Before you re-finance that mortgage...
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08-11-2010, 11:31 AM
 
Before you re-finance that mortgage...
Lawsuits: Banks foreclosed after deciding payments too small November 7, 2010

Grocery store owners William and Esperanza Casco were making enough money to stay current on their mortgage, but when JPMorgan Chase & Co. offered a plan that reduced their payments, they figured they could use the extra cash and signed up.

The Cascos say they never missed a subsequent payment, so they were horrified when the bank decided the smaller payments weren't enough and foreclosed on their modest Long Beach home.

Their story is echoed across the country by people who claim — some in lawsuits — that banks didn't live up to their end of the deal when they agreed to trial mortgage modifications.

The suits add to a feeling among many struggling homeowners that they're getting little help from the part of the government's $700 billion Wall Street rescue that aimed to help them directly.

FULL AP STORY


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08-11-2010, 01:42 PM
 
RE: Before you re-finance that mortgage...
O.o wow... just wow....
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08-11-2010, 07:04 PM (This post was last modified: 08-11-2010 07:37 PM by BnW.)
RE: Before you re-finance that mortgage...
The story on the Cascos is a bit of a red-herring. This is not a story about a refinancing deal, it's a story about a bank who agreed to a mortgage modification and then changed their minds, something they are within their rights to do. And, the way the story is being told is very one-sided. There is more here then is being reported. If I had to guess, my guess would be the real story went as follows:

- Cascos were behind on their mortgage;
- bank agreed to a lower payment schedule for some period of time, probably under pressure from the Feds;
- Cascos were able to make the new payments;
- governmental pressure to give something for nothing goes away and banks insist on original payment terms of the mortgage;
- Cascos lose house.

I'm just guessing but reading between the lines that's what I think happened. Doesn't make it a nicer story but the way this is written it's as if both parties got something in return for the deal and I don't think that is the case.

As for the bank, I think they were stupid. They probably better off agreeing to an extended mortgage term and a lower payment to help the home owner build more equity because everyone loses on a foreclosure deal. Banks don't seem that smart, though.

As for the other articles, I think you always need to be wary when you go into any large transaction. A good rule of thumb is read all the documents, rely on no one but yourself, and make sure you can afford the payments. In the US, every mortgage comes with a HUD that breaks out all the costs and what the monthly payment was. No matter how much you were lied to along the way, the HUD form cannot be falsified so if you get to the table and are handed a form that shows a payment amount you did not expect, then do not sign it.
Scratch my theory, as the article says they were current on their mortgage prior to this reduced payment thing.

Something in this story just does not make sense. I still think we are missing some very pertinent facts here.

Shackle their minds when they're bent on the cross
When ignorance reigns, life is lost
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