Consumer Law

Caveat Emptor playlist: the mortgage foreclosure mess explained

By Sam Glover

In Part 1 and Part 3, Sarah Ludwig and Herman De Jesus discuss the foreclosure crisis in New York City. De Jesus points out that subprime loans are the only loans available in many minority neighborhoods.

Part 2 features Nerida Soto-Cuccia, an ordinary, well-educated, middle-class homeowner who landed in foreclosure as a result of a subprime loan refinance that sounded like a great deal and a high-pressure mortgage broker who closed the Countrywide mortgage loan at her house.

But the paper she signed did not reflect the loan she thought she was getting: 2.5% for five years, then an adjustable rate. The loan had $14,000 in unaccounted-for costs. Her first statement showed an interest rate of 8.25%, and a scheduled payment of $3,100. On a $170,000 loan! The loan also had a prepayment penalty so she could not try to pay her principal in advance.

[via Consumer Law & Policy blog]

Full post as published by Caveat Emptor on February 05, 2008 (boomark / email).