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ARM Mortgage Tricks - How Bad Brokers Fooled Home Owners With the ARM Loan

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By : Corey Bruhn    99 or more times read
The previous 10 years in America saw mortgage lending practices that allowed just about anyone with a pulse to buy a new home with little to no money down or refinance an existing mortgage even with bad credit.

During that time many people who had bad credit were given ARM mortgage that were underwritten through a sub prime lender. Although these loans did help people buy a new home they also were used by shady mortgage lenders to make a lot of money using an adjustable mortgage rate tricks.

The ARM home mortgage usually was given to borrowers that had bad credit. In most cases even if they qualified for an FHA loan they were still given a sub prime ARM.

What Was The Reason For This?

Profit was the major driving force behind the push of ARM loans to borrowers. Lenders and brokers knew that the loans would have to be refinanced in two years or the rates would rise. The worst part is that many people were refinanced right back into adjustable rate mortgages!! It was really a simple way for dishonest lenders to maximize commissions from unsuspecting borrowers who thought they were being helped.

Where It All Went Wrong?

Most of the people that were being treated this way had bad credit and needed to use bad credit lenders in order to keep refinancing before their interest rate reset and their payment went up. This was working just fine for all partied involved until the housing market and real estate boom went south and all the bad credit mortgage lenders went out of business!

These borrowers now had nowhere to turn for help, many had no equity left in the home so even if there credit got better they still could not refinance their home loan. Then the foreclosures started and they started to lose their homes at an alarming rate!

What Can I Do If I Cannot Refinance?

The best thing that any home owner that is unable to refinance can do is to contact their current lender and ask them for help. The help will normally come in one of two forms and is normally called a loan modification. A loan modification is where your loan holder changes the terms of your existing ARM mortgage and either switches it over to a fixed rate or gives you an extension on your fixed rate period.
Where Can I Learn More About Loan Modification Help

To learn more about the options you have when struggling with your Adjustable Rate Mortgage and how to get back on track and keep your home, log onto today

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