“A Choice Of How They Want To Lose It”
The New York Times reports on Washington. “David Franco’s illuminated model of a proposed 10-story condominium tower dominates a sales center that, in spite of the ‘Now Selling’ banner still fluttering outside, is conspicuously closed for business.”
“After six weeks of failing to lure more than a couple of dozen buyers, Mr. Franco and his partner, joined the builders of nearly 6,000 condominium units in the Washington metropolitan area who have decided in the last three months to recast their projects as rental apartment buildings.”
“Since the middle of 2006, the frenzied condominium market here and in several other big cities like Las Vegas, Miami and Boston has collapsed. In many cities, banks have significantly scaled back loans to condominium builders.”
“Industry analysts also point out that rents may start sagging if too many condos are converted into apartments too quickly. In the Washington area late last year, some buildings in the suburbs have recently started promoting move-in specials and other incentives to lure renters.”
“You can do it, but it isn’t as attractive,’ Tom Meagher, a real estate consultant, said about converting condos into apartments. ‘You are not going to get enough rent to cover the cost. You might have to go back and redesign the floor plans.’”
“Lenders started tightening the purse strings for the condominium market in early 2006 as sales weakened first in cities like Miami and Las Vegas. ‘Did the lenders pull back soon enough?’ asked Robert Brennan, managing director of real estate finance at Credit Suisse. ‘I don’t think we know yet.’”
“Take the owner trying to sell a spacious two-bedroom condo for $879,000 in the former Columbia Hospital for Women, which closed in 2002, in the Foggy Bottom neighborhood of Washington. In 2004, the investor was so confident that he would make a handsome resale profit that he told his agent, Thomas P. Murphy, he wanted to buy five condos. Mr. Murphy said he flatly told his client he would only assist him in purchasing one unit in any one building.”
“‘He needs $890,000 to break even, but the offers are at $800,000 to $840,000,’ Mr. Murphy said. Could he rent the condo? Yes, but that option is not appealing, either. Mr. Murphy estimates that the unit could rent for $4,000 a month, far short of the $6,800 a month the condo costs in mortgage interest, maintenance fees, insurance and taxes.’”
“‘They have a choice of how they want to lose it,’ Mr. Murphy said of investors and condo developers. ‘Drip by drip or in one slap.’”
“At the end of 2006, 24,200 units were on the market in the Washington area, up from 13,000 at the start of 2005. Sales have slowed to 663 in the fourth quarter of 2006 from 3,520 in the first quarter of 2005, according to Delta Associates.”
“Recorded prices have been flat, which probably masks an effective decline since only the most attractive properties are selling and many owners throw in extra inducements that do not show up in official figures.”
The Washington Post. “Looking toward his retirement next year, Willie Lee Howard agreed to refinance his duplex in Northeast Washington, thinking that a fixed-rate loan would help stabilize his finances.”
“What Howard got instead was a mortgage he did not understand. Baffled by the loan documents he was mailed after the closing, he consulted a lawyer and learned that he now had an interest-only loan, a new and controversial kind of mortgage. Howard was told that under its terms, his mortgage balance will rise instead of fall and that he will need to refinance in 10 years, when he may be too old to work.”
“‘This is a bunch of junk they done to me,’ said Howard, a construction worker.”
“Howard said he was persuaded to refinance his house by a ‘very friendly’ loan officer who called once a week for a year, telling him the time was right to stabilize his finances. After deciding to take out the loan, he said he told the lender he would need help reading the paperwork at the closing.”
“It is an interest-only loan, which is designed to help wealthy people manage their cash flow, and for people whose incomes are likely to rise, not for those whose incomes, such as Howard’s, are likely to fall as they retire on Social Security. The rate is fixed, but only for 10 years.”
“Jim Sugarman, supervisory attorney at AARP’s financial-abuse unit said Howard appears to have qualified for it with a ‘no-income, no assets’ loan that required minimal income documentation. ‘It’s a very exotic mortgage, and he had no idea he was getting that,’ Sugarman said. ‘He thought he was doing something smart.’”
“Sugarman said that in the past, lenders didn’t make these kinds of loans because they put financial institutions at risk. What has changed is the booming market for real estate securities. Major financial institutions now put thousands of loans together and sell them in slices to investors.”
“The new mortgage products have fueled record profits for the lending industry in recent years. Brokers can generate tens of thousands of dollars in additional fees.”
