Is It Time For A Mortgage Product Recall?

[hometowngrl53]

During the past few years we have been talking about toxic mortgages -- and the need to avoid them. Without fail, each time the subject has arisen lenders would write to say we were wrong, that option ARMs and interest-only loans were simply "affordability products" with no financial sting. As to prepayment penalties and stated-income loan applications, they were -- we were repeatedly told -- minor concerns and not much of an issue.

We were needlessly worried, said lenders, because strong credit scores assured that borrowers could easily handle financing costs "if" monthly payments rose. But toxic loans were engineered to guarantee higher costs once start periods ended. There was no "if."


read here http://realtytimes.com/rtpages/20080...llerreport.htm

[flippinout]

It sure seems like they should recall them and put something else into play here as this is certainly not working.

[thohome]

I agree this is obivously not working and somthing else needs to be put in place to protect the buyer.

[badmomma]

They were plainly just lying. These people new what they were doing when they wrote those loan papers up. They have used peoples desire to own a home against them. They have also used the hard economic times to rope people into these kinds of deals. The public doesn't take the time to read the fine print when they desperately need the money and the check is dangled over them like the proverbial carrot.

[flippinout]

Its a shame that unscrupulous lenders do things like this. These loans are what have caused the Real Estate market to fail. Its time for strict guidelines in this area as well, and they should be strictly enforced, once they are in place.