Saturday, September 16, 2006

How Many Like This?

I worry way too many:

t started two years ago. Anthony Stewart runs an automotive-services business. His wife cares for children in their 4-year-old home on a quiet street in a nice subdivision.

They learned at that time that a third child, a boy, was on the way. Being self-employed, they had no health insurance.

They paid for Kerry's prenatal care, hospital and delivery costs out of their savings and by selling stocks and fairly exhausting every credit card and line of credit available to them.

By the time they took their infant son home, they still owed the hospital $17,000. Negotiations on a payment schedule went nowhere. The $17,000 landed in collections.

Yes, they would refinance their home, pay off the hospital debt, plus bring down their credit card debt.

A banker friend steered them to a mortgage broker, a seemingly friendly woman, who told them that despite their credit woes and low credit scores, she could get them a mortgage at a rate no higher than 7 percent.

Weeks passed. And the offered rate continued to climb: 7.8 percent, 8 percent and higher.

Finally, at the closing table, the broker told them their new loan would be 10.8 percent, and adjustable. Anthony Stewart had missed his last mortgage payment, the one she'd earlier told him he didn't have to pay. He paid it that day. It made no difference.

The mortgage on his home would climb to nearly $5,000 a month now, from the $3,000 per month he'd been paying since buying the house.

...

Getting out of the loan was impossible, what with their low credit scores and a pre-payment penalty of no less than $22,000.

Now, two years later, the adjustable rate mortgage is about to adjust.

He and Kerry have figured out the monthly loan amount likely will total no less than $7,000.


(via housing bubble blog)