From the Capital in Maryland. “Michael Bergeson plans to frame his tax assessment notice. The assistant state’s attorney’s modest waterview home on a half-acre lot in Arnold was valued at $281,000 three years ago. His latest assessment weighed in at a whopping $1.8 million, a six-fold increase in value, well above the average 55.5 percent increase seen across the county.”
“Mr. Bergeson will be one of thousands of property owners appealing their home values. ‘If I could sell my house for $1 million less than its assessed value, I’d be happy,’ he said laughing.”
“Nearly 60,000 commercial and residential properties were reassessed last year. The average property assessment statewide will go up 18.7 percent a year over the next three years, a 55.5 percent increase by 2009. The increase is less than last year’s record of 20.1 percent.”
“Norman Hannah plans to appeal his latest assessment as well. ‘It seemed kind of ludicrous,’ he said after his rancher on an acre of land near Route 50 was assessed at $574,000, a 51 percent jump over its previous assessed value.”
“‘Nationwide the housing market’s gone flat,’ the airline pilot said. ‘It’s in a recession.’”
“During the last round of assessments the Hannahs’ home value jumped 49 percent, but the couple didn’t bother to challenge the valuation. ‘My wife was on my case for not appealing that one,’ Mr. Hannah said ruefully as he prepares to challenge his latest assessment. ‘I like Maryland, but if it gets too expensive to live here, I’ll move.’”
Jim Sugarman, supervisory attorney at AARP’s financial-abuse unit said Howard appears to have qualified for it with a ‘no-income, no assets’ loan that required minimal income documentation. ‘It’s a very exotic mortgage.
I guess so! No income loans? I know about no documentation of income loans, but no income at all? That would be quite the exotic loan, to be sure.
That said, I really would not be shocked at all to learn that such a loan existed.
This very topic came up on the board a couple of days ago. Apparently the NINA loan does indeed exist. The only requirement is a pulse…
From the article:
“‘He needs $890,000 to break even, but the offers are at $800,000 to $840,000,’ Mr. Murphy said. Could he rent the condo? Yes, but that option is not appealing, either. Mr. Murphy estimates that the unit could rent for $4,000 a month, far short of the $6,800 a month the condo costs in mortgage interest, maintenance fees, insurance and taxes.’”
————–
That pretty much sums up what I have been saying. The FUNDAMENATALS are so far gone that thousands and thousands of people are going to join the ranks of the FB.
Many people will NOT be able to try the drip-by-drip method as they can’t bleed hundreds or even thousands of dollars per month….and wait until the mortgages adjust.
Stay tuned…
SoCalMtgGuy
http://www.housingbubblecasualty.com
Do you really think that condo would rent for 4K a month? Anyone from the area care to comment?
I only ask because 4K a month in Palm Beach puts you into a 1-1.5M dollar home, not a overpriced POS condo.
The highest condo rent I have ever seen in my area (beachfront, 3500 sq/ft) is around 4-5K. I can’t imagine spending that much to rent off the beach in a condo? Maybe in NYC, but that’s about the end of the list. Again, I don’t know the area, but the price/rent ratio, for a bubble area, does not seem far enough out of whack.
At your service:
http://www.apartments.com/Results.aspx?page=results&subarea12=y&area2=y&state=dc&rgn1=34&prvpg=5&Rent_Minimum=0&Rent_Maximum=99999
I told my sister who lives in NW DC to sell her house a year ago. She gave me the “DC is different, paying rent is throwing money away, line right before taking out a heloc for 150k. I hate to say it, but with a burn rate of 7k a month, it won’t be long.
I live in DC. And I think he would be really lucky to get $4000 a month. Foggy Bottom is nice, but it’s not that nice. I’m betting he gets closer to 3K.
$4k? World Bankers make a ton (off of us!), but $4k? i’d be very surprised.
I work right around the corner from that building, and in fact I’m right now eating my lunch that I bought at the Trader Joe’s that just opened up on the ground floor of that building.
It looks like a nice building from the outside, but IMHO Foggy Bottom (or really the West End, which is the more precise neighborhood we’re in) doesn’t have enough of the Manhattan-style amenities to justify such a rental or purchase price. On the other hand, there are lots of $150k per year associates at big law firms a block or two away who might appreciate such a close place to crash in exhaustion every night after they leave work at 11pm.
But if they can’t stand the drip drip drip how are they going to bring a 50-90K check to the closing?
