“Feeling Buyer’s Remorse” In California
The Sacramento Bee reports from California. “James and Beth Fullenwider are living inside a bad dream growing ever more familiar across the Sacramento region: Their 2,400-square-foot house in Elk Grove is slowly slipping away from them. They can’t afford their $3,300 monthly payment.”
“‘If the credit people had really looked at our situation, they would have laughed and said, ‘You can’t come close to qualifying for this,’ says James Fullenwider. ‘We’re in a house we have no business being in.’”
“He says the couple didn’t read the home loan’s fine print. Only after moving into the $500,000 home last August did they learn the loan agent inflated their income to qualify them for the financing. ‘But we were stupid to do it,’ Fullenwider says.”
“In markets like Sacramento, already heavy with excess resale inventory, some speculate that stressed owners will hand more homes back to banks and aggravate the oversupply. Since the high inventory of houses for sale already is depressing prices, a run of foreclosures would likely further depress them.”
“Last week, DataQuick reported 865 foreclosures in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties during the fourth quarter of 2006, nearly doubling from the previous quarter. DataQuick also reported 3,071 notices of late mortgage payments, known as notices of defaults, during the same period.”
“Economists say areas like the Central Valley that had an explosion of new houses and now wrestle with falling home values are particularly vulnerable to ‘payment shock.’ Many ARM borrowers owe more on their loans than their houses are worth. They can’t sell and they can’t refinance into cheaper loans, which raises their risk of foreclosure.”
“‘For people in adjustables especially, if they owe more than their house is worth, they’re going to have little reason to stay and kill themselves to make that mortgage payment,’ says Vicky Henderson, senior loan consultant at Sacramento’s Vitek Mortgage.”
“In 2004, about 65 percent of homebuyers in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties used adjustables. The next year, the total jumped to 73 percent before falling back to 62.5 percent from January through November 2006, according to DataQuick.”
“That’s about 135,000 ARMS in the last three years, with thousands of them adjusting upward in 2007, according to Loan Performance. Data-Quick analysts said thousands more used ARMS in refinancing loans.”
“Loan Performance estimates that in 2005 as home prices peaked, nearly one in five borrowers used even riskier Option ARMS. In the first nine months of 2006, one in four Sacramento-area borrowers were using them, Loan Performance estimated.”
“The Fullenwiders, who received an interest-only loan, considered walking away from the house and becoming a foreclosure statistic. But real estate agent Mike Toste of Antelope is trying to save them with a short sale.”
The Press Enterprise. “No longer are builders and land developers heatedly competing to pay top dollar for the thousands of acres of prime land straddling western Riverside and San Bernardino counties. Now some developers who negotiated options to buy dairy land at rates of $500,000 to $800,000 an acre are feeling buyer’s remorse.”
“‘The perception is that the housing market is glum,’ said Sybrand Vander Dussen, a land broker and president of a dairy farmers trade organization.”
“Many builders don’t want to buy more, particularly not at yesterday’s prices that now look overly inflated, brokers say. Dairy land prices peaked in 2005, and since then have dropped by half, said David Arnold, president of Hillcrest Homes. Another developer, Tom Dallape, estimates the decline is closer to 20 percent.”
“Arnold and developer Steve Hathaway said they forfeited an option on 90 acres in Chino rather than pay prices of as much as $800,000 an acre they had accepted at the top of the market. They declined to say how much they had paid on the options.”
“In December 2005, Richland Communities, a Newport Beach developer, agreed to buy just under 18 acres in Ontario from Wilbur Bootsma’s family dairy for about $500,000 an acre, Bootsma said. But when the Bootsma family declined to lower their price or extend the option period, Richland Communities walked away from more than $1 million in deposits, said Bootsma.”
The Orange County Register. “Many of Orange County’s boldest lenders are struggling to stay in the black, and in some cases to stay in business, as their customers miss mortgage payments in record numbers. ‘What’s become clear is a whole bunch of people signed up for loans or were sold a loan they really couldn’t afford,’ said Richard Eckert, an analyst in Newport Beach.”
“Perhaps most troubling, loans made by Orange County companies in 2006 were among the quickest to see defaults, data show. And many of those subprime companies, which tend to cluster here in Orange County, are in trouble.”
