Old Borrowers Stuck With Mortgages They Can’t Afford
This article will make you sick to your stomach. It is about a lady who is 66 years old that was taken out a reverse mortgage and put into a “Stated Loan “(the article says No Doc but it’s really considered stated). She is about to lose her home of 25 years unless the bank modifies her loan.
“In 2007, she received numerous phone calls from a mortgage broker named Daniel Lewis. According to Mrs. Couts, he told her he was contacting seniors to warn them that banks were canceling reverse mortgages because they were unprofitable. She would have to refinance her home, he told her, or lose it. (This wasn’t true; reverse mortgages generally aren’t repayable until death.)
Mrs. Couts signed a document that said she could cancel within three days, and also signed documents that she thought were for a 30-year conventional loan with low monthly payments. The next day she saw that the application listed her income as $5,075 a month. She called Mr. Lewis to point out the error and to cancel the loan, but says he told her it was too late to change anything.
The broker had used a “no doc” application, which doesn’t require proof of income. Many brokers used these stated-income applications when borrowers’ incomes were too low to qualify them for loans. All of the other boxes for listing income and assets in Mrs. Couts’s application, which was obtained by The Wall Street Journal, were blank.”