The phrasing “required minimal income documentation” seems to imply that it’s not a loan based on no income, but rather just stated income (i.e. no supporting documentation of income).
Yes, NINA is an acronym used in the industry to describe “No Income, No Asset VERIFICATION” loans … it doesn’t mean you get a loan with no source of income whatsoever. It just means you’re getting a mortgage in which the lender doesn’t require you to provide full documentation of the amount of income shown on the application. The mortgage lending business is an alphabet soup, with lots of acronyms like NINA, DTI (debt to income), LTV (loan to value), PITI (principal, interest, taxes, insurance) and so on.
I’d like to visit with you offline sometime about that area.
my email is gymnastgal32 at yahoo dot com
“At the end of 2006, 24,200 units were on the market in the Washington area, up from 13,000 at the start of 2005. Sales have slowed to 663 in the fourth quarter of 2006 from 3,520 in the first quarter of 2005, according to Delta Associates.”
(24200 / 663) * 3 mo/qtr = 109.5 months of inventory
Yeah, I had read it over again. Unreal.
Great group of stories here. 1. The guy in DC would be insane not to sell his condo for $840K and suck up the $50K loss. 2. The “loan officer” that sold Mr. Howard the refinance should proceed directly to jail. 3. No house in a town named “Arnold” could ever be worth over $1 million.
Mr. Howard MIGHT have a case. That’s one of the few I’ve seen so far that does, especially since he was solicited rather than approaching the LO for a mortgage.
The way these lenders are imploding, even with a case you’ve still got the first rule of torts litigation to deal with. Remember that one from law school. “Don’t waste your time suing an insolvent defendant.”
Well, that’s been my whole argument as to why none of this will ever fly. These lawyers are wasting their time. But in theory, maybe this guy has something.
Besides, sometimes an insolvent defendant becomes solvent again. Remember Craig Hall, Donald Trump, et al.
I agree with you txchick . Mr Howard also stated what he wanted and he needed a fixed rate because of retirement .The management of that loan company should re-write that loan right away to a fixed and avoid a lawsuit .For some reason I believe Mr. Howard and I think a jury would to .
But But But, If you do not read the contract you are going to sign or have somebody read it to you. You make it difficult for people like us who inssist on reading and understanding every thing we sign. I mean come on read the thing before you put your biggest asset on the line. The state should not be cleaning up after such risk takers.
Ok illegal -immigrant , you have a point . Any person taking out a loan should know what they are signing without relying on the loan agents, because they lie .
That being said ,I still think that this guy was a victim of the loan agents lies ,and maybe the loan company should give him the type of loan he requested at no extra charge on the re-write .
Saw that Washington Post article the other day, and really had to shake my head. Is it really *that* hard to read mortgage paperwork? I’ve bought three houses over the course of my life so far, and never has there been anything in the paperwork that’s “hidden” or something I couldn’t understand without some minor explanation from a lay person (e.g. real estate agent). Never would I dream of signing something of which I didn’t understand at least the basic financial terms.
That being said - all my mortgages have been standard fixed-rate mortgages. Can someone who’s done I/O or ARMs or the like say - is the paperwork really that different? Or are these cases of people claiming they didn’t know what they were getting into just pure buck-passing?
Remember that there are a lot of voters in Florida who have a hard time reading ballots.
Also remember “Captain Dumbass” mentioned a few months back.
Not understanding the loan is the biggest excuse going around to deflect blame from deals gone bad. I’ve seen far too much of this.
I don’t buy it.
I’d agree with you in most cases, but I seriously doubt Mr. Howard called the mortgage guy up and said “hey, I want an interest-only, no income, no assets refinance”. The mortgage guy probably picked the loan he made the most commission on with the least amount of work. There are many, many people that do not understand financial terms at all. Shoot, there are many cashiers that when presented with $5.02 cash for something that costs $4.97 will be completely confused, hand you back your two pennies and three more from the register.
That is so true! LMAO
yeah I’ve gotten that dumb look from them. Sometimes if I’m buying one thing and the line is long I’ll calculate the sales taxes and count out exact change while I’m still in line. It confuses them when you hand the the item being bought and exact change at the same time.
