4 of 4 people found the following review helpful:
5.0 out of 5 stars
Before you buy a house, before you refinance, read this book., August 13, 2005
This review is from: American Nightmare: Predatory Lending and the Foreclosure of the American Dream (Paperback)
Journalist Richard Lord's book "American Nightmare: Predatory Lending and the Foreclosure of the American Dream" takes a good hard look at the subprime lending industry in America. The facts here are astounding. Basically, everyone thinking about buying a house, or refinancing a house needs to read this book before making any decisions.
There's no law against stupidity, naivety, or ignorance, and the subprime industry in America preys on people who simply don't know any better. According to Lord, the subprime industry existed for years on the fringes of the housing market, but now, subprime is BIG business. In California alone, subprime mortgage loans represented only 4% of all mortgage loans in 1993 but swelled to 20% of the entire California market in 2005. With aggressive marketing tactics, the subprime lending industry lures in all sorts of borrowers. In the past, the subprime industry fed off of those with shaky credit, and financed people who had few other options. But that is changing. Subprime lenders now hook borrowers who have much better options.
Lord includes many anecdotal stories of people who owned their homes and then were systematically stripped of their equity as they refinanced. It's easy to shirk off the troubles of those who refinance due to mega credit card debt, and then simply max out those cards again and again. But some of the stories here are just wicked. Lord explains that subprime lending strategy is "Target, Trick, and Trap." Subprime lenders are not upfront with closing costs, hidden fees, and percentage rates. They offer pleasant terms, lure the borrower in, and then lower the boom with the real figures at closing. In several instances, mortgage companies grossly exaggerated the buyer's income, or the value of the house in order to secure the loan and didn't mention a little balloon payment of $50,000 due in a few years. Lord's examples include people who owned their homes free and clear and then were approached by contractors who received kickbacks from mortgage companies for arranging loans. This work is often outrageously priced, never completed, and the homeowner is left with a house that cannot be sold, and with payments that cannot be met.
Lord also quotes instances when loans were made with impossibly high payments. Yes, it's a buyer beware situation, and no consumer should agree to make payments that exceed what they can afford. However, it happens. Debt-ridden consumers who have a history of making poor financial choices make yet more when offered an escape route from debt. But companies who do not disclose the finer, nastier points of the loan skirt the edge of illegal lending practices. One homeowner employed a lawyer to fight the mortgage company trying to foreclose. The lawyer was astounded at the payments her client agreed to, and asked why would a lender approve a loan that cannot possibly be paid back. The book explains that these loans are bundled together and sold as securities on Wall Street--the deal is to "lend high, rake in as much as possible by selling mortgage securities to investors". It's a process that's made millions for the CEOs of these companies.
Just in case you are thinking that you are safe from loan predators, think again. The book also details some very familiar scams and games played by some "respectable" mortgage companies and banks. For example--declaring your homeowner's insurance has expired, presenting you with a deadline to "fix it" and then buying it for you at triple the cost. Basically, if you have a house, with equity in it, and you want a loan, the consumer should remember that someone somewhere is eying that equity, licking their lips and deciding how to take it away from you--displacedhuman
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1 of 1 people found the following review helpful:
5.0 out of 5 stars
An intriguing title all pre-homeowners should read, May 12, 2005
This review is from: American Nightmare: Predatory Lending and the Foreclosure of the American Dream (Paperback)
Many homeowners who can't borrow from banks have relied on the subprime lending industry for mortgages - an industry which has increasingly assessed huge fees and then foreclosed on the house when a buyer couldn't make payments; in effect becoming a predatory lender. American Nightmare: Predatory Lending And The Foreclosure Of The American Dream is one of the first to probe in detail the methods of predatory lending sources, discussing the plight of borrowers who have been taken, lenders cheated, and state efforts to regulate the industry. An intriguing title all pre-homeowners should read!
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3 of 4 people found the following review helpful:
4.0 out of 5 stars
GOING TO THE POORHOUSE ON THE PREDATOR EXPRESS, December 30, 2004
This review is from: American Nightmare: Predatory Lending and the Foreclosure of the American Dream (Paperback)
This Book is concise, informative, and easy to read. Not highly technical, it is full of anecdotal stories. The layperson can read through its pages and keep saying, Oh My God, that's what happened to me. That's my story. How can this happen? How can Banks and other lending institutions get away with this? It is a clear case of, What you don't know will definitely hurt you. Knowledge is power, and Richard Lord puts the power back into the consumer's hands. Like lemmings running headlong towards the cliff, the american borrowing public are rapidly racing for that precipice. All too many have fallen over and disappeared into the ether of predatory victimization. Read and inform yourself, before you become one of the tens of thousands of victims, herded like cattle, into that mischievous money pit,from which most never recover. A must read for all those who want to be informed before, during, and after personal financial disaster strikes! Concerned Citizen
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