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I read an article over the weekend entitled Illinois Probing Top Home Lender. In the interest of good taste I will not name this lender. If you want to see the article be my guest.

http://www.chicagotribune.com/business/chi-fri_countrywidedec14,0,2728675.story

During the feeding frenzy that all big Lenders including the one in the article just finished a lot of Pay Option ARM type products were made. I believe this is the type of loan mentioned in the article. A significant percentage of them were made by Mortgage Brokers and Mortgage Bankers and sold to the lender mentioned and many other lenders who were just like them.

The whole industry turned a blind eye to the quality of the loans and to the real ability of the borrowers to repay them. Pay Option ARMs are not bad loans if they are made to educated, qualified borrowers who understand how to manage them and are of the financial mind to not allow the loan to destroy them. It is my opinion the lender mentioned in the article made loans to borrowers, made by people who brokered loans to them, where the borrowers were not qualified as they should be, not educated and had no business getting this type of loan. Greed and Profit were the incentives no doubt.

Predatory Lenders who now have perfected mortgage loan fraud to an art sold plenty of loans to them. Did this lender know these loans just might be made to people who should not have them? My opinion is yes. Is a lender like the one in the article guilty just because they were doing what other big banks and other lenders were doing? I say yes but you go with what's going on so to speak. As I mentioned before all lenders were originating Pay Option Arm type products.

What was really interesting to me was that just below the article this lender had a Google add touting among other things a no closing cost loan. I have been around the business a long time and if you are going to refinance your home you will pay to do it. There are numerous ways to pay the cost but there are costs. There is not a free ride, trust me on that one. I have talked to many former employees of this company and the real story on this lender and other just like them may never be known. The magnitude of Predatory Lending and Loan Fraud is yet to be discovered.

More to come

Lonny