Baffled by the loan documents he was mailed after the closing, he consulted a lawyer and learned that he now had an interest-only loan,
Hey willie you should have tried this first
packman, from reading the story, it might be that the guy received some “additional” loan documents AFTER the closing. Having worked with construction workers back in the day when they spoke English and were American citizens, this guy fits the profile of an honest, hardworking guy who maybe lacked a little sophistication. I believe this was a real swindle and he really did not deserve this. The “witty” remarks in this case disturb me. I think this is one cirumstance where our contempt should be reserved for the loan officer and other crooks involved. Mr. Howard deserves our sympathy, not our scorn.
there was a critique of this story on Calculated Risk last night by Tanta. Another rave of hers, but interesting. You should go read it…….points out a lot of flaws in the story and give you a little different perspective……….
diogenes.
Fair enough - but how is it possible for loan documents received after closing to be relevant to the mortgage?
What it sounds like is that this guy somehow had is documents signed on his behalf by someone else and got screwed by that someone. Is it legal to get proxy signatures on closing paperwork? Even if so - it’s still a case of caveat emptor IMO. Home ownership closing papers is something you just don’t have someone else sign for you, unless you *really* trust that someone. Yes maybe the guy got screwed by someone, but by the same token it’s his responsibility to make sure he doesn’t get screwed, especially on probably the single biggest financial transaction of his life.
Fair enough - but how is it possible for loan documents received after closing to be relevant to the mortgage?
What it sounds like is that this guy somehow had is documents signed on his behalf by someone else and got screwed by that someone. Is it legal to get proxy signatures on closing paperwork? Even if so - it’s still a case of caveat emptor IMO. Home ownership closing papers is something you just don’t have someone else sign for you, unless you *really* trust that someone. Yes maybe the guy got screwed by someone, but by the same token it’s his responsibility to make sure he doesn’t get screwed, especially on probably the single biggest financial transaction of his life.
(re-posted - for some reason it says I already posted, but doesn’t show up - Ben will this ever be fixed?)
Fair enough - but how is it possible for loan documents received after closing to be relevant to the mortgage?
What it sounds like is that this guy somehow had is documents signed on his behalf by someone else and got screwed by that someone. Is it legal to get proxy signatures on closing paperwork? Even if so - it’s still a case of caveat emptor IMO. Home ownership closing papers is something you just don’t have someone else sign for you, unless you *really* trust that someone. Yes maybe the guy got screwed by someone, but by the same token it’s his responsibility to make sure he doesn’t get screwed, especially on probably the single biggest financial transaction of his life.
(attempt to re-post and get this dang thing to show up)
I certainly agree the loan officer was a crook. Those guys are loaning money - it’s supposed to get paid back. They are cheating their investors as well as the borrowers. It’s their job to make sure the loan is suitable for both the investor and the borrower. Since the investor is footing the bill for these clowns they’re the ones most responsible for their behavior.
Bzzzzzt! Wrong answer! Loan officers are in the business of maximizing their commissions. Nothing else matters.
Yep, loan officers have a fiduciary duty for themselves. Just like stock brokers.
All you really need to read is the “Note” and any addendums and the “Settlement Statement” Rest is just fluff.
It’s possible, maybe sad, given that is an older black guy, construction worker, that he can’t read? But then you get someone to read for you. People who are illiterate are pretty crafty with work arounds to hide their inabiltiy to read.
If you read the full article - the guy asked for help in reading the documentation at closing. This indicates to me he is functionally illiterate rather than careless.
“They have a choice of how they want to lose it,” Mr. Murphy said of investors and condo developers. “Drip by drip or in one slap.”
——————-
Great quote…I vote for “drip by drip”, so the pain and torture can be exagerrated and repeated month after month. Only in this manner will the grerd and avarice of there realty whores will be expunged for good.
“The assistant state’s attorney’s modest waterview home on a half-acre lot in Arnold was valued at $281,000 three years ago. His latest assessment weighed in at a whopping $1.8 million, a six-fold increase in value, well above the average 55.5 percent increase seen across the county.”
Interesting. The way things have been going in this country, it is not a stretch to imagine that local governments all across the country, hungry for revenue, could just slap a large assessment on a home arbitrarily, not based on reality.
Thats the kind of crap that happened in Cali before the voters put handcuffs on the sob’s with prop.#13….
Property taxes going up is the very reason why a fraud or a mania , with concessions and kickbacks ,that inflates property values is far reaching in it’s affect .
People are entitled to fair property taxes .
A real estate purchase is a conditional sale . A RE sale is conditioned on borrowers being able to qualify for a loan and it’s conditional on being able to qualify for the property taxes . The sub-prime lenders failed in their duty when they put unqualifed buyers and speculators into real estate ,especially on these low down loans ,where FB’s can’t make the payments or the “tax payments “.
