Nothing Is Ever As It Seems

A current item in a well recognized celebrated Wells Fargo for the principal of a number of of the mortgage loans that it holds as a result of purchasing Wachovia.  The item noted that mortgage holders were getting a twenty to thirty percent decrease on their loans. 

To the naked eye, this looks heroic.  Then again, things are seldom as they seem to be.  In essence, Wachovia was doing a lot of option Adjustable Rate Mortgages.  They distorted the name a little bit to fleece the consumers, calling it something attractive like “Pick you Payment.” So, every month you got four choices a payment type.  Logically, many of these people chose the lowest payment.  Because of a number of shady bank practices, that lowest payment was often lower than an interest only payment.  As a consequence, because the home owners were paying less than an interest payment, the difference between the interest only payment and the small payment amount was added to the principal at the end of the year.

The end result is that the principal discount Wells Fargo is offering was just giving you your money back.  After five years, your loan could very well be thousands of dollars more than it was to begin with. 

The word out their isn’t at all times what it seems.  Don’t always trust everything that is out there.

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