Crazy Mortgage Loan Products Coming Soon
Author: Nick
Category: Money
Topics: lending, real estate
A time bomb is about to explode. Hit the deck!
Fortunately we’re not talking literal explosions here. But the mortgage time bomb is a very real problem facing millions of American families whose adjustable-rate mortgages (ARMs) are about to move from relatively low rates to potentially outrageous ones.
You might feel sorry for all those folks being taken to the cleaners on their new mortgage payments. Yeah, there will be people whose housing costs balloon from $1,200 a month to $2,500 or so overnight. But maybe we’re forgetting the real victims in all of this…
Mortgage lenders.
Yes, that’s right. As more and more real estate loans go into default, rates on new loans will skyrocket, and it’ll become harder for new homebuyers to afford a loan in the first place. That means lenders will see their business slowly evaporating.
But if there’s one thing of which the banking industry still has plenty, it’s ingenuity. While the days may be numbered for your run-of-the-mill interest-only ARM, I have little doubt that new, fiendishly clever mortgage products will pop up and allow a whole new generation of people to buy over-priced houses with little more than a dollar and a dream.
Coming Soon to a Mortgage Lender Near You:
- No payments, no interest until 20XX. I’m sure anybody can afford a mortgage payment of $0 a month, right? How’d you like to pay just that much to move into a fabulous new home of your choice? Oh by the way, your payment starting with month 13 will be roughly 80% of your monthly gross income. But you don’t need to eat or pay taxes, do you?
- 130-year fixed. Hey, it’s a fixed-rate loan, so you can’t lose! And neither can your children, grandchildren, or great-grandchildren. In fact, you’ll find it very hard to lose those housing payments because you’ll only be paying about 23 cents on the principal every month.
- Lottery loans. Everyone who applies for a loan each week gets put into a drawing, and the winner gets a fantastic rate on their loan. Everyone else, they get slightly less than fantastic rates. The perfect loan for people who think the only way to become rich is to win the lottery!
- Pre-scheduled foreclosures. The bank recognizes that they’re selling you a loan you won’t be able to afford in a few years, but they work with you before closing to determine the exact date when your savings account will run dry and you’ll be forced out on the street.
- “Magical happy-change loans.” Adjustable-rate mortgage sounds so menacing, doesn’t it? Under this new title, these loans will sound much more appealing to potential borrowers. Instead of interest-only, they’ll call it a “delightful temporary discount.” And it’s not a foreclosure anymore… now it’s just “home ownership switcheroo.”
- Indentured servitude option. Can’t afford your newly-adjusted mortgage payment? That’s okay, because the bank is looking for some extra help on nights and weekends. If you can handle a mop or a broom, you can work off your payments in a few (25 or so) short (long) years (never).
But unless these new products catch on, the future for many mortgage lenders looks a bit grim. So please, take some time out to drive down to your local financial institution, have a seat with a loan officer–any loan officer–and tell them, “I’m very, very sorry.” While you’re at it, you might want to bring them some canned goods or warm blankets… or maybe an ARM to refinance.
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70 Responses »
1.
everysec
October 10th, 2006 at 2:14 pm
Some of those ideas might not seem as outlandish to banks as you might think. A bank in Ireland has started to give a cash bonus ($2,500) to first time buyers – http://tinyurl.com/kz86b
2.
Nationwidebillrelief.com
October 19th, 2006 at 11:52 pm
I don’t feel sorry for the lenders in any way shape or form. There are not the real victims here, the homeowners are. They are the people who did what they could to get in the house of their dreams, nobody should blame them for wanting to live the American dream. I bet there was not of lenders who set down with their customers and said your payment is $950 at 5.5%, it will be $1001 at 6.5 percent, then it will be $1061 at 7.5%, $1141 at 8.5%, then $1280 at 9.5%. What do you think? Do you think the lenders sat down and said this or just told the customer you will pay $950 a month with a chance the interest rate could go up but we can refinance if it does? I know all the blame does not rest on the lenders but they are not the victims, they have more comprehension on how interest and mortgage rates work than consumers do. All the consumer was looking at was the monthly payments and being able to afford the house of there dreams at that payment. Anyway some of the lenders are getting rewarded by refinancing the adjustable rate mortgages.
3.
Drew
December 5th, 2006 at 9:44 pm
I dig your sarcasim. I’m a big fam of the Pay Option Arm. I have it on my personal home and I recommend it to almost everyone…AFTER I fully explain it to them. The one’s the “get it” really do get it. The one’s that don’t, I steer away from it.
4.
Bill
May 17th, 2007 at 11:04 am
Re: Nationwidebillrelief.com
“They are the people who did what they could to get in the house of their dreams, nobody should blame them for wanting to live the American dream.”
Responsibility should always go to the consumer. True, the lenders bear some, but the majority belongs to the person who signed on the dotted line. You can live the dream you can afford, not the one you can’t.
5.
Mortgage rates
April 18th, 2009 at 9:45 am
I dig your sarcasim. I’m a big fam of the Pay Option Arm. I have it on my personal home and I recommend it to almost everyone…AFTER I fully explain it to them. The one’s the “get it” really do get it. The one’s that don’t, I steer away from it.
6.
Brooklyn Mortgage
May 19th, 2009 at 11:05 pm
Brooklyn Mortgage is still making common sense loans to qualified borrowers. We specialize in residential, investor, mixed use and commerical mortgage loans. Call today for all your Brooklyn mortgage needs. No Pay Option ARMS found here!!
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VA mortgage loans
July 22nd, 2009 at 12:21 am
These ideas are not so much working. Many companies are still making good common sense loans to the qualified borrowers with No Pay Options ARMS
8.
Mike Johnson - Calgary Mortgage Broker
July 5th, 2010 at 2:19 pm
Your parody of trends in the mortgage products world is unfortunately close to the truth. Things looked grim when this blog was originally posted and they still don’t look great. However there are still, as the previous commenter suggested, companies that are capable of working with the current loan climate.
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John
September 5th, 2010 at 3:59 pm
Very funny article about mortgage loan!
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Interesting read and i like the sarcasm, but unfortunately it is becoming very close the the truth… While i have a good paying job as a security guard (earn more about the security industry on security guard center>, you can also see how much security guards earn), i also struggled with the sudden mortgage raise we were struck by…
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But some of the lenders are getting rewarded by refinancing the adjustable rate mortgage .
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