When real estate agents or others think it’s real great for property values to rise fast ,they should think about how it might affect the tax base for a community ,forcing people to sell their homes .The lenders and the community alike should not of supported such a quick rise in values ,but it could not of happened without this sub-prime horse-sh-t .
I notice that the real meat of the problems associated with the sub-prime lending and speculator short-term demand are not being addressed by the MSM .
Is it fair for unqualified low down buyers and short term flipper/speculators (50% or more of sales volume ) should determine the tax base values of a county by their nutcake short term purchases .
I read the Post article the other day.
One thing though really stands out to me today:
“‘This is a bunch of junk they done to me,’ said Howard, a construction worker.”
This is only going to get much worse for him.
At least he speaks English gooder than most.
And…. he’s a construction worker…. Uh-oh.
I wasn’t aware there were any english-speaking construction workers anymore. He must be a fake.
“Since the middle of 2006, the frenzied condominium market here and in several other big cities like Las Vegas, Miami and Boston has collapsed. In many cities, banks have significantly scaled back loans to condominium builders.”
Collapsed? That is the first time I recall seeing this term in a MSM account of the residential housing situation. I did not see that term in today’s headline story in the SD Union Tribune, however. I guess our condo market is different, because everyone wants to live here?
I saw that headline on Drudge also. That should turn some heads.
Regarding the San Diego #’s, the only significant line is that prices in Solana Beach have declined 20% even though the yearly average rose 6.6%, this from a realtor no less! This proves that the average prices do not in any way reflect the price movement of the average house. I track some townhouses in Carmel Valley called Andalucia, it’s an utter bloodbath. Anyone can go to the San Diego assessor’s site and see the carnage, just enter “Mykonos Ln” and look at all the sales of the 1202sqft model. The peak was $589,000 and the most recent sale was $429,000! I’ve visited these and believe me, there is no view or location premium whatsoever, these things almost down 30%, and there are still tons left for sale.
Median is just median, and represents a type of averaging which is supposed to represent a typical distribution, eliminating lows and highs from the equation. The problem with this representation is that it is clear folks are still spending up to their credit limit, but buying bigger nicer homes with the same money, so the median appears to stay about the same while real selling prices plumet.
You are wrong. Median means half of all sales were higher and half of all sales were lower. This is not an average. The median number in many case is completly useless.
You’re right, the point is that it does not say anything about what was sold, so the median price could remain static while actual prices fall and buyers get bigger nicer homes. I would prefer to see figures for $ / sf which would probably average out and show real trends fairly nicely, although it would still not take into account property condition etc and thus still be inaccurate, since properties in poor condition are likley no longer selling in any quantity.
Five-minute Course on Measures of Central Tendency
————————————————————
1) Median and average (arithmetic mean) are two different measures of the center of a range of data — measures of central tendency.
2) The median is considered to be more robust, as it is less influenced by outliers (extremely large or small values which are unrepresentative of the middle of the range) than the average.
3) For skewed distributions (like that of home sale prices), the mean is pulled away from the median (50th percentile point on the data distribution) in the direction of the thin skew tail (up for housing, which is bounded below by the price of the most hideous dump in the area of interest and skewed up towards a few $50m ocean front properties).
4) Neither the average nor the median is an adequate measure of what is happening to the prices of individual homes, as both confound quality changes in the mix of homes that are selling with price changes of individual homes.
FS…we are watching the same area…we live in Carmel Valley (renting) and are watching the prices fall. Andalucia is a tarted-up dump! Those units at Andalucia rented at around $2000/month before the ‘conversion’ so why does the developer think they are worth $500K. And what about ‘The Heights’ the next development along! That place is even worse….FB’s are taking a bath in that one. We nearly bought at Pell Place close by right at the peak….ding ding ding something didn’t sit right with me so we bailed, and got our $10K deposit back because we hadn’t signed the CA Final Public Report…that was close! So now we watch and wait.
The developer doesn’t think they’re worth $500,000 now since they’re selling them now for 430K and dropping quickly. I actually think this developer is in check with reality at the rate they’re lowering the prices. In another year or 2 I estimate these will be about 300K. BTW They are also now trying to rent out the non-upgraded ones for 1700 “short-term”. I asked the lady if those would be available for at least a year, and she kind of snickered and said “yeah, this is phase 11 and they’re only on phase 4 of the conversion”. I noticed the sales office guy appeared very lonely. I estimate there to be at least 100 of these things left, at the current sales rate of a few a month, well you do the math.
