An interview with a mortgage broker: Tricks of the Trade Part 3
Ben says a lot of loan brokers prey on the ignorance of the consumer. The consumer is duped into a false state of happiness as they find out that they have gotten a 1 or 2 percent loan. What they don’t understand is nothing in this world is for free. Every month, they are losing equity. These loans have been around since the early ’80s, but it wasn’t until lately that the loan values were 95 percent of a home’s value, compared to tougher standards like 80 percent loan to value. What’s making matters worse now is that the people caught in these negative amortization loans are finding it tougher to refinance as banks have become more conservative with their lending practices and interest rates have gone up.