I've been reading the posts lately and I thought it would be "fun" for you to know that even if you work for "the man" (Fair Isaac and myFICO in this case) that you're certainly not immune from financial stupidity!!

Here's my sad story...I'd love to hear yours.

 It's 2004, I'm 27, married, and just about to have my first kid in April. We decide that my wife, who's working in HR at the time, is going to stay home full time, because the cost of daycare in California (or anywhere for that matter) is just goofy.

 So we're about to lose about 30% of our income with another mouth to feed, and the house we moved into in 2003 isn't cheap. We run the numbers, and it just isn't going to work. (gosh darn it -we're spending much more than we make) We've got to look into options for refinancing I tell myself. I check my FICO scores and my wife’s with my “snazzy” employee discount - I’m in the upper 700s and she’s in the 800s and we’re set.

 Because we bought only a year ago, we're of course getting 500 calls per week about refinancing already. (slight exaggeration for the betterment of the story). One company has this fabulous offer - a fixed payment for each of the first three years, that slowly goes up and then in year 4 becomes fixed from year 4 on, or so I am told. Perfect!! That's exactly what I need, a break for a few years while we get financially adjusted to one kid, and through raises at work we might be back where we were by the time year 4 rolls around.

 So we go down to the office (which is 50 miles away mind you) to sign this thing and it's the slickest "salesman" you've ever seen....fast talker, talks about how wonderful it is to have kids, you have absolutely fabulous credit so you’re getting a much better rate than these people, as he shows me their application, a real charmer. We sign the paperwork after me asking over-and-over "so these payments are fixed for the lifetime of the loan and if I make them all the loan will be paid off" and getting the answer "yes" over-and-over again. I've still got a few days to back out.

We come home, and I'm freaked out. I just have a really bad feeling about this in the pit of my stomach, so I drive all the way back down there the next day, and I "barge in" and demand to talk to the guy and I talk to him and his manager and I get reassurance after reassurance that the payments are fixed. So I decide to keep the loan. (I assume you see where this is going)

After the very first payment we make, we get the statement and our mortgage balance has gone up! What?!? The payments are fixed, and you assured me if I just made the payments listed in the contract that my loan would be paid off. Insert appropriate frustrated explicative here. I couldn't believe it. I couldn't believe that there were people in the world so scummy as to lie to your face and trick you into a really terrible loan. And I couldn't believe I was so stupid for not going home and just taking the 30 minutes to do the research and the math to know I was getting tricked into an adjustable rate mortgage.

So I'm in this adjustable rate mortgage, and I know it now, but it has a huge prepayment penalty that I just can't afford and I'm just stuck, for 3 years. So we do what we can, we make sure we make the minimum payment each month so our credit doesn’t get ruined while we wait it out, paying off more than the minimum any time we have a little extra cash available.

We managed to finally get through it - the penalty window expired in June of last year, and I managed to keep my credit good so refinanced back into a 30-year fixed loan at a decent rate for the time, which I had before the whole ordeal started. The original loan back in 2003 was at 5.5%. Now my loan has grown by $30K and is at 6.625%. So that one mistake cost me a ton.

What did I learn from the experience?

1) People suck. (I'm not completely naive, and obviously not all people suck, but I was clearly far more naive than I thought)

2) Do your homework, do your homework, do your homework. If I had just taken the time to do the math for myself, or sanity check what I was getting into with someone else in my family, I would have avoided the whole problem altogether. You’re only alone in your own financial problems if you let yourself be.

3) Once you screw up, don’t compound your mistake and make it worse. I still to this day hang up grumpily on every mortgage-related call I get, but by keeping a reasonably level head I was able to keep my credit solid and get out of the problem with a “minimal” amount of damage. And I have the two cutest boys – 1 and 4. :-)

I agree 100%, people do suck. Thats why I like the X-Files "Trust Nobody".

Try not to become a man of success but rather to become a man of value
Albert Einstein
(1879 - 1955)

"The more people I meet, the more I like my cats, dogs, hamster and goldfish."

 

 

Ficos 2/17/08: TU 551 EQ 534 EX 587
Ficos 2/12/09 TU 695 EQ 715 EX 715(waiting for that last late to be older than a year!)

Paul - Thanks for sharing.  Here's mine:

 

Have you heard that love is blind?  Well, it's also deaf, dumb, and really, really stupid.

 

Just before my EX-fiance and I got engaged, he said he had to tell me his deepest, darkest secret.  He estimated that he had $10k-$12k in credit card debt.  No problem, I said, we can figure it out.