OK found what I was looking for….last year I knew I saw what was paid for the Andalucia and ‘The Monarch’ development (now The Heights) by the developers….here are the numbers
225-unit Monarch @ Carmel Valley $83,000,000 $368,889 per unit
181-unit Andalucia Townhomes $71,500,000 $395,028 per unit
The condo market in the DC area is undergoing serious decline as the number of sales has plummeted and prices have dropped. The average sales price for a condo unit in December 2006 compared to December 2005 [these are ones listed through the MLS and does not include many condos such as those sold directly by developers].
Montgomery County : -7.1%
Washington, DC: -7.9%
Fairfax County: -4.0%
Loudoun County: -4.4%
The condo market in the Washington, DC area will continue to decline due to the growing inventory and the lack of investors. Expect further price declines in the Washington, DC condo market in 2007.
David
http://bubblemeter.blogspot.com
Expect further price declines in the Washington, DC condo market in 2007.
_____________________________________________
Does Lance agree with that? LOL. Send him over here. Let us chew on him a bit…
When the Washington pols lose money on their own digs…we should expect legislation allowing tax credits for first time home buyers (as in 1974). That’s when I bought my first property.
There is a 5k tax credit for first time buyers in DC. I think first time means “not having owned within the last three years.” Pushed me into my first DC condo. (A shithole basement conversion in the hood–all I could afford at the time–I sold two years later for 2X what I paid. Thank you God for saving my ass.)
” Major financial institutions now put thousands of loans together and sell them in slices to investors.”
If it were just hedge funds, I wouldn’t give a damn. But I think part of the fallout is going to be the pension funds that are affected by this. Although any fund manager that ignored the the bubble and blithely bought those “investments” ought to be boiled in oil. I wonder if this could end up like Enron on steroids, spread out among many pension funds across the country.
Ha, that’s why when people ask me what to do with their 401(k)s and a lot do, I tell them to self-direct the account and learn how to invest on their own or alternatively, use a simplified timing method (into the market in late October, out on May 1) and some Vanguard index funds.
A resounding YES ! Even if you think you are safe, you are not. Because the pension fund you have is exposed to this mess. Same thing for insurance companies. ENRON on streroids is a good analogy. The securitization of this junk, makes it almost impossible to know where the sh-t will the fan and who is going to eat it.
“Howard said he was persuaded to refinance his house by a ‘very friendly’ loan officer who called once a week for a year, telling him the time was right to stabilize his finances.”
Why don’t journalists ever identify and try to interview these loan scumbags in their stories? Seems likec nothing but one-sided stories nowadays.
I agree, bubbleglum. The temptation in this case is to make fun of the borrower. I don’t usually feel any sympathy for FBs, but in this case, I think the poor guy was really and truly swindled, and pressured into the swindle. We can make fun of his literacy level and the mistakes he made, but it appears he got some of the loan documents AFTER the closing. The scumbag loan officer should be locked up and the key thrown away. Until the penalties for financial fraud are so severe that it makes people faint to even contemplate comitting that sort of fraud, it won’t go away.
Bubblegum
The perps know that any reporter who wants a story off them IS NOT going to be on their side. The perps figure, “Why put myself up as a target?” Truth is, if a perp can avoid scrutiny long enough, the media will be onto the next story and they will be old news.
About 5 years ago, probably on advice from a lawyer, perps started to decide NOT to be interviewed. One of the worst offenders at the moment is the Federal Government but if CEO’s are caught with their fingers in the cash register, they are the same. What you hear, after a story has been reported, are a couple of tv reporter sound bites. “CEO Thompson declind our request for an interview.” Or, “In a letter to CNN a spokesperson for the Department of Screw the Taxpayer, stated they are looking into the matter.” The Federal Drug Administration has been really good at dodging reporters questions of late and I suspect they have had instructions from the Bush administration not to co-operate with the media when a drug company has a problem.
“Interest-only loans help people get into their first house,” he said. “Interest-only loans minimize their payments, when people know their income is going to be going up. It gives them flexibility.”
I would love to know how people “know” their income is going to be going up. Most people I know can’t even say for sure whether they will have a job next month, or will instead have their job outsourced to the 3rd world.
The mortgage industry re-labeled them as ‘Affordability Products’.
I have more respect for used-car salesmen than those shysters.