“UBS analyzed subprime mortgages made in 2006 and found that borrowers were missing payments on loans made that same year at the highest rate since 2000. In fact, UBS found subprime loans made in 2006 are on track to be the worst-performing loans ever issued.”
“So what went wrong, exactly? Lenders made two mistakes, according to UBS and other analysts. They didn’t scrutinize borrowers’ incomes, and they allowed subprime borrowers, who by definition have had past problems with their credit, to take on lots of risk.”
“Borrowers took advantage of ’stated income’ loan programs, where they simply tell lenders what they earn, said David Liu, director of UBS’ mortgage strategy group. Consumers thought home prices would keep climbing, which would enable them to sell or refinance if they got into a jam, analysts said. But stalling or falling home prices last year changed all that, UBS’ Liu said. Borrowers quickly began to miss payments.”
“‘They lost the motivation or incentive to send in the checks,’ Liu said.”
“Bad loans aside, mortgage companies face a tough environment this year. The combination of tighter underwriting standards and investors losing their appetite for risky loans could drag down volume, analyst Bose George said.”
“George said lenders last year went well past their pool of ideal customers. ‘Now on the edges, they need to retrace and cut out borrowers who shouldn’t really be taking mortgages,’ George said.”
“UBS’s David Liu said subprime lending is still a somewhat crowded field. Nationwide there are 40 to 50 big subprime lenders, so a few closing their doors or being sold won’t solve the oversupply problem, he said. ‘You probably need more dramatic changes in the market,’ Liu said.”
“In any case, job growth in Orange County will slow this year as a result of cutbacks by real estate-related companies, including mortgage lenders, said Esmael Adibi, at Chapman University in Orange.”
“Mortgage-related companies could shed 2,000 to 3,000 local jobs this year, he said. That comes on top of cuts last year. State figures show lending support positions, including mortgage brokers, dropped 13 percent for the 12 months ending in December, or a total loss of 1,800 jobs.”
“‘Overall, this sector is going to feel like a recession,’ Adibi said of mortgage firms. ‘You should expect to see a much weaker employment base in all of the sectors related to real estate.’”
‘As perverse as it sounds, what L.A. needs now is a real estate bust. Home prices have clearly shot up faster than the economy would justify. Contrary to the hype of the condo market, a new study from the Research Institute for Housing America shows that only a small percentage of baby boomers are moving back to the city.’
‘These were the people, along with foreign buyers and speculators, who were supposed to be the bulk of buyers in the high-end urban condo market. This helps explain why between 10 to 14 condo developments downtown — and similar projects in other cities — have been mothballed or downsized.’
‘Yet here too, the bad news may prove to be good news. Lower condo prices might renew the attraction of the inner city for those who started the back-to-downtown movement.’
Condos for everyone from South Central!!!
Compton will be the new O.C. as well. The IE will be the new Compton. hehehehehehehe
posted ” The IE will be the new Compton.”
No Compton has cooler temps and a much better location as long as you are going somewhere else.
IE will be the new “Old IE”…..
Woohoo!!!!
Im waiting for “The Real Homeless Houswives of Orange County” to be a hit.
Who started all the hype about the boomers flocking to these condos anyway? Were there a lot of boomer “investors” buying into the early developments with hopes of flipping them? Did that translate into builders assuming it was the new trend, and therefore overbuilding at an incomprehensible rate? Did anyone do any market analysis? This stuff is kooky.
Probably started by developers shining on the city for tax abatements. “all these high-rolllin boomers are going to be coming in, dropping more bucks into city coffers than there are cigarette butts in the gutters”
Aging Boomers will not move back into DWTN LA or any hip urban central city district. I think that that next RE boom will be in single-dblw wide mobilehome parks to provide cheap affordable housing in the sticks for all those boomers who are about to go belly up on their RE ’specu-investments’.
I wonder how many riches to rags stories we will here.
I know a guy who works with one of the National Parks in N. Cal. who is a few years from retirement. Lives in Arcata and makes over $100k. He mentioned recently that he is rolling high on real estate for his retirement, but I do not know how recently he bought (he has lived in Arcata 30+ years). I hope he does not lose his whole nest egg, but we will see…
A park ranger making over 100K. I love California.
He may not be a ranger. The national parks system has its share of managers and, more importantly, engineers. Both of these are high-earnings professions, even in government-funded jobs.
I say: “National Park jobs for everyone!!”
