Blog of the Mortgage

It's sad but I actually saw credit reports that looked like they had followed this basic path (I am sure many of you have as well).

**disclosure**i found this on the ml-implod-o-meter discussion board. I do not know who the poster was other than their screen name.

The Sub-Prime Mortgage 10 Step Program:

Posted: Mon Jan 21, 2008 6:04 am by HaleyDog on www.ml-implode.com

Step 1: 2000 - Lunch box Joe has a $500 gas card, a good used car and a comfortable apartment.

Step 2: 2001 - He adds his 2nd and 3rd pieces of credit which are his new 80/20 sub prime mortgages. AKA...no money down purchase 100% LTV with seller pays all closing costs. The new mortgage payments are around what he was paying in rent....as promised by the flyer found on his windshield.

Step 3: Within in 9 months after this purchase he opens a min 5 new credit cards each with a $5,000 limit. He can - he has a decent credit score.

Step 4: 2002 1st refinance. Value has increased 10 - 20%. Pays off all the credit cards he ran up shortly after Step 3, pays off both mortgages, gets some cash as promised per the add on his phone book. Cards now have buying power, gets a few more. He can - he has a moderate credit score.

Step 5: 2003 2nd refinance. Repeat step 4, add 10 - 20% to value, get more buying power, and gets a nice new car as promised per the radio ad. He can - he has a good score.

Step 6: 2004 3rd refinance. Repeat step 5, add 10 - 20% to value. Get ARM 1st to keep mortgage payment from rising. Get a bigger car as promised per the solicitation received in the mail. . He can - he has a respectable score.

Step 7: 2005 4th refinance. Repeat step 6 but get an interest only mortgage to keep mortgage payment in check. Buy 2 rentals per late night infomercial. He can - he has a solid score.

Step 8: 2006. 5th refinance. Repeat step 7 but refinance rentals and pretend they are Owner Occupied to keep mortgage payments in check as promised by the mortgage broker. He can - he has a perfect credit score.

Step 9. 2007. Get rejected for all refinance requests since value on all homes decreased by 20%.

Step 10: Walk from all mortgages, sell nice car for good used one, stop paying all max'd out credit cards, keep 1 $500 gas card and move into comfortable apartment. Watch windshield for flyers.