That ought to have been the headline for today’s story in the Arizona Republic detailing homeowners who were tricked into loan programs with escalating interest rates and payments.
But after signing the loan documents, the couple quickly wanted out of the deal. They couldn’t get copies of the papers or answers about why the figures didn’t match what had been promised and why some lines on the document were blank, Elizabeth said. But it was too late
These homeowners were told they’d be receiving $20,000 cash back from the seller of their new home in Queen Creek, money they received only in part. While the article talks at length of the illegal actions of the lender, it doesn’t mention whether these homeowners are facing any loan fraud charges for participating in a cash back scheme.
Are there legitimate reasons to receive money from a seller? Sure … there are allowances for repairs, landscaping and the like; there are contributions toward closing costs. None of these ought to involve a five-figure check being cut back to the buyer.
(I’ve been checking the tax records but can’t find their name in Queen Creek; best guess at what they paid is somewhere around $300,000, which means the $20K represents more than 6% of the purchase price …)
Clearly, these homeowners didn’t realize they were involved in loan fraud. According to the article they didn’t even question why there were blank lines throughout their loan documents. (“What are those for?” “Don’t worry about it.” “Oh, okay.”) But that doesn’t change the fact that they were participating in a cash-back scheme.
Somehow the Arizona Republic, champion of cleaning up the housing and lending industry, never caught on to that little detail. Or maybe Ms. Reagor simply decided such information would ruin a wonderful tale of woe.
Don’t get me wrong. It’s not that I’m insensitive to the plight of many homeowners. There were hundreds of sharks in the loan industry, all looking for their next check and some of the lengths to which some went were beyond shady. There’s blame there to be sure.
But there also is some culpability with the homeowners who were signing loan documents with multiple blanks, who signed loan docs in a parking garage without a notary without knowing they needed one because they were using their nephew or their daughter’s new boyfriend or their neighbor to refinance.
Just because your niece Sally got her real estate license last week, it doesn’t mean you ought to trust her with the sale of your $400,000 house. And just because you’re nephew Tim started working in the mortgage industry a month back, it doesn’t mean you ought to trust him with the loan (refinance or otherwise) on your home.
For all the fingers pointing out to assign blame it would be refreshing to just once see the story of someone looking in the mirror and saying “I screwed up. I’m too smart to have gotten myself into this situation.”
Maybe next week.
[tags]real estate financing, loan fraud, Phoenix real estate[/tags]