 

Several times I asked him to provide his credit card statements so we could get a handle on how much he owed.  He continually "forgot" or there was some other reason why he didn't have them.  He moved in with me (paid nothing for my mortgage or the utilities ... yes, stupid, stupid, stupid me) and I noticed that he didn't open his bills.  The ol' hide-your-head-in-the-sand-approach.  Do you know that one? If you don't see your bills, they don't exist.  Well, it doesn't work that way in my little world.

 

Eventually, I said hey, we're just going to have to run your credit reports to find out how much you owe.  I think he was even more surprised than I was to see that he owed about $50,000.  No problem, I said, we can figure it out.  Stupid, stupider, stupidist.

 

Fortunately for him, he had an asset he could sell that was worth a lot more than the debt.  But he wasn't moving very fast to sell it.  The wedding date was getting closer.  I was getting really anxious.  The last straw was when he blew off calling a credit counseling agency that he had promised to contact.  I gave him the engagment ring back.

 

My credit didn't suffer although I did lose thousands of dollars in wedding-related deposits (because of course he didn't pay for any of those expenses).  It was a small price to pay. Had we married, I'm sure we would have gotten divorced, and I could have lost up to half of MY house and MY assets.  I'm sure some of you have been THERE.

 

The point of the story is that I almost made an extraordinarily expensive and traumatic mistake because of failure to check my potential mate's finances. 

 

P.S. The CAs eventually stopped calling my house but a few years later they started again.  It disgusts me that he didn't learn anything from this experience and went back to trashing his credit.  The IRS is still trying to contact him.  He owes them $48,000 for failure to file returns for years.  How could I have been so stupid??

I was told a long time ago by an attorney that no one should sign any contract before an attorney reads it. He said that the was things are going that it even for a small purchase you can get beat up!

 

It isn't the legal terms but the normal words that we all use everyday can hurt. These sales people will twist the wording and we do not see it until it is too late.

 

Example:

 

Filling out a simple form........are you singl or married?    answer....single

      Now in your mind you are single SINCE your divorce.......something as simple as that can nail you.

 

I received an offer from Cap1   transfer (2 ways)   1 deposit check & pay off high int.CCs.........use check 1 & 2  for no transfer charge and 1.99% int for 6 months........use 3 & 4  for a 3% transfer rate  Int for life of transfer 1.99%

 

I called Cap1 and was told I could transfer on the phone and it would be 1.99% for life of loan

 

I asked to have the info.mailed to me   BUT  I made the transfer.

 

I received a notice about the transfer at 1.99%  for 6 months & paid 3% fee

 

I call & ask for super. This lady had me on the phone with an open line while she read the contract (so I know that she did read it)   Was told that there was nothing in it that said was only for 6 months! Asked to get in writting again.       Got the same letter!

 

NOW I was stuck....I was so mad to think that I could have used the stinkin check & had it for life and in writting by just using that check.

 

I learned that the people that we talk to at CCC are just normal people that usually do not know what goes on after they foward transactions to the uppers. They really think that the info that they are telling us is correct.

 

Now when it comes to auto or mortgage salesmen....look out!!  I bought a car in April 2007 & it looked like a simple  2 page contract. BUT they way it is filled out looks good until you get home & sit down & really read it. I was to get this & that for free   yeah right! it is just added under somethig else.

 

I have call CCC and asked for reduction in int.rate   and do not believe it untill I get it in the mail!!!!

 

I transfered the Cap1 amount to another low int.CC  1 month befor the my 6 months was up.

 

I refied.my auto after 11 months and saved $6000.

 

So I would tell anyone  buying an auto to get an attorney to read the contract first. IF it is correct the auto dealer will not try to press you into signing NOW.

 

I felt so stupid because I thought I was being careful.

I have already shared this on the forums but anyway here goes. I felt and was told with my credit score I wouldn't be able to own a home so we had found a lady selling a house that said she was looking to get out fast and would even rent to own. This was perfect for us because we already rented all the time and if we really like the place we can stay there... We rented for 1 year, After the year was up because we could prove 1 year of good history on a house payment we were told we could go through a mortgage broker and refinance our rent to own and they could combine my wifes and My score to make it work. I had a credit score combined with my wifes that our broker used to get us a home loan barely at 500.  We ended up fixing the place up during the 1 year rent to own. wall to wall new carpeting paint etc etc.. 14k of my own cash I spent to be exact.

