As many of you know, I myself was not born in this country. I emigrated here at the age of nineteen from Tajikistan. I now of course am an American citizen, but I still empathize with immigrants. Still, I find myself rather disgusted at a trend that I am seeing. I offer to specific cases I know of.
Case 1
Igor buys a home in 2005. He has $70,000 to put down, but still makes too little to buy the type of home he wants. An agent from his country approaches him and says he'll get him the home he wants.
They quickly find a nice home selling for $350,000. He applies for a loan and has no problems. What he doesn't know (because he does not know English and has to trust his agent to explain what he is signing) is that he has a negative interest loan. In addition, to qualify for his loan the agent and mortgage broker colluded to list his salary at $6,600 per month instead of the $2700 he actually makes.
After several years, he figures out about the negative equity loan. After two years, the interest rate skyrockets past 9% and he cannot refinance his home. His reaction is to stop paying. He also drives to Olympia (capital of WA state) and complains about the agent and mortgage broker (by now he has figured out what they did).
For a year and a half he does not pay his mortgage. His home goes into foreclosure, but to try to prevent it the bank offers to lower his loan amount to 2%. He considers it, but now the mortgage is $390,000. (100k more than original loan amount) The home has fallen to the original sales price and he feels it is not worth owning the home any longer. He rejects the bank's offer and lets the bank foreclose on his home, figuring he will just rent for the next several years or return to his home country.
Case 2
A Canadian couple have been working here for the past several years, but plan to move to Canada in a year. They decide to sell their home so they place it on the market.
The home is not a short sale as they still have equity in it. However, they still want to make a small profit from the home so they price it about 5% more than what it is worth.
They speak to their attorney about what they should do and his advice is to be firm with the price. It is not in their interest to have to bring anything to the table.
They stop making payments on the home with the idea that one of two things will happen.
1) Someone will buy the home and they will make a small profit.
2) No one will buy the home and the bank will foreclose it. By that time they will return to Canada and their credit score will not follow them there. They will then buy a property in Canada.
What do you think?
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It's awful. As a listing agent I watched as a young couple purchased a $380,000 home. The closing costs were $35,000! They had no idea what they were signing and the LO was taking advantage of them. I hated it but could say nothing since I was representing the seller. I wanted to jump up and yell, "Don't sign it!!!" I had to sit tight and close my mouth, but I gotta say, it was a terrible moment for me. I felt dirty when it was over.