Living the American Dream

From the New Jersey Herald News we have A bitter ending.

The Maldonados, like many other homeowners, faced financial difficulties and refinanced with a nontraditional mortgage -- the kind of adjustable-rate loan that has inundated the market over the past few years, promising quick cash or low interest rates.

Now, mortgage payments eat up Maldonado's entire monthly income.

Oooh, good, a payment more than your entire monthly income. This is definitely going to end well.

But the same year Maldonado bought his home, his wife had started racking up thousands of dollars in credit card debt while out of work.

In May 2005, creditors placed a $15,000 lien against the house on $80,000 of unpaid debt. The Maldonados panicked. But the house had grown in value, so they refinanced, using the equity to pay the debt. Their monthly mortgage payments grew by $800 -- tight but manageable for the family.

Then earlier this year, they discovered additional credit card bills.

His wife racked up $80K in debt while out of work. $80K?!?

The sum total of all the money I have spent in the last 10 years barely adds up to $80K. (and yes! I actually pulled out the spreadsheet.)

What the fuck?!?

And they, "discovered" additional bills. Please note that this is the same usage as in Lavoisier discovered oxygen, Newton discovered gravity, and Columbus discovered America.

It was totally unexpected, of course. The bills were just "discovered".

While Maldonado toyed with selling the house, daughter Wanda Perez began looking for alternatives.

She found Equity Source Home Loans, a Morganville-based company catering to those with damaged credit. Equity Source said the value of the Maldonado's home had grown to $345,000. They offered the family a $230,000 adjustable rate mortgage, with monthly payments of $2,330 -- more than Maldonado's take-home pay.

More than the pay. Yippee-skippee!

But Equity Source verbally promised them that they could refinance again in six months, when their bills were paid off, the Maldonados said. With better credit, they'd get a lower interest rate and smaller monthly payments, Equity Source told them.

If it ain't in a written contract, it ain't worth shit!

The Maldonados devote more than 53 percent of their gross income to the Equity Source mortgage, according to the loan documents. There are no legal limits to debt-to-income ratios.

But the mortgage documents don't list the Maldonados' actual income. According to documentation the Maldonados provided, the family pays 63 percent of its income to its monthly mortgage.

Ooh, the documents say that they only pay 63% but, in reality, they have to pay more than their income.

Can you say "fraud"? I knew you could!

Hurrah for the American consumer!
Hurrah for the American dream!