Tuesday, October 2, 2007


Everytime that the Federal Reserve raised interest rates in the last one and one half years there was a corresponding effect on your existing home value. As interest rates increased the price of loans also increased. This had the effect of increasing the monthly real price of your loan servicing and squeezing people out of the market as it became more and more expensive to make the monthly loan payments. As there were less and less buyers the demand for property decreased which caused a corresponding drop in the value of the properties. The Federal Reserves' recent lowering of the interest rates has only had a negligible effect on overall interest rates because everyone figures that the Fed will not lower the rates anymore.

All of this means that if you had an adjustable rate loan tied to the Federal Funds rate your interest rate increased over time as did your monthly loan servicing payments. Also, at the same time your equity was being depleted as the value of your house decreased. At some point if these variables continue in the same direction you will end up upside down on your loan versus your property value. With a no equity position and increasing monthly payments your reserves are being drained and you are falling deeper and deeper into debt. Your entire financial future has now been ruined by the loan broker, banker or agent that put you into your loan, and they knew this was going to happen to you. Those hollow promises that you would be able to refinance your way out of this predicament were carelessly made by your lender or facilitator and may be actionable.

You have real damages because the cost of your borrowing over the life of the loan just keeps increasing, your credit rating is falling, your equity has evaporated and you have nothing to show for your hard work. Forget about refinancing becasue with the implosion of the subprime market any hope of obtaining a 100% loan has disappeared with your agent's business. Who's going to pay for your damages and how are you going to be able to avoid certain financial death for the next several years.

The Law Offices of Dennis P. Wilson is exploring the possibilities for you and may be able to help. You need to review all of your loan documents, closing statements and other representations made to you by the lenders or their agents. If they knew or should have known that you could not afford the effects of an upturn in the interest market and if they failed to properly inform you of the potential consequences than you may be able to take legal recourse against your lender. Contact the Law Offices of Dennis P. Wilson to find out what they have to say about your problem.

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