Posted by PJM/MI on 3/2/07 3:23pm
Msg #177932

ARMS & foreclosures

I keep reading news articles where bo's who signed ARMS a few yrs. ago are now in the process of foreclosures. I just cringe when I read where the bo states, "I didn't know my interest rate was going to adjust".
I know it isn't our job to make sure they REALLY understand what they are signing, but c'mon.. a good closer goes over the note & the terms. Plus... they have a copy of the docs! It looks like they just stick 'em in a drawer and forget about 'em until the interest rate adjusts.
One of the articles I read made it out like the closing agent was the "Bad" guy... we didn't originate nor write the loan... we just made sure they understood they were back in debt and they signed, signed, signed.
Just my vent for the day.

Reply by MikeC/NY on 3/2/07 10:32pm
Msg #177988

The bottom line is that we don't know the borrower's financial situation - and it may be that they are eager to sign a note that will get them out from immediate crushing debt, even if it means they will be taking on more debt in the future. Not our problem, and nothing to feel guilty about.

What I've seen lately is people converting ARMs to fixed rate loans. Some of these are sub-prime, so the interest rate is hefty - LO tells them "we just need to do this for 6 or 7 months, then your credit score will be higher and we can redo the loan at a lower interest rate". What are the chances of that happening when these people are living hand to mouth? Again, not my problem - I have no idea what their finances are, and I'm not being paid to figure that out...

My personal favorite - a 30 year balloon note amortized over 50 years; after 30 years, you still owe approximately what you borrowed 30 years ago. LO's rationalization for this: "We need to do it this way to keep your payment low. Besides, you'll either sell the house before then, or your credit rating will be better and you can refinance at a fixed rate". OK - and I have a bridge in Brooklyn that you might be interested in...

It's not my job to ask the borrower if they really understand what they're getting into - that's for a lawyer or a financial advisor to do. As long as they're signing willingly, my job is done.

Reply by Susan Fischer on 3/3/07 12:37am
Msg #178018

Well done! Notarize, don't analyze. Hope for the best.

On the other hand, Charles recently posted some valuable info re forclosures, if you're interested in win-win opportunities.

Reply by Kevin/Ct on 3/3/07 5:22am
Msg #178033

The law on the subject is that a party who signs a document will not be heard to say that he did not read the document at a later date. The signer on a note and mortgage has an obligation to read the documents he signs. If he does not understand the documents he has an obligation to take it to an attorney who can explain the documents to him.

Not reading the documents is not a defense to a foreclosure. I recently saw a foreclosure in which a woman was representing herself, and argued to the court that she did not read or understand the terms of the note and mortgage. The judge informed her that it was not a valid defense.

Borrowers who sign loan documents without benefit of legal counsel do so at their own peril. They certainly have ample opportunity to obtain legal counsel in time for the closing, and have the three day cancellation period in which to have an attorney review it.

Reply by WDMD on 3/3/07 5:28am
Msg #178034

I've got one now where a guy is trying to claim it was not him that signed the documents. Its interesting that he was the sole borrower and this loan was signed over a year ago. That must have been a nice person who "stole" his identity to be making the payments until now.

Reply by Tracy_ME on 3/3/07 6:58am
Msg #178038

There are instances when someone will use a stolen identity to obtain employment, credit and even homes and mortgages with a stolen identity. I have seen it first hand. I used to work at an H and R Block office less than 20 miles from Boston. A clients return had been "rejected" for a bad social security number. I did not prepare his return but I was the senior tax preparer on duty when he came back to fix his problem.

As I explained to him that the social security number came back rejected. He agreed and explained that he was here illegally and had been for 12 years. I asked him if he had ever filed his taxes before. He said no. I asked him why he chose now to begin and his reply was "I bought a house this year and I was told that I would get a lot of money back". He went on to show me a wallet full of credit cards. He had a job, credit cards and a mortgage in someone else's name. He was paying "his" bills. He thought he should file "his" taxes and get "his" refund!

Reply by Kevin/Ct on 3/3/07 7:13am
Msg #178042

He has more problems than that. At the very least he is looking a deportation. At the worst he is looking at a jail term for tax evasion. In either instance he can probably kiss his real estate and his "whole lot of money" good bye.

From what I understand this individual's conduct is common among illegal aliens in Florida.

Reply by Kevin/Ct on 3/3/07 7:10am
Msg #178041

Forgery is a valid defense to a mortgage foreclosure. Forged documents are void or voidable.
The issue come down to the expert testimony of handwriting experts at trial if the lender elects to take it that far.