn.com/id/17929461/

Reply by PL on 4/10/07 10:41am
Msg #184448

When one see 2% money, one should wonder

how do they have such cheap money? The radio is overflowing here with 1.99% money with the fast talking at the end with all the particulars. Like they say. "If it sounds too good to be true, read the fine print". to me, it all boils down to Caveat Emptor.

Reply by PAW on 4/10/07 11:35am
Msg #184461

Introductory rate ... Negative Amortization ...

The **loan** rate will be a standard rate, say 9%. The intro rate of 2% (for the first month!) followed by periodic increases until the **payment** rate meets or exceeds the loan rate. So, what does this mean? If the interest payment due the first month is $900 (at 9%) and the borrower is only paying 2% or $200, the other 7% ($700) has to be accounted for. It is ADDED TO THE PRINCIPAL. So instead of decreasing their principal by some amount, say $300, the principal has INCREASED by $400! And if they are not paying any principal (I/O), then the whole $700 is added to the principal. This is how many homeowners got into trouble, along with all the subprime crap.

I had one closing where the borrowers were upside in their mortgage because of the negative amortization. In order to refinance out of that loan, they had to sell some personal property and apply the funds to the loan to get the principal down below the appraised value. What a nightmare.

Reply by SueW/Tn on 4/10/07 11:42am
Msg #184463

Re: Introductory rate ... Negative Amortization ...

A true nightmare without question. I had one borrower with an MA in business with one of these, when I pointed out the terms she got huffy and said "I wasn't born yesterday, I intend to take care of this before it buries me but at the moment I need this I/O deal"...case closed. Many walk in with their eyes wide SHUT, temporary fixes turn into some of these horror stories but we don't have Paul Harvey telling us "the rest of the story".

Reply by CJ on 4/10/07 11:44pm
Msg #184586

Re: Introductory rate ... Negative Amortization ...

I hate to say this, this is what I see. We have a LARGE Hispanic commity in our area, mostly poor, most barely speak English. I don't speak Spainish, but I do okay at these closings. Anyway, THESE are the people that I mostly see get these type of loans. I show them the figures, and they call their processors. The processors speak Spanish, so they jabber in Spainish, and then they sign the loan. Honstly I think, "Just because he speaks Spanish like you dosn't mean you can trust him!" I know they are suspicous of me becuase I am white. I see them lean back, look me over, and ask why they didn't send a Spanish speaking notary. But they trust their "amigo".

One time the processor was right there. I showed the borrower the interest rate: 8%. The borrow said it was wrong. The processor said it was "really" 4%. They argued in Spanish for 45 mintues. I was glad I didn't know what they were saying. Then the processor stepped outside to make a phone call. I told the borrower: I don't know what he said, but THIS (on the Note) is the interest rate". He said, "I'm not signing. I grabbed the papers and left (before the processor could stop me).