Many borrowers are now finding that getting out of their mortgage can be financially painful, according an article in the New York Times:
Homeowners whose loan rates are soaring may want to head for the exits. Many of them, though, will find no way out. If they sell their home or
refinance, they will face a penalty of thousands of dollars for paying off their loans early."
While we feel sorry for the borrowers who were not aware of penalties, millions of mutual fund investors have faced a similar unexpected punishment when trying to move out of one fund and into another.
Back end load funds were invented by the mutual fund industrial complex as a way create the illusion of selling a no load fund (a fund where the investor pays no sales commissions to buy) while still collecting the load. The sales fee, or load, in only charged when the investors sells. To this day, most back end load class fund investors have no idea there is a large commission involved - as high as 5.75% - when they sell shares.
In fact, we'd say supposedly predatory home lenders are less predatory than some mutual fund companies (and the brokers who sell such wares). At least the home buyers received a lower teaser rate for the first few years.
Buyers of back end load funds pay the same yearly expenses as no load fund buyers - the back end load is extra fees. Most banks are just making back their teaser rates with their version of back end loads.
The government will probably take steps against such mortgage lending practices because home ownership is a sacred cow. The government will continue to allow sneaky hidden loads to take billions from fund investors while they try to save for retirement.
Many borrowers are now finding that getting out of their mortgage can be financially painful, according an article in the New York Times:
Homeowners whose loan rates are soaring may want to head for the exits. Many of them, though, will find no way out. If they sell their home or
refinance, they will face a penalty of thousands of dollars for paying off their loans early."
While we feel sorry for the borrowers who were not aware of penalties, millions of mutual fund investors have faced a similar unexpected punishment when trying to move out of one fund and into another.
Back end load funds were invented by the mutual fund industrial complex as a way create the illusion of selling a no load fund (a fund where the investor pays no sales commissions to buy) while still collecting the load. The sales fee, or load, in only charged when the investors sells. To this day, most back end load class fund investors have no idea there is a large commission involved - as high as 5.75% - when they sell shares.
In fact, we'd say supposedly predatory home lenders are less predatory than some mutual fund companies (and the brokers who sell such wares). At least the home buyers received a lower teaser rate for the first few years.
Buyers of back end load funds pay the same yearly expenses as no load fund buyers - the back end load is extra fees. Most banks are just making back their teaser rates with their version of back end loads.
The government will probably take steps against such mortgage lending practices because home ownership is a sacred cow. The government will continue to allow sneaky hidden loads to take billions from fund investors while they try to save for retirement.