Many Valley homeowners pressured or tricked into bad loans, experts say
Catherine Reagor
The Arizona Republic
Oct. 21, 2007 12:00 AM
azcentral.com
...Loan officers were enticed to put more borrowers in subprime mortgages because lenders paid higher fees on those. People were able to obtain mortgages without documenting their incomes. Sometimes borrowers lied, and sometimes loan officers lied.
Since lenders offered higher fees to brokers on the loans with the highest interest rates, some mortgage people put borrowers in subprime loans when they would have qualified for loans with lower interest rates.
Home buyers, as well as refinancing homeowners, opted for those riskier loans with teaser rates and deceptively low initial payments. Prepayment penalties often weren't mentioned....
The day after the Torreses signed their loan documents, Elizabeth called her loan officer to try to stop the deal. Several days later he called her back and asked that she meet him at the title agency to get her check and final documents, she said. She waited, but he never showed. Eventually, someone from the title agency came out and gave her a check for several thousand dollars less than the $20,000 she was promised.
Elizabeth began calling her loan officer that afternoon, but he never returned calls. The Torreses' loan officer couldn't be found. Recent calls to his former employer revealed he left the Scottsdale mortgage firm at least a year ago....
As many as 18,000 unlicensed people are taking mortgage applications, negotiating rates and getting loan commissions statewide. Only the official "broker" for a firm must be licensed. "We want to regulate anyone who is soliciting loans and getting commissions," said Felecia Rotellini, superintendent of the state Department of Financial Institutions. "Most of the mortgage problems we hear about come from unlicensed originators, and it's not only hard to stop them, it's hard to find them as they jump from firm to firm."...
...Often struggling homeowners don't know where to go for help. They may have worked with a mortgage broker or originator, but their loan was financed by another firm. Their mortgages could be sold to another group after that, and a different group could be servicing their loan. Anthony Sanders, professor of finance and real estate at ASU, said borrowers should be careful working with servicers to avoid a foreclosure. He said they can charge excessive fees to both a lender and borrower and delay the foreclosure and still a homeowner can lose his or her home. ... |
