A loan that'll get ugly fast

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1 total messages Started by Anonymous Sender Fri, 15 Dec 2006 05:05

#2018

Author: Anonymous Sender
Date: Fri, 15 Dec 2006 05:05

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EVERY day, Will Hertzberg owns a little less
of his three-bedroom house in Corona. Like
hundreds of thousands of other homeowners
around the state, Hertzberg has a mortgage
that lets him choose how much he pays each
month. Like many of them, he always chooses
to pay as little as possible.

For the moment, this allows the 56-year-old
Hertzberg to continue living in his tract
home despite being only marginally employed.
But his debt is swelling, and his mortgage
company controls his fate.

"I am rather screwed," he said.

Hertzberg could sell now, but his lender
would charge him an $11,034 prepayment
penalty � money he doesn't have. Yet if he
stays, the housing market may tank,
vaporizing what little equity he has left.

"I made choices, and they happened to be the
wrong choices," said Hertzberg.

In 2003, only about 8 of every 1,000 people
buying a home or refinancing a mortgage in
California got a pay option loan, according
to San Francisco-based data tracking company
First American LoanPerformance.Last year, 1
in 5 loan applicants got one.

COUNTRYWIDE sees little risk of widespread
foreclosures.

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