Falling rents aid homeowners in mortgage trouble

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Anonymous_IHB

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Falling rents aid homeowners in mortgage trouble

Southern Californians facing the loss of their homes are finding refuge in rentals. At larger apartment complexes, monthly rents have declined an average of 4.9% in the last year.



<A href="http://www.latimes.com/business/la-fi-cover-rentals29-2009nov29,0,7731217,full.story">http://www.latimes.com/business/la-fi-cover-rentals29-2009nov29,0,7731217,full.story</A>
 
I know a lot of people who bought homes because thier option-ARM payments on a SFR were a fraction of thier previous apartment rent.
 
[quote author="no_vaseline" date=1259583690]I know a lot of people who bought homes because thier option-ARM payments on a SFR were a fraction of thier previous apartment rent.</blockquote>


Did they only look at the minimum payment, or did they consider the other payment amounts as well (interest payment/IO; fully amortizing payment)?



If just the minimum, how did they justify the increasing loan balance?
 
If they asked, the loan officer told them "Don't worry, we'll just refi you."



This had me pulling my hair out because I couldn't understand how they borrowed $600K on a payment of $1300.
 
[quote author="no_vaseline" date=1259634846]If they asked, the loan officer told them "Don't worry, we'll just refi you."



This had me pulling my hair out because I couldn't understand how they borrowed $600K on a payment of $1300.</blockquote>


Even with today's low interest rates, that should be double that (for a 30-year fixed).



Of course, many ex-renters only are looking for the monthly payment-they are thinking about it like rent, a monthly expense like a utility bill, as opposed to paying down a mortgage. So they, um, never actually did pay down the mortgage, and probably have been foreclosed, or will eventually be foreclosed (although they are enjoying the free rent program in the mean time).
 
[quote author="Geotpf" date=1259637374]Even with today's low interest rates, that should be double that (for a 30-year fixed).</blockquote>


At the time, the monthly payment should of been 3 1/2 times that. Gotta love financial deregulation.
 
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