You’re not the only one. This kind of thing now seems to be EXTREMELY common. People are sucking out all all the equity in their homes and then some. Everyone knows the “appraisals” are inflated to begin with and then some banks even have 125% loans. Gee, some people might end up with a 135% loan to value ratio even before the market begins to drop. What a joke!
In the greed to sell more loans, banks appear to have been loaning out as much $$ as possible to as many people as possible. These loans are so crazy, the people at the banks HAD to know the borrowers would end up not paying back the loans. If I’m a responsible bank and I that see a prospective borrower bought a house in 2002 for 500K with zero down, now he wants to refi all the way up to the 900K “appraised” value and suck out 400K from the bank, what are my chances of getting that 900K back. Slim and none! I wonder if most of these people blew that 400K or whatever amount on yellow Hummers and toy trailers or if they still have the cash. I wonder how many of the banks will try to get the money back since these would be non-purchase money loans with recourse. Technically, I think the banks can sue these people. Anyone know how practical it is for the banks to do this?
