The truth in ‘predatory’ lending practices…(Part 3)
I was reading an article about ‘victimized’ homeowners. It said lenders ‘mostly targeted unsophisticated consumers with high-interest loans stuffed with high cost pitfalls’.
I hate that a lot of borrowers are willing to be called ‘unsophisticated’ – heck, let’s call a spade a spade -borrowers are willing to be called stupid so they can be seen as ‘victims’. If only stupid, uneducated people financed interest only or ARM loans… there sure was a spike in idiocy between the years of 2004 – 2006. So much for Darwin’s theory.
I’m sorry but I don’t think all the dumb people decided to buy a house at the same time. I think – better yet – I KNOW a lot of people were driven to make a buck on the fast rising home prices. And some, like me, were willing to ‘stretch’ the lending rules to buy a piece of the American Dream.
Not only did we pay off someone else’s debt (in the end, it took 5 years and after the fees and interest, cost nearly $16,000) but we also pay somewhere in the neighborhood of $500 more a month for the ‘privilege’ of our stated income loan because the cell phone collections and debt prohibited us from financing conventionally. We bought the home thinking we could refinance once the debt and collections were gone in February 2009. Little did we know the market would tank and we’d be stuck for a few more years in our crummy loan.
Am I a victim?
No. I made a bad decision. I should have paid off the debt first and waited for the collections to clear. But it’s hard enough to pay my own debts, it’s even harder to pay the debts of someone else. Like I said before, I was sick of putting off living my own life to pay for someone else’s. I pay for that decision. I don’t expect the rest nation to pick up my mess. And they won’t. I financed what I could afford.
Let’s not blame the banks. Trust me, they are paying now. They are failing, losing profits, and losing employees. You and I are paying now. But you know who isn’t? Those who borrowed more than they could afford and walked away.
My hands aren’t clean… but I’m working to clean up my mess.
My husband’s new collection free credit score? 810. At least we did something right.
*Side Note: This is in no way an attack on those who lost their homes (financed conventionally) through job loss, health affliction, etc. I understand things just sometimes happen. But let’s be honest, the market isn’t crashing because of these folks… it’s crashing from those who bit off more than they could chew and it’s killing the rest of us.
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Posted: March 18th, 2009 under Credit Score, Debt Reduction, Life in General, home ownership.
Comments: 18
Comments
Comment from MonkeyMama
Time: March 18, 2009, 7:27 am
I still don’t see what’s so different between you and the MANY who bought and knew they could not afford adjusted ARMs, but figured they would just refinance. Bad decisions all around. Bad decisions where you can afford and they can’t? What difference does it make?
& I have to say – you said yourself – you partook in lying on the loan. When they ask for your income they don’t mean yours + your husband’s income. The rampant fraud disturbs me on many levels. If a lender told me to put our household income under my name, I would walk away.
I am from an extremely HCOLA and I understand, but the truly smart said, “This is for the birds.” We never bought in the HCOLA and I certainly would never stretch the truth on a loan. Unfortunately, people on all sides were too willing to do just that.
I do thank you for sharing your story, and I don’t mean to attack you personally at all. But I see little difference between you and many of the people I know who simply can not afford their mortgages any longer. They all went into it with the same attitude – anything to buy a house – very short-term thinking. Some can hold on. Some shouldn’t even bother trying. (Some immigrants around here have loans around 100% of their income. Most of my friends who bought at the peak didn’t have a clue what they were getting into. The mortgage brokers weren’t exactly honest with them – no surprise there).
Comment from Nicole
Time: March 18, 2009, 7:46 am
Hey Rebekah:)
I would suggest you just ignore the comments from bitter people who seem incapable of hearing your story. You are NOT skipping payments, you are NOT defaulting on your loan, you are NOT blaming the government or the lender. You are taking responsibility for yourself and your finances. Thanks for always giving us such great advice! Because of you I started making extra payments on my mortgage and am quickly whittling away the principle:)
Geez, it’s like lumping people into a huge racial profiling pool and suggesting all people with undesirable mortgages are alike. Maybe all of these negative people should read your other posts and see that you are a responsible young lady with a good head on your shoulders! I’m glad to see you aren’t taking the easy way out.
Oh and “don’t take this personal” but I think you’re awesome!!!
Comment from mikey
Time: March 18, 2009, 7:53 am
Oh I’d take that personally, Nicole. Well said.
Brilliant, ground level analysis, Beks! If only so many of the others who made bad decisions would own up like you guys have. Then the govt wouldn’t have to bail their asses out on our grandchildren’s backs. Pathetic…
Keep on…
Comment from Joan
Time: March 18, 2009, 9:22 am
This is the 2nd time I’ve seen you refer to your husband’s credit history having made this kind of finance deal necessary for getting that house because he (and you) were paying SOMEBODY ELSE’S DEBTS. Either they were legally his debts, or you all were not diligent in getting a huge screw-up fixed, and instead chose to misrepresent your income and go with an oddball “stated income” 100% loan. I still don’t see why you could not have just waited until your husband’s credit history was clear. To me, that is the normal thing to do: make a purchase when you can afford it, not a few years before you can afford it.
