I MUST add that back in 2004, I was coerced into a $322,000 home making $75K a year or $6250 a month gross. My payment was $2100 per month and it was a 2 year interest only ARM. Broker said, "Don't worry about the payment going up, we will get you refinanced before that happens. My wife and I did the same thing. It was rough at first but we worked overtime and did whatever we could to pay the mortgage on time. Our scores went up and we refinanced into a 30 year fixed and now paying the mortgage on our dream home is easy. You're a successful Engineer right? Your income is going to soar and you are already working overtime now so you will adjust easily. We can't escrow your property taxes and homeowners insurance as your payment will be too high and you won't get approved. This is your dream home and I want you to be successful just how my wife and I are today so just pay the property taxes when the bills come in with the overtime you have saved up. You'll be fine. I'm an expert at this and know you will be successful given your financial means. Now please, just sign here, here, and here." House was a gorgeous 4,000 sq ft granite castle. It even had a full wet bar with granite countertops and a fireplace in the double door master bedroom. 3 car garage. That house had it all and we fell in love and I can't deny that I miss it. Two years later and after multiple denials for a refinance, mortgage payment goes up to $2700! We were toast! But i filed EXEMPT on my taxes to try to hang on to it while we continued to search for refinancing with cash out to pay the IRS now. Then here comes the IRS after another year of no refinance. Rolled the arrears into a Chapter 13 BK to get current while we continued (well actually started begging) for a refinance. But i was drowned by the IRS, Chapter 13 Trustee payments, and the now enormous $2700 per month mortgage. i had exhausted my options and we moved out two days before the Sheriff came to evict us. it took us 3 days to move because i had no money to hire movers. it was just me, my husband, and his friend and his friend's girlfriend moving a whole lot of stuff as the renter that was there before us got evicted when we closed and as we were moving in, she was moving out at the same time. There was a lot of nice things that she let us keep as she was moving to a studio apartment. My 6 month old son was at Grandpa's house while we moved. I had to amend the BK 13 to get the arrears from the mortgage payment out of there. It was an absolute financial disaster! If we would have been told no by everyone else or at least not shown these immense houses and reasonable houses instead, this would have never happened. But that Broker wanted his $35,000 commission despite knowing full well it wasn't right. And actually proceeded to push and manipulate us into purchasing. His whole office was in on it. The realtor was just as pushy, conniving, and manipulative as the Broker was! This is what happens when people abuse their powers and position of trust. I grew up with bankrupt parents. I didn't learn much financially sound from them so I couldn't see the problems that were right in front of my face. I put my full trust in that Broker to find us a good home on reasonable terms. Which he did but it wasn't sustainable and he lied when he said that it was sustainable because he made it seem like refinancing was as easy as 1-2-3. This is why subprime mortgages are bad. They may be following the rules under new slimy tactics because they just got a little smarter on how to game the system for money without committing mortgage fraud. Back in 2004, our state had absolutely no laws on mortgage fraud and it was a safe haven for greedy and conniving Brokers. I went through 10 years of pure financial hell thanks to a subprime mortgage so because of that experience, I would never say they are okay. Never! There is nothing new under the sun with them. It is the same garbage wrapped up in pretty wrapping paper and a bow. I hope folks with low credit scores that read this, learn something and will garden their credit to get reasonable terms. A mortgage is a 30 year commitment so you need to be happy with the terms as they are without the contingency of refinancing because that may never come. Sign for a 30 year fixed, or fixed for 15 years...whatever is affordable as long as it has FIXED terms along with a reasonable interest rate. Don't let these subprime lenders manipulate your finances into something they're not and bait and switch you. Despite your low scores, you are worthy of being treated with respect and dignity. Don't let someone manipulate you into buying a home with bad terms just because you have bad credit. Just don't. They aren't there to help you, they are there to make money off of unsuspecting and vulnerable people. Don't be vulnerable, stand firm on getting a mortgage with reasonable terms. Don't be fooled, they are snakes in disguise! You may end up regretting it. Life is too short to play with fire. I spent the last 10 years after that foreclosure being depressed, feeling hopeless, and I cried a lot. 10 years is a long time to feel that way so please, think about what I said to whoever reads this. It comes straight from my heart to you, a stranger. I don't want anyone to go through what I went through. Garden your credit to get it to 640 and you will be good to go! I just paid off the back taxes I owed the IRS because of that subprime mortgage LAST MONTH and it has been almost 10 years since I lived there! Don't be fooled. If you get burned, it will hurt for a really long time.
Now my mortgage payment with this second house is $2387.23 a month on a $347,900 new construction home. Income is $97,000. Mortgage payment is made with ease. Everything is escrowed into that dollar amount. No more $1800 bills for property taxes every 6 months and no need to pay for homeowners insurance outside of the mortgage payment on top of a $2700 mortgage. More expensive house, but totally different scenario or outcome as I was given reasonable and sustainable terms.
The big question regarding the article is, are the terms sustainable? And, I doubt it.
Now my mortgage payment with this second house is $2387.23 a month on a $347,900 new construction home. Income is $97,000. Mortgage payment is made with ease. Everything is escrowed into that dollar amount. No more $1800 bills for property taxes every 6 months and no need to pay for homeowners insurance outside of the mortgage payment on top of a $2700 mortgage. More expensive house, but totally different scenario or outcome as I was given reasonable and sustainable terms.
The big question regarding the article is, are the terms sustainable? And, I doubt it.
Cards: Orchard Bank ($1100) | Cap1 Cash Rewards ($2500) | Chase Freedom ($1000) | Best Buy ($2500) | Discover It ($1000) | Barclay Rewards ($2500) | Current scores: EX FAKO: 684, CK TU: 649, FICO EQ: 680, FICO TU: 698, FICO EX: 658 Happy Homeowner Since 2/6/13! 
Last App: 4/5/13 Gardening until July 2014
When banks have problems, they stop lending. Which is what happened in 2008. So sure, tell all the personally irresponsible people to go have a ball crashing and burning. After all, it is just their fault and only they get hurt right? Well, don't complain one day when you can no longer get a loan because banks stop lending. The housing market is FINALLY recovering thanks to stricter lending practices. We do not need subprime mortgages rearing their ugly head again.
It was not that I couldn't afford the subprime mortgage when I signed. The terms changed on me when they promised refinancing before that would happen and they flat out lied. I was very young at the time, 23 and didn't know they were lying to me. I definitely didn't grow up with a silver spoon in my mouth and my parents didn't know much about finances. It was all about being book smart so I could get my degree and not have to struggle like my parents did.
I work my finances, okay, and everything balances out at the end of every month on my base salary so your point is moot. I can afford everything that I have now with abundant savings.
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Banks have their own lobbyists...and they don't care what legislation gets passed on capital hill. They're loaning money again because they want to make money. Again, it's as simple as that. The government wants to cap fees for NSF' charges? Fine...banks will start charging fees to use a debit card. They find ways around everything. That's always been the case and always will.
The fact that you think you can legislate them into better lending practices is not realistic.
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