"Extreme Makeover" home threatened by foreclosure

[Joe Frickin' Friday]

article here.

 

Yet another foreclosure is not particularly news, but this bit caught my eye:

 

After their appearance on the show, Larry was laid off and they remortgaged the house. Since then the mortgage has been resold to different companies three times, with the interest rate jumping each time.

 

I assume that by "remortgaged," they mean they refinanced. But what's up with the interest rate jumping each time the mortgage got sold to another company? Each time I've bought/refinanced, my mortgage ended up getting sold fairly quickly to someone else, but the interest rate never changed.

 

How can the interest rate charged to the borrower be changed when the lender sells the mortgage to a third party????

[Dave McReynolds]

I would assume that if the interest rate jumped, the increase had to be tied to some provision in the note he signed. Maybe the interest rate jumped because he was behind in his payments, and there was a provision in the note that gave him a certain interest rate if he was current in his payments. Maybe the interest jumped when the loan was sold because it was sold at a date that was coincidentally close to a date specified in the note when the interest would be adjusted anyway.

 

Maybe he signed a note that allowed the interest rate to be adjusted if the note were sold. Why would anyone be stupid enough to sign a note with that provision in it? Who knows. He would probably tell you it was buried in the fine print and he didn't read it.

 

Maybe the reporter got the facts wrong. I can tell you from experience that every time I have ever been interviewed about the tax law, mistakes were made in the article that I thought made me look stupid. I don't think anyone else noticed except me, or maybe people who read the article already thought I was stupid and it just seemed normal to them, I don't know. But the last time I was asked to be interviewed by the paper on a new tax law, I asked if I could see a draft of the article before it was published, and they said no, that's not our policy, so I declined to be interviewed.