The only thing that is going up for sure are taxes,insurance cost of living and foreclosure rates.
It helps them to get their first house and it will help to loose it too. It was in the first place, just a gimmick, a scam to steal. Nothing else. The easy financing was just an illusion nothing else.
“This is a bunch of junk they done to me”
Anyone want to get rich making t-shirts with this written on the front….and a Century 21 logo on the back.
“Take the owner trying to sell a spacious two-bedroom condo for $879,000 in the former Columbia Hospital for Women, which closed in 2002, in the Foggy Bottom neighborhood of Washington.
I agree that Foggy Bottom area is fairly nice for DC as I lived there and worked ago at the GWU Hospital many years ago. We used to get a lot of the local Friday night area and overflow gunshots and stabbings wounds in surgery there.
These crime victims came from SOMEWHERE and unless law enforcement and the city preformed a miracle, paying $4000 a month for the Thrill of being on the edge of it is total insanity IMHO !
“Construction worker Lee Howard said he didn’t understand the mortgage he was taking out…”
Give me a break! How long have you lived in America, Mr. Howard? How many stories have you read or heard about over your entire life about slick “friendly” sales people? How many times have you checked out prices, been shmoozed by a “friendly” sales person, then decided not to buy and go looking for a better deal. Truth is, Lee Howard thought he was getting one up on a finance company or bank and was being clever. Makes you wonder how many morte “whiners” we are going to see over the next 2 or 3 years who, “didn’t understand.” My guess is a LOT.
I don’t agree. This guy was probably taken. It’s not a crime in America to be uneducated or of low intelligence but it is to take advantage of someone like that.
America has become a nation of whiners. Five years ago, when the US invaded Iraq, on every major corner of the town where I live there were a dozen people with flags and placards and whistles, cheering the US on with the Iraq invasion. Now, because it didn’t go the way they thought (like getting a mortgage which looked like a winning deal at the time) nobody is standing on the corner anymore waving flags. They are whining about the mistake of invading Iraq.
Thousands of property boom buyers thought they were smart when they jumped in and bought property in the last few years and considered ‘Non-Boom-Buyers” not too smart for paying rent with all the great mortgage deals out there and missing out on the incredible profits to come. Now a large number of them are whining, and there’s a lot more coming down the line, who they “didn’t understand.” Tough sh*t.
To quote my long departed but very wise mom if I screwed up, “Stop crying. You made your bed - you lie in it.”
Mr. Howard needs to grow up. He’s old enough to retire so he’s not some young kid with no wordly experience. Educated or not. During his life he bought a house and signed papers. He’s probably raised kids and made sure they went to school. He’s made a good living. Enough to buy a house. He’s over 21. Bottom line is, he made a mistake and because he’s over 21 he owns it.
Well, trust me, you’ll never make it onto a jury with that attitude.
That’s true, tx, and it’s a sad commentary on our society.
I’m a liberal and I’m always for giving the exploited a break IF they were exploited but there are going to be hordes of Mr. Lee Howards coming out of the woodwork in the next few years whining and crying about how they, “Didn’t understand”. What’s the answer? Either tell them, “You signed it - you own it.” Or make the litigation lawyers even wealthier than they already are by flooding the courts with cases of “financial exploitation”.
Whatever. It’s useless to argue. From what I’ve seen of this, the guy has a colorable claim and would make a sympathetic witness. If I were doing cases like this, I’d think about taking it.
I’m with you, txchick. This guy’s story is different from the run of the mill greedy FB stories I’ve been reading. He was trying to do something prudent and was misled. This story really wrenched my gut and so did some of the pseudo sophisticated comments about it. I’ve known a couple of guys like this. If your car broke down, they’d help you in a heartbeat. They can fix your drains, they can build things, too. So maybe they aren’t particularly sophisticated in finance. It doesn’t mean they deserve to be shorn like sheep. If the system caves, these folks will be the ones the rest of us turn to, because they can work with their hands. I understand where you are coming from, Mike, and you pride yourself on being self taught in trading, etc. Think your money, your retirement is safe? BAH! Any of us could wake up tomorrow and find our savings and other accounts confiscated or disappeared. Think it can’t happen? Well, I didn’t think Caligula could be reincarnated and take the helm of the US, establishing abattoirs all over the world.
I always said I’d never get mixed up with a guy who couldn’t open the hood of the car and know what the hell he was looking at or couldn’t fix things. That’s what men do (or used to do!). Now you see them running around with nail polish, manicures and body waxing. Scary scary scary!
