Kentucky Predatory Home mortgage Foreclosure

Most Kentucky home owners don’t know they have a predatory mortgage until they are having problems making monthly payments.  Predatory mortgages are normally quickly sold to investors.  Predatory lenders want to sell their loans before it defaults.   Predatory loans are rarely held by the lender that made the loan.   When the interest rate is high it is highly likely that people can’t afford the mortgage.   If the person owes more than the property is worth it is highly likely that the homeowner will allow the home to go back in foreclosure.   Even then you have to watch out for the foreclosure scams and choose the proper way to let a home go back in foreclosure.  If you have a predatory mortgage you can either fight the foreclosure or you may actually want to let the home go back in foreclosure and file bankruptcy to insure that you don’t have to pay a deficiency to the  bank.  Here are some of the common factors in a Kentucky predatory mortgage scheme.  

Years ago mortgage companies would not allow you to have a mortgage  payment over 25% of your income.   If you have an average income and your payment is more than third it puts too large a strain on the monthly budget.  There is not enough room in the money that is left over to cover living expenses, other debt payments, savings, job layoffs and emergencies.  

The second is having an adjustable rate mortgage.   In August 2010 my wife as a mortgage banker had clients with Kentucky Housing Corporation obtaining loans at 30 year fixed 3.5 percent rates and obtaining 10,000 dollar down payment assistant grants for these first time home buyer loans.   adjustable rate mortgages were even lower.   But when interest rates increase the monthly payments increase.   Some ARM mortgages can increase every six months.  Others loans have prepayment penalties and other terms that make refinancing impossible.   A Principal only mortgage pays only the interest or actually increase the principle if you pay slower than the interest accrues.  

The difference between a 30 year loan payment and a 15 year mortgage payment is small.  But if you have a 15 year mortgage, you have a very low-cost for the money you borrow and likelihood that you will lose your home to a foreclosure because you gain equity so quickly. 

Nick C. Thompson Louisville Kentucky Foreclosure Attorney