Thursday, October 25, 2007

I guess Rock Financials "Secure Advantage Loan" Wasn't so secure after all.

Nice going D-Hall, with your scrupulous advertising blitz's and admittedly catchy theme song heard every 5 minutes on Detroit radio you have destroyed the lives of thousands.

The Secure Advantage Loan was a highly advertised negative amp, option-arm loan that was being promoted as a way to “lower your payment and get more cash flow”. Here lies the problem: The more cash flow comes at the expense of your mortgage balance GROWING every month that only the minimum was made. Of course people were qualified for the home purchase based on the minimum payment only so what did he really think would happen giving these people this toxic mortgage.

Well, now its time for the shit to hit the fan. Only 80% of the people with these loans are currently making more than the minimum negative equity payment. YES ONLY 80%. When these loans reset to include principle + additional principle tacked on via the –3% minimum payment, all of those people will surely lose their homes. Luckily the fun won’t really begin to 2009.

When you choose to pay the minimum payment, you’re paying less than the full interest that is due for that month. By deferring your interest, the unpaid interest is added each month to your outstanding principal loan balance.

If you defer payment of interest, your outstanding loan amount could exceed the value of your home. This may affect your ability to refinance your loan or sell your home since you will owe more than what your home is worth. A higher loan amount may also result in larger payments down the road.” [Quicken Loans website]

On October 14, 2007 Quicken loans suspended the Secure advantage and most of their other non conforming loans… I guess it was not so secure after all.

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