tag:blogger.com,1999:blog-6323554779266663124.post5515402985570697079..comments2023-11-03T04:45:26.986-05:00Comments on Proprietor Nation: Liars into Victims: The Continuing Misleading Mortgage Narrativemike volpehttp://www.blogger.com/profile/00858580982582146161noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-6323554779266663124.post-46775679538639835802007-10-03T10:57:00.000-05:002007-10-03T10:57:00.000-05:00I know these buydown loans and frankly, I myself, ...I know these buydown loans and frankly, I myself, don't understand them, which is why I have never done any. I don't know if this guy made a killing so to speak. The amount of money that a broker makes is not related to the type of loan he offers. It is possible that your son was able to buy a bigger house as a result of this loan. <BR/><BR/>Your son's story is different than most because I agree with you in this case one of the sociopaths that regularly infects my industry did do a huge number on him. Again, I have no use for almost anyone in my business and if you read much of any of my other work on the crisis I am not shy in saying it. All I can say is you are right, caveat emptor. If your son didn't understand the loan, he would have done himself a favor getting the simple fixed loan you offered. There is a sense of greed here too, and I am not trying to pile on, but your son looked at the payment of this loan, and then looked at the payment of a fixed loan and was seduced. <BR/><BR/>Unfortunately, the responsibility rests with him. If he was flat out lied to, that is an unfortunate but not uncommon occurrence. Like I said, my industry is infested with scum and sociopaths. One of my first posts is about one such co worker and the number he did on me. <BR/><BR/>Your son's story is not the usual. Most of the problems come with people who stated their incomes in order to buy property they frankly couldn't afford. In the macro, if the problems were only those like your son's we wouldn't have a crisis.<BR/><BR/>In the micro, I hope your son takes with him the lesson that you never get involved in something you cannot understand completely. There is another class of loans called Option Arms which people also don't understand and far too many are involved in those as well and also headed for similar peril.<BR/><BR/>I am sorry to hear about what happened but it sounds like he got out of it only a valuable lesson.<BR/><BR/>The other lesson is that if something is too good to be true it is. Your son was lead to believe that a loan would start 2 full percentage points below the market and gradually rise to the "prevailing" market rate. In fact, your son wasn't lied to at all. What happened was that in the interim, the "prevailing" market rate shot up. He obviously assumed or didn't think about what could happen to the prevailing market rate, but he basically got in on a low payment without understanding the ramifications.mike volpehttps://www.blogger.com/profile/00858580982582146161noreply@blogger.comtag:blogger.com,1999:blog-6323554779266663124.post-19425683463326774432007-10-03T10:36:00.000-05:002007-10-03T10:36:00.000-05:00My son was caught up in one of these sub-prime loa...My son was caught up in one of these sub-prime loans by a builder / lender combination that in my opinion committed fraud. My son is a well educated person (with a PhD), but inexperienced in financial matters. I had cautioned him about taking an ARM in a rising interest rate environment, but he ended up signing what essentially turned out to be an ARM anyway. How could this happen to a well educated person? After talking exstensively to my son I believe he was set-up for this by a saavy, but deceptive builder and lender combination. This was his first home and the builder recommended he use a lender that he personally did a lot of business with. When my son said he preferred to use a lender of his choice the builder said that would increase the price of the home because he had negotiated a deal with this lender that allowed him to discount the price, but it was only good if he used this particular lender. The lender then presented my son with a loan he called a "2 for 1 buy-down". He showed him the prevailing interest rate and told him that he would give him a rate that was 2% lower than that for the first year and then it would rise to the prevailing rate and stay there for the term of the loan. Needless to say, that's not what happened. His payments actually increased 50% over the next 2 years due to interest rate increases. Luckily he took a job with a Fortune 500 company in another city and the new company's moving policy helped him get out of the loan without much damage. I'm sure there were a lot less educated people living in his subdivision that took the same deal, just to get into the market. There are a number of foreclosures in that neighborhood due to people walking away from their loans. I believe in buyer beware, but it appears to me that a slick duo took advantage of a lot of unsuspecting first time buyers and made a killing.Anonymousnoreply@blogger.com