There is a story behind every foreclosure. This couple was lucky they didn't lose their house. But it's scary how they got taken in. The broker made it sound like a such a good deal. These are bright people.

http://money.cnn.com/2007/09/12/real...vers/index.htm

How can we protect ourselves?

Do you know someone who is losing or has lost their house? What is their story?

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Their monthly payment is outrageous for the amount they actually needed!

We try to be fairly educated about things like this, but the traps are so attractive. We were recently considering refinancing and taking some cash for improvements on the house. DH shopped around and gave me a couple of offers, one he was really excited about. I knew it didn't really make sense and checked into it. What a crock it was. Even if there were no fees, it wouldn't have been worth it.

Then, he called me excited about a quote and preliminary approval he got from ETrade. He uses them for other things and considered them reputable. He gave me an interest rate that sounded good. The person even called our home and left the rate on the recording. However, I asked him to get the info in writing. Sure enough, when we got the email, it had a different rate - one that SOUNDED like the one quoted (we listened again, and had not made a mistake). DH contacted the rep who confirmed the higher rate, "Because we saw other things that justified the higher rate." What? What would change? Then we got the form that shoes all the charges and fees. What a HUGE joke. There were more junk fees in that than a brokerage house! It was hilarious! DH questioned it and was told by the rep (we'd already decided not to do this at all because the rate would have been higher than the original rate that we already paid), "Oh, well that won't necessarily pertain to you, as we have movement on that. We just have to disclose it." Right.

So, we told them we are officially withdrawing the application, as their terms were not satisfactory. About two weeks later, we got an envelope in the mail from them. Readable in the window of the letter, so the mailman could see, was, "Letter of credit declination." What? We'd been approved already. So I opened it. The letter was entitled that, but of course, they list reasons a person could be declined. However, there was only one box checked off for us. Yep, "Applicant withdrew application." Needless to say, ETrade will never be a choice for us and my dh is moving his other business away from them.

The reps always make it sound so rosy. People are so busy today, and by the time approvals are done, they are so set on where the money is going, or excited by what it's buying, they agree to everything, and the brokers know it.

There was one a few years ago that started with a decent rate, but still an adjustable. However, the broker tried to tell us it would be very easy to refi out of it to a fixed before the rates went up too much. Well, refi means the original loan gets paid off and closed out, right? What wasn't discussed, is what I found in the fine print: the early payoff fees more than made up for any savings we would have had. It would have hurt a lot to refi.
No thank you.

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Make someone's heart smile today.

This would have been where it ended for me. I would never refinance with some random broker who called me on the phone.

The 1 percent rate would set off major alarms in my head and I probably wouldn't have even said "no thank you"...all they would have heard was me hanging up.

We can protect ourselves by taking the time to be informed when we are making the largest purchase we probably will ever make. Geez...I know we are all busy people but for pete's sake, we need to educate ourselves about this stuff.

We can use common sense and take to heart the saying "If it sounds too good to be true...it probably isn't".

We can get things in writing.

We can read our contracts line by line and ASK QUESTIONS if we don't understand something.

We can research lenders and be sure we are using a reputable one.

It's very sad that people get caught up in the moment and make mistakes like this. In this case there seem to be EXTREMELY shady practices on the part of the lender...but the couple is partly to blame as well.

I think Spoondler is right on the mark with everything that she said!

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~Happiness is a large family~