If you told me what I am about to tell you, I would not believe you !
I received a call from a lady who had viewed a recent Mortgage Magic TV Show about market problems in general. She was concerned about her loan and wanted me to review her papers because she felt she had made some bad decisions. When she came in she kept talking about how she may have to live on the streets and was afraid that she would lose her home.
The first thing I did was review her loan papers. She has an Option ARM. But, it is a good Option ARM. The margin on her MTA is only 2.5 and her one year prepayment penalty has past. Her life cap is a very reasonable 10.5. The broker who helped her with the loan was honorable and treated her well.
She is a housekeeper and obviously could not show the income to qualify full doc. She purchased this home 3 years ago and with today's underwriting she would not get into the home. I explained the loan in detail to her and showed her that she now needs to pay at least the interest only because she is getting close to a recast of the payments. She understood that and said that she will start making the interest only payments.
She came to me because she was afraid that she would lose her house in foreclosure. Viewing her mortgage statement she appeared to be up to date but I ran a credit check to make sure everything else is OK. Are you ready for this? Her mid score is 750. I was stunned.
I asked her why she thought she would lose her home and she replied that all she is reading in the newspapers and hearing in the news is how Hispanics are losing their home to foreclosures because of these "horrible" Option ARM loans.
When I explained to her that she is in no danger of losing her home she actually started to cry from relief and asked if she could give me a hug.
Amazing. Here is a lady who is paying her mortgage and all other bills on time. She manages her money very well and has money in the bank. Yet, because of all of the negative media she thought she could lose her home.
The Power of the Media is tremendous and it can be abusive.
Doug Jones December 19, 2007
