Home > Blogs > Linda Blanchard > Linda Blanchard's (blanch) Blog

Another Sub-Prime Mess

By Linda Blanchard

Real Estate Agent with Exit Realty Elite

June 22, 2007 05:18 AM

I guess I'm just spewing, so bare with me. Why does a person who wanted to refinance their home back in '05 get sold an ARM starting at 7.5 and capping at 10.5? This is insanity. Well, this is what was revealed to me by my client yesterday. She is paying $2800/mo. and it was owner occupied at the time of the loan. This is total insanity. I am now attempting to get her out of this mess so that she can put it under property management until market improves. Someone made a lot of money from an unsuspecting home owner.

Comments(14)

Comment

Show All Comments Sort:

Leigh Brown

Leigh Brown & Associates, RE/MAX Executive - Charlotte, NC

CEO, Dream Maker - Charlotte, NC

But why didn't the homeowner ask questions and why did she sign the paperwork on that loan? Folks need to take some responsibility for their actions. Of course,the lenders who made the crap loans need to be held to the fire as well, but both sides are guilty. Good for you, trying to help her minimize the troubles!

Jun 22, 2007 05:22 AM

Kate Bourland

Marketing with Kate - Redding, CA

Onlilne Marketing Mobile Marketing

What was her credit rating, ratios and reserves at the time she bought or refinanced? It does sound ridiculous and the aftereffects of greed can really be disheartening!

Good luck

Kate

Jun 22, 2007 05:26 AM

Rob Robinson- Lehigh Valley PA

Bertrum Settlements (Title & Abstract) - Allentown, PA

The bottom line is of course the person signing the documents - HOWEVER..... there are so many slimeball Mortgage Brokers out there that do not give a crap if the person will be able to afford a bar of soap AFTER they get their client in a 'home'.

Sad.

Jun 22, 2007 05:30 AM

Jeff Belonger

Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ

The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

Linda.... you can't always assume that someone made a lot of money on this deal, just because their rate was high. A lot of it has to do with credit scores, credit, income, and what their LTV was at time of closing.

In all honesty, I have been doing this for 14 1/2 years and I agree, some people made a lot of money of others. And please don't take this the wrong way, but you are now acting just like the media.Spitting information out without knowing the exact details. Or at least mentioning the scenario in detail. Did they have a bankruptcy, possible 1 day out of bankruptcy and needed a 100% loan at that time? There is just so much and I am here to educate the consumer with facts and not just a rant based on a rate.

Sorry, but too many assume and this can sometimes give the public and the media the wrong impression. It's bad enough to defend certain things with assumptions, but waiting until all hard facts are on the table.

And I agree with Leigh Brown..... people NEED to ask questions and take responsibility. All of this is my opinion and it is good that you are trying to help her. But I think so many raise an uproar without knowing the facts at first.

jeff belonger

Jun 22, 2007 05:33 AM

Jeff Belonger

Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ

The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

I was writing this as Kate and Rob chimed in.... Kate basically said the same as I did. Just a shorter version... lol

And I will admit, your title did rope me in. But it was a quick rant with no facts. I usually walk away from these types of posts. But as I mentioned, I also feel the need to educate the public and present all facts before we lower the gauntlet.

jeff belonger

Jun 22, 2007 05:35 AM

Rob Robinson- Lehigh Valley PA

Bertrum Settlements (Title & Abstract) - Allentown, PA

Point well made Mr. Belonger.

Jun 22, 2007 05:42 AM

Tom Burris

NMLS# 335055 - Baton Rouge, LA

Texas/Louisiana Mortgage Pro - 13 YRS Experience

I am willing to bet large sums of money that the borrower had the option of a fixed rate..... but wanted 'lower payments' or 'needed' lower payments.

The loan guidelines are the same for fixed as they are for ARM.

Now, this case MAY be an exception..... but 99% of the time the borrower wasn't 'sold' anything. They looked at the options and chose the wrong product for a long term investment.

