Predatory Lending Leads to Foreclosure

October 3rd, 2008

The story of David Parkes and Kathy Sakry highlights the dangers of predatory lending that lead to foreclosure. Their experience shows up to what lengths brokers and lenders had gone to make the best of good times without caring two hoots about the vulnerable borrowers.

44 year old Parkes and 43 year old Sakry were lured by three lenders to go on refinancing their house until all the equity had been exhausted and they could no longer manage with monthly mortgage payments. Thanks to the lenders foreclosure became inevitable.

There are thousands like Parkes and Sakry who have been taken for a ride. But despite this the Congress is all worked up about a $700 billion bail out from taxpayer’s funds to rescue the very people that manipulated this foreclosure crisis. It is doubtful if the relief package will bring any relief to the couple or to 28,000 others in Minnesota who are rocking in the same boat – can be tipped over by foreclosure waves any moment.

Prentiss Cox of University of Minnesota said, “This is a more egregious example of what’s happened to a lot of average folks.” He caustically remarked that the bailout package is a cheque of $700 that is being “paid out of your child’s future.”

Parkes and Sakry are sweethearts from school days. Together they purchased a house through a non-profit group that was helping 14 other nest builders. It was a town house with two bedrooms in quiet neighbourhood of Hopkins. To them it was a dream that had come true. The couple relied on social security cheques and part time employment. They somehow managed to make the monthly payments of $627 for the mortgage but unfortunately ran up debts on their credit cards.

During the peak of the housing boom in 2004 they were pestered by lenders and brokers to refinance. The lure was that the mortgage payments would go down and they would have some cash at hand. The bitter pill was coated with sweet words.

Today the Legal Aid Society of Minneapolis after reviewing the case concluded that there was no legal way out for the couple even though the mortgage company admits that the pair was treated shabbily. Foreclosure cannot be avoided. Christine Holevas of the mortgage company, Chase Home Finance said, “They were preyed upon, and yes, they didn’t have the guidance that they needed.”