Read this story from the Chicago Tribune and see if you don't agree that that there is some serious need of judicial and congressional intervention to prevent these types of abuses. Here is part of it:
PITTSBURGH - For Donna and Steve Love, the plan seemed perfect.
Priced out of the Boston-area housing market, where 2-bedroom homes can cost about $500,000, the working-class couple thought it was time to head to a more affordable market.
They chose Pittsburgh. They liked the city, thought they could get jobs there and were sure they could afford a home without having to win the lottery.
After finding their home -- a $59,000, 3-bedroom, brick row house near the city's downtown that they paid for with a subprime loan -- they moved in June of 2006 and tried to settle into their new life.
But within a year, they were facing foreclosure, their relationship was strained to the near-breaking point and their emotions were in tatters as they tried to hold onto their home.
"Sometimes I feel like I have post-traumatic stress disorder," said Donna Love, 46.
Their story has been repeated thousands of times this year alone, as the subprime mortgage market, made up of loans to consumers with a higher default risk, continues its dramatic collapse.
...
The Loves qualified as subprime candidates because of their income level and because Steve Love, 30, had so little prior credit history.
"I believe in paying in cash," said Steve, who worked as a night manager at a CVS pharmacy near Boston, a job he expected to replicate by transferring to a Pittsburgh CVS store.
...
In March 2006, they reached what they thought were final terms for the loan: $5,000 down, a 7.75 percent interest rate, fixed for two years and then adjustable for the remaining 28 years, with a cap of 14.75 percent.
The $429 mortgage payments would be higher than they expected, but still within their budget -- equal to less than one week of Steve's salary with CVS. Plus, it was still cheaper than their $700-a-month rent in a suburb of Boston.
Then, on April 20, two weeks before the May 3 closing date, they said they got mortgage documents in the mail with a letter that said they should sign all the papers and return them as soon as possible.
But they quickly noticed the final contract listed a higher interest rate of 12.125 percent, with a cap of 19.125 percent. That pushed the monthly mortgage payments up more than $200 to $692 a month.
"We both said, 'Oh my God!' and started reading page by page," recalled Steve Love.
They called Countrywide and talked to several representatives who told them "that the fluctuating market went up and investors had asked for a higher percentage rate on the loans, and this was the best they could do," he said.
Other problems surface
"We weren't sure if we would ever find another property we'd agree on. We'd already rented our apartment. We'd resigned our jobs. We were afraid of losing our $1,000 deposit [on the home]. There was just a huge fear factor there," Donna Love said.
The couple decided to go ahead with the loan, figuring they could refinance in six months.
The lenders do this because of these people's commitments, they are without adequate bargaining power. This problem is playing out (pardon the pun) countrywide. We need to get some serious oversight and remedies and quick.
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