At some level this story was frustratingly incomplete and we just don’t have the whole story. We don’t even have an “unavailable for comment” from the broker. It doesn’t appear that the reporter contacted the broker, the closing company or got somebody competent to read the contract and figure out what it says. I’m sure that there are plenty of brokers out there who will lie to steer there clinets into the worst loans with the highest comissions. But without talking to anyone else all we have is someone claiming “I was taken.”
A lot of people were also standing on corners, waving signs and protesting the entry into Iraq. They were portrayed in the media as the lunatic fringe because they didn’t drink the Bush Kool-Aid. The parallel is the US goes to the aid of a country where the people lacked the spine to overthrow a horrible dictator but makes fun of its own people for being ignorant victims of conmen.
hey but mike is a liberal….he says so.
And Bush is a conservative. Ah! Ah! Ah! Ah! Ah! Ah! Ah!
Mostly a CON-servative.
“America has become a nation of whiners.”
Or a nation of con men,where honesty is neither rewarded or respected, but a fast hustle or a successful spin is all. Mr. Howard is not necessarily either uneducated or unintelligent…but a man who has worked with his hands for 40 plus years. Up a against a suit with a fast spiel in numbers, he might have been intimidated or embarassed to admit any confusion. Look at the contempt his blue collar status has garnered here. I have no doubt that broker lied like a rug and assured him “he had the best deal possible”.
Of course, when all these bubble tract houses built with unskilled migrant labor start collapsing, folks may want to know Mr. Howard better.
Also this was a refinance ,so this Mr. Howard doesn’t appear to be a purchase money investor ,and he complained about the loan as soon as he had knowledge that he was put on a loan he didn’t ask for .
I never believe these people that buy a investment property and cry foul about the loan after the property goes down in value . Every case is different however .
“‘They have a choice of how they want to lose it,’ Mr. Murphy said of investors and condo developers. ‘Drip by drip or in one slap.’”
I have been on this blog several times a week for going on 2 years. In the beginning we could only hope that we’d one day see statements like this. Sometimes my faith wavered but I thank God that I’ve lived long enough to see quotes like this appear. Sniff Sniff, I love youy guys Sniff.
Its gotten almost blase. We’re in the grove to see so much more of this. Prices are going to drop and drop hard (in some areas). If you haven’t been tracking all the sub-primes failing… you wouldn’t be aware of how its destined to slow further.
Interestng times ahead. This will be the worst recession of my life. Cest la vie.
Got popcorn?
Neil
No. C’est la mort!
More exactly. “C”est le mort-gage.”
I forgot to add …..to see quotes like this in THE FRIGGIN NEW YORK TIMES, A.K.A. The main stream media!!!!!
Our rep from Bloomberg was over setting up some stuff on our terminal, his wife talked him out of buying 2 years ago because she couldn’t buy what she wanted but she could rent it. We were laughing about how much better things are; now that we are worrying about the magnitude of price drops, not when and if.
Before our three years in Florida, we lived in the Annapolis area of Maryland. What in the h#ll are those a$$hats doing with all the additional money? Are they at least lowering the millage rates, or are people actually going to see a doubling of their tax bills from 2005 to 2009?
Why isn’t there more of an outcry? Oh that’s right, Maryland is a very liberal state and those people love higher taxes. Another senior moment on my part.
Well in Maryland there is a 10% and in Anne Arundel County a 2% annual cap on increases in taxable assesments. So, as with prop 13 in California only houses sold recently are taxed on the full assesable values.
Assessments came out recently in Prince George’s county, where the taxes are high and the schools are lousy. In my neighborhood assessments are up more than double. I have a fixed rate loan, but this assessment would push my bank payment up about 25% over three years. Local gov’ts are scheduled for a windfall and in this county I expect much of it to go to patronage & corruption.
I live in College park and, just got my trienial assesment: My market value went from 182,470 to 317,960. But since I bought pre-bubble in ‘99 my taxable assesment is 134,380 for county taxes and 176,686 for state taxes. Even though I’m single, I’d pay more to get better schools, but there’s a real cause/effect problem here. School systems where most of the students show up for the first day speaking something close to standard written english andf are read to regularly at home have a much easier time getting good outcomes at a reasonable cost than schools where students never see a book or are exposed to grammaticly correct english except in class have a much more difficult and costly time educating the kids.