Foreclosure – Review by Martha A. Cheves, Author of Stir, Laugh, Repeat
(The downfall of our real estate market) – “This entire matter revolves
around sub-prime loans. When the government began to deregulate the
business sector nearly ten years ago, it opened a large door for
businesses to become engaged in practices that were legal, yet highly
speculative. The matter of sub-prime loans is one of many such
instances. In the real estate market, companies were encouraged to
bring in new customers by offering glittery loan packages. Many of them
sweetened the deal by offering loan interest rates to initiate the process, but placing the loans on an ARM instead of fixed rates.
Many of the people were so ready to get homes or refinancing that they
didn’t know the ramifications of the ARM…. Adjustable rate mortgages
simply increase over time. When the notes increased, however, many had
no ability to pay – therefore their homes went into foreclosure. The
loan companies didn’t suffer, because they had sold the mortgages to
investment firms or real estate investment trusts.”
I have to say upfront that I’m not an uneducated person, at least in the
field I’m employed in. But… I’ve never been educated in the field of
real estate and real estate loans, so I can be considered uneducated in
that field. Before I read Foreclosure I did know what an ARM was (adjustable rate mortgage) but I have never had one so I’ve never given much thought as to how it really works.
When I bought my condo a few years ago I had no idea as to what I was doing. I called the mortgage company who
had the loan on the condo by the previous owner, assuming they would be
the best since they already knew the property. I had my doubts as to
being approved for a loan. I made a decent salary but I was single, had
no savings account
and I have to admit that after my divorce I had struggled to pay my
bills. So you can imagine how surprised I was when I was approved
within 10 minutes of making the call and with an interest rate of 6.5%, fixed!
So, after discovering how easy it was for me to get my home loan I
never gave much thought to the problems others might be facing. Even
when my neighbor, who was with the same mortgage company, told me her
loan had been sold. I assumed mine would be next but it never
happened. When her loan had been sold for the 3rd time she
decided to refinance and decided to going through the bank for her
loan. Mine was eventually “bought” but only because the mortgage
company was bought out by a bank.
When foreclosures started making the news I couldn’t believe there were so
many people having problems paying their mortgages until I realized it
was due to the ARMs. Still, it didn’t affect me, I thought. And I
believed that, until I saw my 401k statement and I had lost about 1/3 of
my hard earned money that I had planned to use for retirement. Then I
started seeing condos in my complex coming up empty with foreclosure
notices on their doors. I saw condos sold for almost ½ of what I had
paid for mine. And I saw some of those condos sitting empty for
months. All of these events started opening my eyes.
After reading Foreclosure I realized then that I was one of the lucky ones. I had a good mortgage and a
good rate. It helped to open my eyes as to what really went on in the
real estate world which ended up affecting the whole financial world.
Using a handful of characters Herman L. Jimerson’s created Foreclosure, which will take you step by step into the downfall of the real estate
world. Through these characters he takes you through the legal “Loan
Stores” and then slips you into their illegal actions that caused so
many people to fail. Foreclosure is a book that needs to be read
by everyone who plans to acquire a loan in the near future, of any
kind, as well as anyone who may already have a loan. And before even
thinking about applying for a home loan, read and follow the “50 Ways to
Avoid Foreclosure” at the back of the book.