What to do if your bank has you trapped in a high priced home, business or farm mortgage that may become more expensive, putting your home at risk through default. By law I can’t tell home-buyers or other consumers for a fee, so I’ll tell you for free.
How do borrowers get trapped in a high priced home?
Banks and other lenders knew interest rates would probably rise from historic lows. By offering cheap mortgages for very expensive housing as well as for businesses and farms, they knew that as rates rose buyers would be trapped in unaffordable mortgage debt. Then they could nurse the borrowers along like pet rabbits destined for stew. The interest they earn will grow with rate rises to give huge returns. Borrowers will slave away to meet repayments. Unmet interest can be added to the debt to earn more interest. If after a decade the debt gets close to the home value, the lenders can move in and sell the borrower up, absorbing the difference between debt and sale value by unbelievably high foreclosure charges.
Escape the debt trap
On Monday I will start explaining the best options for borrowers to escape this carefully laid trap. Then I will explain how a simple Votergram to parliament can help if your bank or lender is giving you a hard time, cheating you or acting dishonestly.