IamFacingforeclsoure.com will be chronicling stories of homeowners that are facing foreclosure in order to publicize the travesties that people are suffering as a result of toxic loans and predatory lenders.
If you would like your story published on this website, then please visit our sister website at www.LoanSafe.org (Homeowners Forum) and register as a member to share your story with other homeowners and we will do our best to assist you in any way we can.
This is a letter from a man that Moe met 4 months ago. Mr. Don Bullis contacted Moe because he needed help to stop foreclosure on his home. After speaking with Donald, Moe realized that he was definitely the victim of predatory lending and needed an attorney right away.
His current mortgage was originated by a World Saving’s loan officer and that loan officer placed him in a negative amortization loan (commonly known as a Option ARM or Pick a Payment). That same loan officer inflated Donald’s income by over $4,000 and he is on a fixed income of only $2,500!
These are the kinds of abuses that we see everyday and these scams need to be publicized and the perpetrators brought to justice.
Moe called World Saving’s in behalf of Donald Bullis and all they said was that Mr. Bullis signed the loan documents, so therefore they are not liable and will not do anything to assist him in helping him avoid foreclosure.
To this day, we are still fighting with this lender, who admits no wrong doing.
Here is Donald’s letter to World Savings:
The intent of this letter is to explain the position I find myself in, how I got there and what I could do to eliminate the problem.
I have a home loan with World Savings for $338,000, I am three payments due and ready to go into foreclosure. I am 67 years of age and on social security and my wife is on disability. Total income is $2300 per month. About a year ago I did a refinance through a loan officer who was not doing me or World Savings any favor.
This loan was a ARM fixed for five years with a pre pay penalty I paid $3,000 to reduce the penalty to only one year I was lead to believe that the payment would be $1380 including tax and insurance, this would be a pick a payment plan which means that if money was tight I could pay a lesser amount, I had sticker shock when I received the payment coupon from World Savings the $1380 was the minimum payment.
Nothing was explained to me about how the minimum payment worked, the loan balance goes up because the minimum payment does not include interest which is added on. The broker told World Savings that my monthly income was $7,000 per month, how he could verify that is beyond me.
I should never have qualified for this loan. I believed the broker and never did my math if I had I would have known something was not right but I never. We topped out our credit cards which was a bad idea. I had hopes of finding employment but had no luck what so ever.
To resolve this problem I check into refinancing but due to my income and a late payment nothing could be done. I am now checking into Government grants to see if there is anything I can qualify for, but that is very time consuming and I don’t really know where to start any suggestions would be greatly appreciated If and when my plan is to get current with World Savings and the next step would be to start with the credit card with the less amount and start paying it off as soon as possible and keep the others current, the next step would be to use the payment from the paid off credit card and add that amount to plus the payment to the next credit card until they are paid off.
If I can find employment and not have the credit cards showing that they are over 50% of limit which has bad effects on my credit score I might look into refinancing to a fixed rate loan.
That is my story sad but true.
Donald Bullis
IamFacingForeclosure.com will do whatever we can to assist homeowners that are victims of predatory lending and help them stop foreclosure. Please let your story be heard and do not lose hope or your home without a fight!
6 responses so far ↓
1 mort // Nov 24, 2007 at 3:28 pm
Wow, everyone in America is so naive and innocent. He probably didn’t read the terms of his credit card agreements either. Poor thing, boo hoo hoo. No fool like an old fool. Arrogant on the way up, innocent little victims on the way down.
2 parnsama // Nov 25, 2007 at 2:58 am
I’m sorry to hear that he’ll be losing his house, but I find it hard to believe that he doesn’t know anything about the loan or how WS/broker qualified him. There is no language barrier involved, and seeing that this is a refinance transaction, he probably got cash out, spent it, and wished that the value would go up or something. I’m assuming he’s 90-day late when the loan has NOT recasted (he got it a year ago, and has a one year prepay), that means he couldn’t even afford paying 1380/month (PITI). They make 2700/month on SS and disability, which I assume to be non-taxable income. His front end at minimum payment is around 50%, even if we don’t take consideration that his income is non-taxable and do not gross up. He got cash out and could have paid all his debts. That just means that he doesn’t have his finances in order.
As for refinancing to a fix rate, don’t even bother. At 6% 30fix he would be paying 1690 (PI only, TI not impounded) with the original loan amount.
Even though there are rampant abuses in this industry, I think this site and Moe have picked a particularly bad example. He signed the initial/final 1003, the final TIL, the GFE, the HUD-1 and had the presence of mind to pay down the prepay. He is of legal age and has the intellectual capacity to understand written contracts and notes. He should have been able to afford at least the minimum payment but was late BEFORE recast. I have to assume he made a bad bet, and now has to pay the price.
I understand that this is not a good loan to make, after all if you have a 50% front DTI on the MINIMUM payment, you’ll almost certain to run into problems in the future. However the fact that he received cash out and most likely able to understand what he signed will make this a weak case. He should not have refinanced his house at that LOAN AMOUNT, period.
I’m actually more concerned about WS having stated program on FIXED income. Stated deals are prevalent in the industry, and we need to have a tighter guideline (no fixed or wage earner stated or high net worth) or abolish it altogether so this kind of thing will not pass U/W in the future.
3 michaelsblomquist // Nov 25, 2007 at 10:52 am
On the surface it is easy to look at this loan scenario and not feel sorry for the borrow. Surely, you should not jump off a cliff before knowing what is below, but this loan scenario is too common in the world’s most important sector (banking).
