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Yep. Happened with my mortgage; I only know about it because the bank actually asked for evidence to support a level of liquid assets that I never claimed to ha

Yep. Happened with my mortgage; I only know about it because the bank actually asked for evidence to support a level of liquid assets that I never claimed to have. In my case, it wasn't really a problem as the mortgage was in line with what I knew I could afford. What was surprising, however, is that the bank offered to loan me considerably more than I could afford. I found it all very odd, but I didn't understand the meaning of it at the time. A few years later when it all blew up, I realised what had been going on. Again, I was fine as I did my own math, but I can imagine many people were sold on mortgages that they were never going to be able to afford.

at-fates-hands 5y ago
Yep, happened with me too. I remember my wife being adamant about a fixed rate mortgage while the banker was being super pushy about doing a 5 year arm. About a month after we got our house, we started getting the letters, "Your loan was sold to Bank XYZ, your new loan holder is ABC company." Literally every month our loan was getting sold multiple times. Then Wells Fargo started calling about re-financing our mortgage around late 2006. We were like, "Huh? We're on a fixed rate." and the guy was like, "Says here your 5-year ARM you signed is expiring in 2008 and your rate is going to go way up." Alarm bells started going off. We made an appointment to sit down with the guy at Wells Fargo. Sure as shit, the guy who was pushing us to do a 5 year ARM falsified our loan papers. Inflated a bunch of our assets to get us qualified for a bigger loan that we didn't need. He put us into a 5 year adjustable rate that was set to increase wildly in 2008. We refinanced and got our mortgage into a fixed rate again. We talked to an attorney about suing them, but by then the crisis was starting to gain some real steam and the company who did our original loan had already been out of business for six months.
- bliteben 5y ago
  I really feel like we need more stories like this catalogued. Glad it seems like it all worked out.
  - not2b 5y ago
    It didn't all work out for many: when real estate crashed in 2008 a lot of people lost everything: they had huge negative equity in a house that was suddenly worth 20% or more less than what they paid with 5% or less down payment, lost the house and their savings and wound up bankrupt, at a time when the economy was tanking so many lost their jobs as well. Many people had invested their retirement savings in bonds based on all these crappy loans, thinking that this was a conservative investment (real estate! Only ever goes up!).
- WalterBright 5y ago
  In the late 90s I decided on an ARM with a teaser low rate for the first year, then it would jump up. So I refi'd after one year for another. Refi'd a year later. I think I did this 3 years in a row, then sold the house. I read the mortgage agreements carefully. I didn't write them, and the contracts allowed this. A side effect was each refi came with a home appraisal, paid for by the mortgage company. Every year, my property tax valuation went way up, every year I appealed, attached the bank appraisal, and got it back down.
  - not2b 5y ago
    That worked when interest rates were declining; now they are going up, so refi'ing at a better rate might not be an option.

at-fates-hands 5y ago

Yep, happened with me too. I remember my wife being adamant about a fixed rate mortgage while the banker was being super pushy about doing a 5 year arm. About a month after we got our house, we started getting the letters, "Your loan was sold to Bank XYZ, your new loan holder is ABC company." Literally every month our loan was getting sold multiple times. Then Wells Fargo started calling about re-financing our mortgage around late 2006. We were like, "Huh? We're on a fixed rate." and the guy was like, "Says here your 5-year ARM you signed is expiring in 2008 and your rate is going to go way up." Alarm bells started going off. We made an appointment to sit down with the guy at Wells Fargo. Sure as shit, the guy who was pushing us to do a 5 year ARM falsified our loan papers. Inflated a bunch of our assets to get us qualified for a bigger loan that we didn't need. He put us into a 5 year adjustable rate that was set to increase wildly in 2008. We refinanced and got our mortgage into a fixed rate again. We talked to an attorney about suing them, but by then the crisis was starting to gain some real steam and the company who did our original loan had already been out of business for six months.

bliteben 5y ago
I really feel like we need more stories like this catalogued. Glad it seems like it all worked out.
- not2b 5y ago
  It didn't all work out for many: when real estate crashed in 2008 a lot of people lost everything: they had huge negative equity in a house that was suddenly worth 20% or more less than what they paid with 5% or less down payment, lost the house and their savings and wound up bankrupt, at a time when the economy was tanking so many lost their jobs as well. Many people had invested their retirement savings in bonds based on all these crappy loans, thinking that this was a conservative investment (real estate! Only ever goes up!).
WalterBright 5y ago
In the late 90s I decided on an ARM with a teaser low rate for the first year, then it would jump up. So I refi'd after one year for another. Refi'd a year later. I think I did this 3 years in a row, then sold the house. I read the mortgage agreements carefully. I didn't write them, and the contracts allowed this. A side effect was each refi came with a home appraisal, paid for by the mortgage company. Every year, my property tax valuation went way up, every year I appealed, attached the bank appraisal, and got it back down.
- not2b 5y ago
  That worked when interest rates were declining; now they are going up, so refi'ing at a better rate might not be an option.