Quote:
Originally Posted by L-Pink
Many borrowers knew they couldn't afford future increases in their payments but were assured by the "bankers" not to worry ..... Refinancing at a lower rate or selling and getting the appreciation was a sure thing.
Not.
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There was a story about a guy who was from Canada who came to the US to go to college. He goes to Washington Mutual bank to open up a bank account. He has $3500 total to deposit into the account. They give him a checking and savings account and then tell him he pre-qualifies for a $350K mortgage. He asks them how that can be. He has $3,500 to his name, no job and is a full time student. They tell him that having a job is not part of their criteria for getting the mortgage. They also tell him that they can arrange it so that he can get 6 months with no payments so they suggest he buy a cheaper house, fix it up during those 6 months with no payments then sell it before he ever has a payment and he could make some nice money off of it.
He didn't take the offer, but I think it goes a long way to show how they would give a loan to anyone and were pretty persuasive with people. They just wanted someone to sign the loan and they would instantly sell it to someone else and get it out of their hands because they knew it was toxic.