Elderly Borrowers Now Paying the Price of Listening to Unethical Mortgage Lenders During Housing Boom!
Elderly Borrowers Now Paying the Price of Listening to Unethical Mortgage Lenders During Housing Boom!
MANY SENIORS WHO REFINANCED ONLY TWO YEARS AGO ARE NEARING DEFAULT OR HAVE ALREADY LOST THEIR HOMES!
During the heyday of loosely-qualified heavy-fee quickly-adjusting mortgage loans just a couple of years ago any number of demographic groups may have been taken to the cleaners –
The Poor – those who may have previously not qualified for any home loan because of their income.
Members of Minority Groups – simply seeing a too-easy way to live the "American Dream."
The Elderly – seniors with considerable easy-to-refinance built-up equity in their homes.
In Ellen E. Schultz’s article in the April 14th Edition of The Wall Street Journal the reporter documents stories of elderly homeowners repeatedly being solicited to re-finance their soon-to-be-paid-in-full home loans. Borrowers were offered stated-income or "no-doc" loans risky interest-only loans or "Option ARM Loans" where the buyer can choose their own payment and often selected the lowest option at risk of negative equity in some cases.
Many re-fi loans reduced rates and monthly payments for the borrowers who signed on to them. But they were loaded with fees and points added to the mortgage balance reducing equity further. In many parts of the country as property values began to slide in 2008 these borrowers’ equity took an even bigger tumble – and property values fell below the outstanding mortgage amount due.
Today some borrowers in the hardest-hit areas including the Central Valley of California have home loan payments that exceed their fixed retirement of Social Security Income. Many now face foreclosure as most lenders refuse to refinance loans so far in excess of collateral property value.
A few were lured by offers of a "Reverse Mortgage" loan where those over the age of 62 can take their home equity out without the requirement of repayment. But the rates and fees attached to many of these loans exceeded current market interest rates.
And a few "Reverse Mortgage" borrowers found themselves stuck with conventional adjustable-rate loans where regular payments are required.
The stories of these Elderly Home Borrowers is quite sad and are documented in Schultz’ WSJ story. That of one long-time homeowner recently evicted from her home due tor mortgage default but still traveling back to water the flowers in front of her now-vacant former home is particularly gut-wrenching.
DEAN MOSS & DEAN’S TEAM CHICAGO
