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| The Media is abuzz with news of the devastating decrease in property values, the surging number of foreclosures, the excessive and obscene amounts of profits made by lenders, and the huge numbers of people being forced out of their homes. Anyone who's been reading the newspapers, watching the television, or getting the latest news from any source is aware that California is one of the areas hardest hit by the subprime meltdown and suffers a staggering number of foreclosures. In some areas of Southern California, one out of three homes is in foreclosure. Lenders and brokers have spent the last few years taking advantage of home owners by providing teaser rates and pay option loans, and the effect has been an artificially created "boom" in real estate. The lenders and brokers knew these loans were too good be true, and the borrowers weren't told the truth. The two-year fixed teaser rate loan are now changing to the adjustable rate, and homeowners are seeing their mortgage payments double. We have clients who have been paying two thousand dollars a month see their new statement demanding payment of four thousand dollars a month. There's no way they can afford the new payment, and they quickly find themselves facing foreclosure. Meanwhile, the broker made a large commission and the lender has been collecting a high interest rate in the form of the negative amortization. |
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