Paula Rush

Subprime Revelation: Early Payment Default-ers Just Don't Care

I don't know the statistics, but I will venture an educated guess that early payment defaults are also occuring because aggressive lenders were targeting homeowner already in trouble to refinance into some crazy products like the option arm loan. THey promise a lot and deliver very little. So quickly the person realizing that they are not going to be in better shape after the refi, but much worse with a pre payment penalty, refinancing costs added into their balance and negatively amortized interest added on the balance every month. They realize they are doomed. Prices are falling and balance on principal is going up. SUICIDE. So the broker who did the deal he should have never done in the first place makes a bundle, the loan got sold up the food chain to investors, and now the SH_ _ is hitting the fan. Investor in the beginning were willing to overlook a few here and there, but as the housing slump has continued and people are trapped in these homes, more and more are walking away. Investors are now saying, "What's this crap you sold us. Buy it back." But in most cases lenders can't buy it back. New Century for example. So the law suits are flying. But what many people don't realize, now that the SH_ _ is hitting the fan and lawyers are examining consumers loan docs, surprise surprise, they are finding all kinds of laws were broken in the selling of these loans. Everything from RICO, TILA, RESPA, ECOA, DPBA, UCC, and many other violations of federal and state laws. Many of these companies were operating as no more then white collar criminals figuring a multitude of ways to milk consumers and investors dry. So there you have it, the rest of the story and my explanation why many may have, and may in the future just walk away. AND SUE!