14 Halloween financial horror stories
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14. Grave mortgage lending
"Zombie Bank" approved a $430,000 loan for my wife with an income of $110 a week. She had only worked at a retail store for eight months and had no previous work history.

The lender, "Blood-sucking Mortgage," in Fairfax, Va., did not check her employment and made up fake documents stating she worked for a grocery store as a manager and made up a bogus income to get the loan for her. She had worked there for only six or seven months in the past five years. She never worked as a manager and she barely speaks English.

The mortgage lender did not tell her about the 2 percent penalty if the loan transferred to another lender within three years. She only realized it when she was at the settlement table in Florida with a Budget truck loaded outside the settlement office.

My wife and I did not even know what type of loan we were getting. At that point, we had no choice but to finish the deal and unload the truck. The settlement agent did not know anything about the other terms and conditions. She suggested we should get more details from the mortgage lender.

When we went for a walk-through, the agent and owner were sitting in a black SUV 200 yards outside the house. She handed us the keys on the curbside like she was giving us something for free. We had no idea how to operate the pool, the garage doors, community entrance and much more.

When I received the second mortgage statement from "Zombie Bank," I noticed the original loan amount went up. I immediately called the bank. They told me it is an index loan and it depends on the market, "blah, blah, blah," and kept explaining how index loans are calculated on Wall Street each month and other factors.

We were making a $2,300 payment, but $500 was adding each month to the original loan amount because I was not making the full interest payment. The $2,300 was just a minimum payment. In March 2006, I placed the house for sale and it was on the market until February 2007. In February the original loan amount went up by $6,000. We became so devastated financially that I had to stay in my job in Virginia and visit my kids only once a month.

Finally, in March 2007 we decided to pay the 2 percent penalty and refinance the loan. The banks were not able to refinance the loan for my wife because she had no job and I was working in Virginia. At last, I found a lender who suggested that the entire loan should be transferred to my name in order to refinance and we agreed.

In July 2007, my family moved into the same townhouse and we rented the Florida house. I am working two full-time jobs and my wife went back to working as a deli clerk in order to cover the two mortgages. I had $33,000 in savings and $7,000 in a 401(k). They have all vanished to cover the mortgages.