Mortgage mess: The family learns the lesson about lending money | News | Salt Lake City

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In October 2008As global financial markets were sucked into a giant vacuum created by the subprime mortgage crisis, Cherie McMurdie scrambled to buy her backyard neighbor’s house.

McMurdie’s adult children and grandchildren—some of whom were already living with her—had enough income to collectively pay the mortgage payments. The images of a McMurdie family campus, where everyone would be close, was an alluring dream. In short, she went for a loan at the most difficult time in recent history to get a mortgage, but she said she trusted a Lindon mortgage broker who said he could do of his dream a reality.

“We just wanted to live here forever with our families,” McMurdie says.

She has a job as a school aide, but neither she nor her fiancé had a good enough credit history. The only house she has ever owned is the one she grew up in and inherited from her parents. McMurdie never even had a credit card. Her children each had their own credit problems, but had incomes.

The loan she signed allowed the family to buy a second home, but within a year the $245,000 loan turned into a $300,000 debt that now threatens the home she has purchased and the one she inherited.

“This is a situation that could rob us of our two homes and leave 16 people on the sidewalk with nowhere to go,” Cherie’s son Kelly McMurdie said.

McMurdie says she signed documents she didn’t understand, but she didn’t care because she trusted her mortgage broker, Darren Eady of Good Neighbor Mortgage, whose motto is ” If I can’t find a loan that’s right for you, it probably doesn’t exist.

What she got was a hard money loan at 3% monthly interest for a year. So-called hard money loans typically carry high interest rates, are backed by real estate collateral, and are issued by individuals and businesses with non-bank private money.

“The vast majority of these transactions end in default,” says Jeff Fullmer, nonprofit mortgage counselor for Your Community Connection in Ogden. the terms are so oppressive to borrowers that only the most desperate situations justify using one, says Fullmer. In this case, the private money involved was his, says Eady.

McMurdie says she had no idea the house she was buying and the house she inherited were pledged as security for the loan. She put down $30,000 — all the money she had — and made regular payments of $1,900 a month as per the contract. She now says she didn’t understand and was not told that interest accrued at three times that amount.

“He made me fail and him win,” says Cherie McMurdie. “I was not explained in terms that I could understand what I was signing.”

Eady denies Cherie McMurdie’s claim that she was unaware of the details of the contract, calling her family ‘predatory borrowers’ who now feign naivety. He explained the contract to Cherie McMurdie several times during the signing and made repeated follow-up calls about accrued interest.

The hard money loan was meant to be short-term, Eady says. Cherie McMurdie needed to have the hard money loan just long enough to apply for a few credit cards and make a few payments, building up a credit history and score so she could qualify for a normal mortgage to pay off the loan. hard money.

Eady says he’s the victim.

“That money loaned to Mrs. McMurdie took me my whole career to save,” he said. “It’s not money from inheritance or donations or money from other investors. The only person who suffers a loss at this point is me, until my money, plus interest, is returned.

Michael Blackburn of Perfect Home Living, a nonprofit mortgage fraud investigation organization in Salt Lake City, investigated the case and is skeptical of Eady’s explanations. Mortgages require certain disclosures from the lender to the borrower, such as a good faith estimate of the total cost of a loan and disclosure of the annual percentage rate on a loan application. The title company that handled the deal between Cherie McMurdie and Eady doesn’t have any of those documents, Blackburn says.

“If Mrs. McMurdie was lying [about not understanding the loan terms], the loan application would show that and indicate the interest rate she was looking for,” says Blackburn. “But it’s not here.”

In its place is a document signed by Cherie McMurdie titled “Note”, which says “I will be charged 3% points on the 15th of every month”.

The Utah Division of Real Estate is also looking into the matter. The division does not comment on ongoing investigations and declined to comment for this story, Commerce Department spokeswoman Jennifer Bolton said.

The timing of the transaction is important. On October 15, the same day the loan was signed, the US Federal Reserve pumped $250 billion into the US banking system, fearing it would collapse with the bursting of the housing bubble. Homebuilders complained throughout the year that creditworthy customers couldn’t get loans. So what convinced Eady that he could get a conventional loan from Cherie McMurdie soon after the financial crisis hit?

“You are asking the wrong person. I’m not the borrower, I’m the lender,” he says. “Ask them about their exit strategies.”

There is a bitter irony in the story: the plan worked, partially. McMurdie applied for the credit cards as Eady requested and now has a credit score of 723 which is good. Recently, she got a $245,000 loan from US Bank, but that’s not enough to pay Eady the roughly $300,000 she now owes him.

She says Eady gave her an October 22 deadline to pay her what she owes or threatened to take both of her houses. Eady told City Weekly he would like to “work things out”, but did not specify how he might do so.

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