Instead of checking out HSBC’s false claims, he accepts their deal and will soon be losing his house
A lot has been written about predatory lending practices employed during the housing boom. But the following was one I hadn’t heard of in the news.
The victim was a man from Texas who at one point had a nice 6 percent fixed interest rate mortgage. But in 2006 he refinanced his house with an adjustable rate mortgage, the rate had since soared to 10 percent, and his payment had gone through the roof.
Why would anyone do such a thing? This man told me that in 2006 he received a phone call from megabank HSBC, warning him that if he didn’t take this horrible refinancing deal they were offering, another bank could buy his mortgage and change the terms to be even worse.
“HSBC called me out of the blue,” he said. “The guy told me that any company could buy my mortgage, and they could change the terms to whatever they wanted. The guy said I should just refinance with them, so I would know what I was getting.”
“Mortgages are bought and sold everyday,” I said. “Whoever buys your mortgage can’t just change the terms on you. HSBC actually told you this?”
“Yup. And I panicked.”
This man was screwed. There was no way he could afford the house payment. And he couldn’t refinance again because like so many, the value of his home had dropped below what he owed on the mortgage.
This man was blatantly lied to, but instead of checking out HSBC’s claim, he unthinkingly rushed into their offer out of ignorance and fear.
If only he’d done some research. Most credit counseling agencies like mine offer mortgage counseling where the whole process is explained and all questions answered. If only he had called my agency before accepting HSBC’s deal. He would have discovered quickly that the con man offering this horrible loan was lying to him. Nobody can just change your loan terms if they buy your loan.
Please learn from this man’s experience. If you intend to get a mortgage, and you don’t know a lot about how the mortgage industry works, do your homework first. Just an hour on the phone could save you from ruin, just like it could have saved this man.