Jun 22, 2007 05:52 AM

Joe Adams

Major Mortgage USA/Branch Manager - Montrose, CO

I am sure there is more to this story

Jun 22, 2007 08:09 AM

Linda Blanchard

Exit Realty Elite - Vallejo, CA

Jeff:

My apologies as for my "quick rant". I am still investigating the facts; however, in 2005, no one should have been paying 7.5%, even on a subprime loan. Yes, I do not have all the facts, but will know them shortly. My frustration and "assumption" is that she was not receiving the guidance she should have had. I did not know her at that point. We have a large number of 1st generation immigrants in this state and sometimes, they don't always understnad what they are signing. I do hope that this was not the case. I do have a mortgage consultant speaking with her to see if she can help her. My apologies if I have offended anyone. My goal is to educate my clients with the best information I can provide.

Jun 22, 2007 09:43 AM

Jeff Belonger

Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ

The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

Linda.... rants are okay.... but in 2005, yes, there were rates this high and even higher.... even if I wanted to give a great deal. 1 day out of bankruptcy with a 620 credit score at a 100% LTV.... YES... very much so at 7.5%. I even saw a rate that I had to give which was 8.8% back then. Credit, ratios, and LTV are huge....

It's not so much your passion that would offend myself and a few others. But you talk about educating your clients. This general post would be misleading to many. EVEN though many lenders did abuse subprime, rates, and fees. You just can't assume. And again, this rate back then was not high at all..... in all honesty, that was a decent rate in the subprime market, no matter what year it was.

jeff belonger

Jun 22, 2007 10:23 AM

Maurice McLaughlin

Nations Princeton-Nassau Inc. d/b/a NATIONS - Naples, FL

Maurice McLaughlin

SUB-prime mess?......just had a buyer $700 k down on $1.5 mil. purchase.....2 major sub-prime lenders closed their doors...shopped the loan...NO GO!.....I always had an expression that used to irritate my colleagues......"NEXT"

Jun 22, 2007 10:37 AM

Cyndee Haydon

Charles Rutenberg Realty - Clearwater, FL

727-710-8035 Clearwater, Beach Short Sales Luxury Condos &Homes

Linda - go on a rant - seeing way too much of this myself - just makes you want to scream. Now Jeff says they can't assume they made money but I know one thing those deals were done to make money - not in the clients best interest in my humble opinion.

P.S. Glad to have you in Active Rain - I'm here to help if you need any :-)

Jun 22, 2007 05:36 PM

Jeff Belonger

Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ

The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

Cyndee.... not trying to pick a fight here. But is it safe to assume that a FHA loan at 7% was to make money? All deals, not matter what the rate or type of loan, are suppose to make a profit. You can't assume, sorry. She talks about a subprime rate of 7.5%. If anyone knows this business at all, that is a good subprime rate. I have made less money on half of my subprime deals in the last year than all the other loans that I have done. Why? Many of these types of deals have no room in them.

I am always standing by the stance that I am making because blurting something out like this without the facts, is misleading the public. Plain and simple.

Cyndee, as a realtor..... I write a blog about you making $55,000 in commissions on 1 house that you just sold. And I rant and rave on how that is ridiculous, because of the money that you made. But wait, the sales prices was $6.5 millions dollars. AH.... in reality, 3% is over $190,000 in commissions on this. Even if you took it for 1%, you still would have made more than what I mentioned. Now, in reality, you didn't make much on the deal. But I left out some key information for anyone to make a fair statement. To judge the statement accordingly.

Overall... I am not trying to put Linda or you down..... Cyndee, I have gotten to know you a little here on AR and I like what I see and read from you. You seem like a very ethical person, caring, and one who knows her business. But making a statement here. Educating the consumer and not assuming. I have done many subprime deals that clients got great deals on. And if it wasn't for the subprime market, they would have never been able to have bought. And wait, 2 years later, these same clients that I helped, still have their houses and have better credit now.

My whole point... let's not be like the typical media. Rants are good, but only fully armed with info. Let's not broadcast like the media without arming the consumer with ALL facts. Just my opinion.

jeff belonger

Jun 22, 2007 08:29 PM

Brad Andersohn

Retired Executive Director of Education at eXp - Boulder Creek, CA

ActiveBrad - 707.646.1876

Linda - great 2nd post with some awesome dialogue going here. I returned your email today and am looking forward to your call next week. Keep up the great Blog and we'll set some time aside to help you out where you feel it's needed. Have a great weekend!! :-)

Jun 22, 2007 08:53 PM

Older Post