Citicorp Trust Bank - Beneficial Finance HSBC RIP-OFF INTEREST for people with low credit scores

There is a lot of fault to go around here . Bottom line is you probably should have not even bought this house til you had a good emergency fund in place and a good strong down payment to make on it. This post is not specifically to the OP but just what I observe on a daily basis in the business I am in.

My husband and I have to inspect on a monthly basis homes that are either in deliquency, in forclosure or bankruptcy. I see homes every month with loans that should have never happened.I see people who have bought $30k suv's sitting in the drive and their house is maybe worth twice what the car is. The sad thing is they are in debt up to their eyeballs for a car that is worth maybe $17 and a house that is maybe $75? It does not take a phd to know if you are having trouble making a mortgage payment on a $75 house you do not need a $30 car. Again, I do not this is the problem of the OP, it is based on what I see on a daily basis. I find it sad to see people who can not make this small house payment, but do not think twice about buying an expensive car. Make no mistake, I see people with large incomes who think that one Hummer is nice, why not buy two? So then they become behind on their mortgage it just snow balls because they are living way beyond their means. Again, they will say things like, " well I had unexpected medical bills or my wife got pregnant and had to quit work". Folks, this IS called LIFE. You have to actually PLAN ahead. Sure there are going to be the very unusual and extreme events that even a 6 month emergency fund can not take care of, but for the most part if you have a savings, if you put a good down payment on the house and if you bought a house that is only a 1/4 of your income then is doubtful you will fall in a mortgage meltdown.

I am not saying the OP is in this type of mess, I am just saying I see this on a daily basis. I see people who could only afford a $300k house( a nice house in Nashville area)however they went for the $600k house and took out those horrible high rate 80/20 arm. The based their decision that they could re-fi in two years. However, no one seems to understand there is a huge amount of RISK in doing that. People do not seem to bank for LIFE happening. That is why it is so important to have an emergency fund, to do a budget before each month begins, to know where every penny is going to be spent, to stay away from credit cards. People do not bank on getting sick or losing a job, but these things do happen.

So why would anyone risk all the stress, risk ruining your credit, the stress it brings to your family? It is so important to know ahead of time what you truly can afford after you put down a strong down payment and after you still have a good savings just in case LIFE does happen and trust me it will. So many people think they just HAVE to have a house and go into a house frenzy if they don't. This is just not true. A house is not a must, it is something to look forward to while you save up for it. Get your cars paid off and for heavens sake do not take out a house loan to pay off medical bills, taxes, cars and whatever you still owe on! For one thing you did not "pay off" these bills. All you did was MOVE the debt and spread it out over many years. The result of this type of loan is that in the end you will owe more on your house than what it is worth. Then you are either stuck in the loan or you are forced to sell it and take a huge loss.

I find it sad to see that so many issues we are seeing right now could have been avoided if people had just waited and saved up like twenty years ago when no one bought a house until you had 20% down. Hopefully soon, we will begin to tighten the reins on borrowers and it will go back to that.

Bottom line, if you have a low credit score or have had credit issues in the past, get that cleared up before you buy a house. Buying a house when you have these issues only brings pain as the OP has found out. However blaming the company is not fair. Did they screw up by calling relatives or calling you repeatedly? Sure, they have violated the guidelines on that. However, this is a house that should not have been purchased until you truly had the money to buy it and your credit issues were cleared up. The reason the interest rate is so much higher is you are considered a credit risk. Forclosure happens generally after 6 months of late pays unless you have a history of late pays and then they can and will forclose sooner. You need to be proactive in making sure your payments are made before the due date. Mortgage companies will not accept partial payments. If you have not asked for a forbearance then you need to.

I know this is frustrating, but alot of this could have been avoided. I hope you are able to get caught up and get a work out plan going. Good luck!

Years ago, banks wouldn't even look at people with bad credit. Everyone wanted to own a home and some couldn't even imagine getting a loan for one. Then the lending criteria changed and all of a sudden, everyone could get a loan. In return for giving anyone a loan, the higher interest rates wene into effect. After all, people with bad credit were paying higher interest rates for cars and credit cards, why not their mortgage? Many people who signed knew what they were getting into, read their paperwork and made sure they could afford it. Many people did not, but signed anyway. After all the loan people told them they could just refinance anyway, but...

The people who ruined it for all were those who defaulted during their initial 2 years. During the time of their lower interest rate. This meldown began in 2006, which means people who bought in late 2003 and 2004 were the ones defaulting. They were still able to refinance at that time, but they couldn't because they had defaulted during their initial 2 years. When I got my loan, my mortgage broker told me to never be late on anything over the next 2 years so I could refinance. The people that started this snowball effect were the people who didn't pay everything on time over their 2 years.

So the banks began really tightening their lending criteria in early 2007. Now, those people who hadn't defaulted at all, couldn't even refinance because their credit scores weren't high enough, even though they did what they were supposed to do. They couldn't even get rewarded for complying with the terms of their loan because of those who defaulted early in their loans.

It's not the banks' fault for the mess we, and they, are in. It's the fault of those who continued to play "credit roulette" after they were given a gift, the ability to get a home loan. If they would have paid their loans during their initial interest period, they could have refinanced, then paid that loan over another 2 years, and refinanced, etc., until they paid for enough years to raise their credit score and get a real loan.

You can thank your self for your situation. To begin with you should not have bought a house with a low credit score. You would have had to be informed of the intrest rate of the first loan. No one forced you to sign up for a loan with a high intrest rate. If your allegation are true about them contacting relatives who were not on the loan or your employer, them shame on them and they did break the rules of the fair decbt collecting act. If I were you I would put your house for sell now and start negotiating a short sale. You might have to rent something until you fix your credit score.