From The Wall Street Journal:
“In Granada Hills, Calif., Natalie Brandon is fighting to keep the three-bedroom ranch house she bought in 1985 for $105,000. Mrs. Brandon, 51, does medical billing for doctors; her husband is a dispatcher for a local gas utility. Last year, she got a $625,500 mortgage from Argent, now owned by Citigroup. Her 7.99% interest rate isn't set to rise until next June, but she already is behind on payments.
Over the past five years, she has refinanced her home five times, each time taking out cash and paying prepayment penalties. Last year, all she had to do to refinance was state that she and her husband earned a combined $100,000. She says she used the proceeds to pay off $30,000 owed on her white Lexus.”
From the San Francisco Chronicle:
“Jarvis, 34, refinanced her mortgage three times, most recently to invest in a car-repair business. She planned on refinancing that adjustable-rate mortgage before the rate went up, but the real estate market soured. The value of her home dropped. Her business foundered. And her monthly payment jumped to $5,000 in August, from $3,600.”
From Visalia Times-Delta:
“Adjustable-rate mortgages to subprime borrowers accounted for about 44 percent of all new foreclosures in the second quarter of this year, according to the Mortgage Bankers Association. Many subprime borrowers also refinanced their homes to pay off credit card debt or pay for costly remodeling projects.
‘One of the things we're seeing is people who have no equity in their property,’ said Jill Perry, who works for Consumer Credit Affiliates, a nonprofit that offers housing counseling in northern Nevada. ‘They've used their house as their ATM.’”