Millions of borrowers have been encouraged and allowed to commit loan fraud.
http://www.michaelblomquist.com/complaint/Title/18/1014.htm
Clearly everyone involved should have known better; borrower, agent and lender. A second grade education, calculator and a few keystrokes should have raised enough warning flags to not proceed with this loan. This is just one of millions.
http://www.youtube.com/watch?v=Oya0PlwA-NM
After 20 years in the business I have seen this scenario hundreds of times and the homeowner will do whatever it takes to save their home…even commit loan fraud.
Now the borrower has lost his house for his involvement in the crime, but those who were most aware or should have been most aware of the crimes have been rewarded instead of punished. The agent received a commission and the executives at the lender have been grossly over-compensated for their roles.
Because we do not know all the circumstances regarding the loan origination we should not jump to conclusions, but most likely ignorance is not bliss nor does it place anyone above the law (foreclosure). We have to let the courts decide.
Hopefully, the lender received over-bids and there are excess proceeds to help out the owner. Regardless, if all the facts are as simple as presented the l/o should be forced to pay the borrower his commission and possibly lose his ability to originate loans, WB should be fined and the manager/executives indicted for loan fraud or at a minimum aiding and abetting.
Bank examiners and other market participants (debt rating agencies, investment bankers, etc) should also receive punishments for their roles in these crimes.
The impact from this fraud on our economy is incalculable. This has been a giant ponzi scheme, highly illegal and financial anarchy.
What I find very ironic is many of the l/os who were selling the deceptive option arm and SI guidelines are now one of the biggest percentage of foreclosure victims. Like the retired oldman the l/os were praying for a miracle (unlawful, lending madness to last forever)
The American Dream of Homeownership has been destroyed and this could lead our country and the world into the next depression….or worse yet the next world war.
LTCM, S&L crisis and the dot.com implosion combined pale in comparision. The American taxpayer will be paying for many years if not decades for these crimes. We need to address this issue not provide bail outs.
If I see another article about “laxed” lending guidelines I am going to puke. Current guidelines are not laxed; they are fraudulent and should be dealt with accordingly.
Either our government regulators are extremely inept or corrupt; either scenario is not acceptable. Duggan, Reich and Bair should all be removed from office immediately!
Loan fraud is just one of the many violations and is very easy to prove. A loan application and verified 4506-t is all that is needed.
Stated income guidelines had well established and prudent guidelines prior to 2004.
2 years of current, consecutive self-employment documented by CPA letter or business license
20-25% downpayment or equity (refi - c/o 25%)
excellent credit
6 months of stated income in reserves after down payment (not including cash out)
theme in the industry and one that has developed on the back of criminal activities.
These are prudent guidelines and should have remained the standard. Instead millions of borrowers were allowed to reduce existing housing supply. The lack of supply and unqualified demand created this enormous bubble that should have been stopped years ago.
This unconscionable sheep mentality and lack of rationale judgment has not been experienced since the holocaust.
Like the war on drugs you cannot improve the situation by convicting the user (borrower) nor the corner store dealer (broker). You need to arrest the kingpins. Lenders, credit rating agencies, investment bankers and corrupt government officials.
Unlike the war on drugs; credit and money is not a psychological addiction it is a necessity. Preying on the ignorant and greedy has created a situation where millions of Americans may receive bail outs at the cost of prudent Americans.
This potential bail out sends a very dangerous message; F/U as much as you want provided millions of others also F/U and you will get bailed out.
We need to demand that our government convicts these criminals instead of taking their campaign contributions.
http://www.discountrealty.com
4 Top producer // Nov 25, 2007 at 7:38 pm
It will be very hard for this borrower to save his house, because he was aware and had knowledge of the program he was taking on. He even bought the pre-payment to one year, so he could refinance. He couldn’t even make the small required payment and blaming the loan officer isn’t the answer.The program allow stated income and based on his score he qualifyied for the loan. He had 3 days to review the documents and cancelled if he was mislead. I agree that the stated programs have to be elimated for borrower on fixed income to avoid these cases in the future. The internet,Media has been targeting the broker for the mess that big banks have started and the bottom line is that the consumer is the one to pay.
5 larryg // Nov 25, 2007 at 10:32 pm
I think that the loan officer or broker who did this mortgage did not have the customer’s best interest at heart. I have been originating for 12 + years and if the borrower disclosed his fixed income to the loan officer as $2300 then that loan officer was only interested in his own wallet. We as loan officers should know these programs and the parameters if we are going to originate these loans. Unless this borrower was told how all 4 choices would impact him down the road then I don’t think he is to blame. I don’t leave it up to my borrowers to read every document and become an expert on unique programs, that is our job! I have only originated 2 of these Payment Choice loans and both had unique situations where they knew they would be out of the loans within a year (and were) and I did not charge a pre-payment penalty. I treat customers right so they come back to me and refer me to others because they have been treated right. That broker probably doesn’t get a lot of repeat customers. It is stories like this one that have scared the market and the investors buying these loans. I feel bad for the borrower but as others have said with 3 lates and limited income I don’t see a positive outcome with this house. I would suggest selling and finding something in the $140,000 to $160,000 loan amount range.
6 admin // Nov 29, 2007 at 2:37 pm
Thanks for all your comments. Many well thought out insights.
Bottom line is that he is in an Pick a Payment loan, the World Savings rep inflated his income and essentialy helped contribute to his demise.
Is he to blame? I would say that this is down right predatory, regardless if he knew or contributed, which I know is not the case. His contribution was ignorance and in this case, it is not bliss.
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