These are people I know right now who were affected:
91914: single mom of 3 (all minors) with toxic loan who was paid $4K to walk away in 12/09. She put about $100K down (divorce settlement) in 2004, but removed over $200K in “equity” since then, paying exorbitant points and fees for her “cash-out” transactions. Property recently sold by bank for about 90% of what she pd. She’s now living with mom again, who is 93, after filing Chapter 7 in 12/09. Education: HS Diploma.
91913: single mom of 2 (1 minor child) still squatting after 20 mos. of no payments, 3.5 yrs. behind on taxes and two HOA liens outstanding. Lost decent job two mos. ago. Purch. in 1998 for $97K but managed to borrow since then $185K more than her home is now worth. Has had “roommate” for four years who pays her monthly “rent.” Education: HS Diploma. Her last “toxic loan” was intended to “avoid foreclosure” but instead mortgage broker made off with $60K of her “cash-out” under a fraudulent investment scheme. Mtg. broker is under investigation by the DA’s office for defrauding nearly 50 people but he laundered some of this $$ into Mexico and lost much of it paying inflated prices for condos in Coronado, which he lost in foreclosure. She and all the other victims met him at a local “church” where he was a very active member.
92104: family of five (2 minor children) parlayed the wife’s family acreage in 91902 (deeded to them in 2002 by her living mom with just $88K owing on it) into an $860K Craftsman in North Park in 2005 with plans to convert to four units. Put just $150K down and made only four mtg. payments. Spent the rest on vehicles and private school. 1st TD (private lender) foreclosed timely at the 7-8 mo. mark. Couple has since filed Chapter 7 (where they had to give up 3 of their vehicles) and divorced. She’s back living with mom. He’s living in rental in dtn. SD. He: HS Diploma; She: HS Dropout.
91910: family of four (2 minor children) pd. $590K in 2006 with nothing down, using purchase $$ first and second. First foreclosed within two years. Unclear how many payments were made. Property sold by bank for $273K in 2009. Both parents had good jobs and were HS graduates.
The reason I am including the educational levels here is not to make fun of anyone (I myself don’t have a college degree) but to illustrate the willingness of lenders to just hand out $$ if you could fog a mirror (not based on “real” income).
After #1 and #2 applied for but had not yet closed on their last “toxic” cash-out refis, they both at different times came to me for advice on their loans. I requested they each bring me their Reg Z’s (GFE’s) and escrow instructions and estimated closing stmts. #1 brought me only the GFE and #2 brought me everything. I strongly advised both of them NOT TO GO THRU with the loan but each of them was dead set on receiving what cash they could from the transaction. When I told each of them they should back out of the transaction immediately, I never heard back from either of them until foreclosure was looming again, at which time I told them I could no longer help them.
Which begs the question? So, who’s the smart money, here? All I can tell you is that I know for a fact they each paid DEARLY with their FICO scores. And as all of you PIGGS are aware, FICO is what makes the world go round.