I’d like to know if you think that the house loan you took was a good idea for you, after all. Would your life be better, worse, or no different without it?
Comment from Nicole
Time: March 18, 2009, 9:29 am
I really want to argue with all the negative people who JUST DON”T GET IT, but I won’t……
Comment from Joan
Time: March 18, 2009, 12:01 pm
Nicole, please at least say what the “It” is that negative people just don’t get. The author is meeting her contractual obligations. I get that. I’m glad to know that. Most people [i]do[/i] pay their debts. No big deal to do what you are supposed to do. To take a stated income 100% loan and to claim someone else’s income is your income? Yes, it is a big deal.
Comment from Nicole
Time: March 18, 2009, 1:03 pm
A big deal to who, you Joan?
Comment from Joan
Time: March 18, 2009, 1:29 pm
Mostly to the person taking out such a loan. To me and society if it is done illegally.
Comment from Nicole
Time: March 18, 2009, 3:52 pm
Last I checked, stated income is NOT illegal….
Comment from Kevin
Time: March 18, 2009, 5:12 pm
I’m there with you Becka. Made a decision to buy a house to “float” in for 2 years while building a home…thank God the plan didn’t work out for us (we didn’t build). Needless say that our financial guru who suggested that we buy a house to live in while building another house was a Mortgage broker.
In short, yep we made a poor financial move, yep we are paying for it, yep we signed up for it (100% loan), and yep there will be a way through it.
To Joan, in the state of California when a man an woman are married EVERYTHING they have is combine unless stated by prenuptial agreement. So LEGALLY income can be combined to qualify for a loan. Where the illegal side of this comes in is IF the same income is restated under the spouses name for another loan. (which is not the case with the author) Joan I hope you are financially set and could offer advice on how to get to that point without pointing down.
Comment from Joan
Time: March 18, 2009, 7:20 pm
According to Freddie Mac, “The income of a non-qualifying spouse or partner should never be added to the borrower’s income for qualifying purposes under a stated income program.” I am not saying a stated income loan is illegal. But fraud is illegal.
I do not know if what you did constitutes fraud, but I wouldn’t be surprised if it does.
I am glad to know that you can afford your loan, even if you are paying high rates. I’m glad you understood what you were getting into and that you do not feel victimized. But I suspect there are better choices for someone who finds themselves in the same position as you did at the time of taking out this loan.
Comment from mikey
Time: March 19, 2009, 8:52 am
hey, I invented the internet!
Comment from Jordan
Time: March 19, 2009, 9:56 am
YIKES!
I learned a LOOOOONG time ago, that if I don’t know all the little details, than I had better SHUT UP or make a fool of myself.
Hey Rebekah, for your own sake don’t take it personal. Way too much of that going around.
Just keep in mind you are doing your part.
And for anyone else wanting to shoot, hindsight IS always 20/20. Think about that before taking aim.
Comment from Jay Gatsby
Time: March 19, 2009, 10:38 am
I’m one of the folks who initially questioned Rebekah’s decisions (including cyberfinancial stalking her husband when he was away). That said, if she can pay her bills, that’s great. Historically that’s all creditors have cared about, and in today’s economy, that’s all creditors STILL care about. Creditors are quite willing to overlook past discrepancies, misstatements, or even out-and-out fraud (which this doesn’t seem to be) if you can pay your bills.
Rebekah – I’d advise against getting into too much detail on your blog regarding your personal financial decisions as they relate to contracts (i.e. mortgages, etc…) Anything you write will be on the Internet forever, even if you delete this blog. You never know when something will come back to haunt you. Stick to just general financial advice and a few personal anecdotes here and there. Much safer and still good reading!
Comment from Lynn
Time: March 19, 2009, 11:15 am
Maybe its me, but it seems as if there are so many vicious comments on the blogs I am reading. Wow. I commend you Rebekah for actually keeping your end of the bargain even though you may have not made the best decisions. That’s more than a lot of others are doing.
BTW, thanks for the great Al Gore laugh. I am now going to check my Blackberry that John McCain invented! LOL!
Comment from Lizzie
Time: March 19, 2009, 7:38 pm
Bekah-great job! We can so relate to bad loans and the struggles that come with them. Be proud that you are now an informed homeowner/borrower and will continue to make your situation better through good financial stewardship. The best part about what you have learned is you can pass the info on to us and your family. Something tells me you will be watching out carefully for those you love! Keep up the good work!! 
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