Mortgage Abuse?

I wrote a story earlier this month about how your stock and bond portfolio -- not just your home's value -- could take a hit if the real estate market crashes. See,
Amey Stone

I wrote a story earlier this month about how your stock and bond portfolio -- not just your home's value -- could take a hit if the real estate market crashes. See, "If Housing Slumps, How Safe Are You?
You may be more exposed than you think, especially if you own financial-services and consumer stocks. Better take a close look at your bond funds, too."

I link here to the story, not because it's such a great piece (okay, it's not half bad), but mainly to draw attention to an interesting reader response. To save you from scrolling down through the comments, here's the one that took my breath away when I read it:

I am a lawyer and I represent illegal aliens in deportation. In all but one of 35 cases I currently have on docket the illegal owns a home. But it is the loan terms that fascinate me. One lady finished school at second grade, speaks no English, and works for a recycling company binding cardboard boxes. She makes about $30K per year and is a single mom with three children. She has a $430K interest only loan that she used last year to buy a $430K condo - 100% financing - she paid $3,000 in closing costs. I tried to explain that her monthly payments will rise substantially in four years. She does not believe me, did not understand what I said and told me the loan and real estate agents specialize in real estate and would have told her if her payments could go up. If 34 of my clients with risky loans and no school past at best eighth grade are surprised by rising loan payments, we should be afraid. This is the last group desperate lenders pander to, meaning we're near the end.

Yikes! I find this both frightening and depressing. I hate to think of all the hard-working people who may lose their homes in a few years because they trusted their lender and/or real estate broker.

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