 

This was the first house we had after renting for 7 years so we were excited. Ok, Now the broker also says guess what you guys can get an additonal 20k out to buy whatevfer you want. WOW 20k additional nice! Ok, The day we were to sign the papers the broker calls us and says I am sorry we can't get you the additional 20k because after fees paid there just wasn't enough left over but we CAN refinance the house and get it into your own name and away from the rent to own contract. Ok, fine let's do it. Well after signing the papers I ALSO got a very sick feeling in my gut. Now we look in the fine print in the contract and we noticed the 20k WAS IN THERE but was listed under his broker fee and realestate lady's fees. I was so pissed and wasn't going to sign but the lady that owned the house said we either sign it over now or she is putting it back on market. Ya right back on market after we did all the work to fix it up? Don't think so. So we signed the darn paper and we didn't even know what an arm was. They showed us 10% to start and will climb to 16% before it comes back down. BUT don't worry about the higher rates over 10% because in 1-2 years your credit will be so good from buying this house that you can refi at a low fixed rate. Ok, We believed it and signed papers and currently are at 13% on our motg and will climb to the 16%. I won't let it though because I am working very hard on my credit thanks to myfico and will refi soon at a decent fixed rate. Currently after 3 years of this mort we have only paid off $100.00, Bought for 107,100 and owe 107,000. On a good note I have never missed a payment on my mort and I make a very good living so it doen't hurt for me like it would for a lot of people which I am fortunate for.

 

We were very naive and made some major mistakes that we will learn and grow from but this.

 

CONGRATS on the kids. I have 4,  8yr 4yr 2yr and 3mo. I am only 30 and have 4 kids I must be crazy and my wife is 28 LOL. We figured out how to make them just can't figure out how to stop LOL

01/31/2008 EX 502 EQ 466 TU 481
3/14/2008 EX 578 EQ 539 TU 543
4/16/2008 EX 622 EQ 532 TU 578
5/19/2008 EX 604 EQ 591 TU 592
1/1/2009 EQ 625 EX 576 TU 569
02/13/2009 EQ 648 EX 617 TU 590
09/28/2009 EQ 568 TU 591
Thanks to all Fico supporters for your encouragement and advice

Masheado-

 

You are not stupid, repeat.....you are darn smart to dump him !

In 1999 my now ex and I were sitting in our living room when all of a sudden his head went down to his chest.  He was like that for about a minute and when he looked up, his vision was blurry and his speech was slurred.  He had had a stroke.  Because he has other health issues, like diabetes and post polio, he was told he could no longer work.  He had sick leave and we applied for SSDI with ss.  In the meantime, his sick leave ran out and SSDI was taking forever to  approve.  We got behind on our mortgage payment.  Now I had been stupid stupid in the previous year by refinancing our mortgage to 125 percent loan to pay off ALL of our unsecured debt.  So all we had was this huge mortgage payment and all the car loans (4 teenagers) and insurance etc for teenagers (who had reckless driving tickets)   But trying to be a good mom and step mom and not wanting any of our financial problems to "affect" the children's lifestyle, I called the mortgage company and ask them for help on reducing our payments as I was starting to slip behind on all the payments.  For the first time in my life, my utilities were late too! Anyway, this mortgage company said "sure, we can help you, we will put 2 payments at the end of your loan, and you can have a month to catch up and then just start paying on time in the next month"  Great I thought.  Well, of course, with our income cut in half, it didn't take long to figure out that the issue was we were overextended for just 1 income.  So we got behind again on the mortgage.  But we were also getting behind on everything else as well.  I was stressed out and having a nervous breakdown, my now ex was unable to help and was even more depressed than I, and 2 of my kids went off to college.  Now it is 2000 and I was under water.  No ss, only my income. I try to work again with the mortgage lender.  Come to find out, when they moved those 2 payments to the end of my loan, they forget to mention that I was still accumulating late fees and daily interest on the amount outstanding.  So instead of my mortgage decreasing, it was INCREASING by leaps and bounds every day.  In the end, I owed almost 200,000 on a mortgage loan for 135,000.   So my ex and I decide to declare BK, chapter 7.  Well another stupid mistake because our attorney told us NOT to do a chapter 13, which would have put us on a budget and helped us with our mortgage arrears and gotten us on our feet again I believe. And I believe we could have lein stripped our mortgage back to the amount our home was actually worth.  But I learned all of that AFTER we filed for the BK.   But no, we went chapter 7.  Because ALL of our debt was secured, we lost everything, our house, all of the cars, everything.  We separated and eventually divorced.  SS came through but too late to help.  My kids borrowed themselves right into debt to get through college.  But here it is 7 years later and I am finishing up my chapter 13, thinking about being able to own a home again, and my daughter and son are college grads with good paying jobs and able to take care of their own student loans now.  I am paying off the PLUS loans.  But finally, I am seeing light at the end of the tunnel.