What to do when your fixed rate adjusts?

I should date more.  I've had a bunch of biz referred to me by gals I used to date.  I should dump or be dumped on a more regular basis, it seems good for my business.  Though, bad for the heart.

The following is another example of what has been going on in Real Estate, especially in the past 2 years.  An ex-girlfriend of mine referred a couple who were looking to refinance out of an adjustable rate that when instituted, increased their payment dramatically.  Apparently, when this couple bought the home, the lender they were dealing with gave them a lower rate in what is called a 2/28 by the Mortgage Lending side of things.  That product, quite simply, is a rate that is fixed for the first 2 years years at a lower rate than they would typically qualify for and adjusts (most times upward) thereafter.  The idea, if you do it right from my end, is that person has a 2 year gap to get away from any credit issues from the past, pay their bills on time, and to be in a position to get into a more conventional mortgage that will not only save them money, but better help better define their economic situation by putting them in a better one.

None the less, their time was up, 2 years went by real fast.  But the initial mortgage they were put into and chose as their own didn't kill them.  They took out a second mortgage one year later and ago that is burning them at the financial stake.  Turns out, it was an over-equity mortgage.  Quite simply, that means they owe on their home more than it is worth.  They are, how do ya say, yeah.....Mortgage Screwed!

So after doing some homework and having a little help from my friends...there was only one way I could help them.  And that is, to refer them back to guys & gals who made them the second mortgage.

You see, that company is now in a tough spot.  My guess is that company had no idea that the first mortgage they were lending behind had an adjustable rate.  They probably never did their proper homework.  My guess is that company thought they were safe in viewing a stable credit and job history, despite lending above and beyond what the collateral (the home) was worth.  So, my solution was and is to guide the customers to call the holders of that mortgage and work with them to bring value and solutions to everyone involved.  That solution is save their behinds by watching the behinds of the current mortgages they hold.  Not often do I refer business away from me, yet when it is in the best interest of the consumer...that's the only ethical & human thing to do.

My now former clients owe $312,000 on a property currently not worth more than $300,000.  Time to be creative by communicating.  My guess is that the road they should travel is one not taken.  That is the road of futility by proximity. 

I need to date more,....more referrals, more drama, more chances to make good on what seems not so bad.

Trust who you know, not what you don't know.  

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