The other day, I spoke with a retired gentleman who was inquiring about a home mortgage. As I went through his scenario, it came to my attention that he had just refinanced a few months prior at 11.25% on a loan of over $700,000 (not a typo). Incidentally, he said his loan officer hadn't called him back but had assured him that after the refinance he could get a new appraisal and get the rate lowered. Here is where the bigger problem came in. I asked him how he qualified for the loan (fully documented, stated or other). His comment was "I'm not sure... we don't even make $6,800 per month" referring to his new mortgage payment that he was dipping into his retirement funds for every month to make his payment. To make matters worse, there was still no equity in the property.
So who is really at fault here? Is it the loan officer for trying to make a quick buck and being the alleged professional who very poorly advised this customer? Or is it the customer for signing loan documentation knowing that he could not make a $6,800 payment?
I fault the lender for even putting someone in a position to have to make the decision of whether or not to sign the papers. Granted, no one should ever sign loan paperwork that shows an income that they don't actually have, or a payment they can't actually make. In the end, it's the homeowner that has to live with their foolish decision, but what recourse do these customers have against the lenders?
I referred him to the attorney general in his state as there was nothing I could do for him.
Tell us what you think?
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