In defense of ARM borrowers

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I’ve done it, you’ve done it, we’ve all done it: We’ve questioned the intelligence of those who took out adjustable-rate mortgages -- ARMs -- they didn’t fully understand. With that in mind, I pass on this e-mail from a retired computer programmer who is ‘pretty financially savvy,’ explaining how she ended up in an ARM she didn’t want:

‘Recently I have read a lot about how people were so stupid to get ARM loans. What has not been covered is that the mortgage brokers were pushing these loans to the exclusion of fixed-rate mortgages.
‘As a case in point, I recently did a 1031 exchange on a rental property. We originally purchased the property in 1993. When we sold that property in 2007, the partnership ended. I took my share of the proceeds and put it down on another rental property in 2007. The down payment represented 51% of the purchase price.
‘Washington Mutual told me that because of my recent retirement that I would ‘be required’ to take a ‘no doc loan’ in spite of the fact that I could show adequate assets and income. They would not even consider a fixed-rate loan even though I repeatedly requested it. So, now I am stuck with an ARM loan.
‘Washington Mutual also told me to pay the minimum amount. After the first statement which came with 4 choices of amounts to pay, I did as I was told and paid the minimum. The next statement showed the same 4 options and a negative principal payment from the previous statment. So, I paid the fully amortized amount which they posted as 2 minimum payments. After many phone calls to get this straightened out, I did not receive another statement for 2 months. So, I went online to determine the amount to pay. I paid the fully amortized payment for the next 3 months which is where we are today.
‘Hopefully I will be able to refinance this loan after 1 year. Meanwhile, the fully amortized payment amount has been going down.
‘Even though I am pretty financially savvy and read every document completely , I believe that I was not fully informed because the documents only contained ‘examples’. They did not contain any actual numbers pertaining to my situation. In addition, when I called Washington Mutual about this, they said this is ‘normal business practice’. I will not do business with Washington Mutual again.
‘By the way, I am a retired computer programmer and majored in math (not accounting) in college. I retired in July 2006.’

Excellent e-mail, explaining a side of the story I hadn’t previuously read. Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.
Photo credit: L.A. Times