LOL.
I know several people at work who recently retired or will retire in the next few years. Not even one of them has expressed the desire to move downtown anywhere. Most of them are buying a house in the country with a couple of acres. Some are looking at the Rockies. Some are doing the RV thing. Nobody mentioned Florida or Arizona.
True. The newly retired are “living their dreams”. It’s the very elderly retired who move back to the city to be close to their soon-to-be-caretaker children. There are lots of them now, and their numbers will grow in future years.
LA’s downtown reclamation is a big scam. When LA was originally settled a downtown so far from the sea made some sense, as it was largely an agricultural community. If you need a primer on this, watch Chinatown. Now downtown makes no sense at all. The courts and huge office buildings are there, so some people are drawn there, and some of the changes (the W Hotel, Staples Center) have made it more lively, but I can’t see it ever being the a true downtown. There are too many nice shopping/tourist districts (Santa Monica, Beverly Hills, Westwood etc.) that compete with it. I’ve never had a friend visit and say “let’s go downtown”. Plus there’s the added problem of traffic: coming from the westside, there’s almost no way to make a Laker/Dodger/Kings/Clippers game/opera/symphony/play during the week. The traffic is simply ludicrous. Oh, and they recently discovered another fault line, one which runs DIRECTLY under downtown.
“Plus there’s the added problem of traffic: coming from the westside, there’s almost no way to make a Laker/Dodger/Kings/Clippers game/opera/symphony/play during the week. The traffic is simply ludicrous.”
The way the major Freeway systems all converge into DWTN LA is part of the problem LA is this ugly monstrously unlivable place. The entire dwtn inner core is ringed by 4 major fwys which enclose the dwtn in a concrete barricade. The 10 fwy on the south side is particularly dismal, with nasty areas underneath the fwy overpass.
BTW: DWTN LA core is ringed by a concentric series of nasty inner-ring districts such as westlake,chinatown,boyle hts, warehouse district, pico-union, jefferson park, angelio hts,ect. These are some of the nastiest filthiest decayed slum areas of Cal, brimming with illegals and assorted derelicts. Want to make dwtn livable. Start by neutron bombing a 2-mile wide swath surrounding the dwtn, or better yet simply raze it to the ground and make it a green belt. Lots of these inner filthy slums qualify as EPA superfund sites.
The LA Dwtn at night is a bleak,cold,empty and lifeless expanse of concrete, fortress-like forbidding marble/glass skyscrapers, and a hugh population of ragged street urchins. No place for aging boomers or middle class professionals with kids.
There is however a small colony of urban beatnic artists living in converted warehouse lofts on traction ave east of alameda st between 3rd and 4th. LA DWTN does attract a certain type of individual, those single-types who favor a less inhibited existence in urban chaos over a safe but relatively dull existence in a cookie-cutter suburb.
There are two parts to downtown: Broadway St., where all the low-income residents walk and shop for knock-off goods, and the part “up the hill” where misguided architects and developers have built pedestrian-unfriendly, out-of-scale structures.
Condos don’t make sense for people about to enter a phase of fixed income living. In many urban markets the affordibility advantage that condos once held has long since been lost. Additionally, in some cities condo owners have to either buy a parking spot (and pay taxes and assesments on it) or rent one out, and in either case second spots are often not even available. In cities under the sway of unions, the salaries of building engineers and refuse collectors will ensure your HOA maintains a steady climb upwards. It’s a pitch that might sound logical, boomers flocking to city condos, but it stands on some shaky ground. It gets a lot of play in the MSM here in Chicago too where the city government remains bedazzled over the promises of limitless future revenues. We’ll see.
I read the entire article. Boy this guys talking “fightin’ words” for the LA can’t happen here crowd. Logical and measured arguments. Surprised LA Times printed it.
PS was downtown recently….. and ain’t NO boomers gonna buy those Lofts.
Saw this yuppyish girl (although dressed down in jeans) about 30 waiting at the stop light across the street from a “loft” development with a pizza box and takeout bag in hand. It was dusk, and she was looking around a bit nervously. Had to “get inside” before it got dark.
Oh Yea, that’s worth 600K…….
Yea,
Cool article. RE folks talk about a “weak market” as if it is a big economic crisis. But truth is, 10%-20% yearly appreciation simply brings out the roaches.
“Saw this yuppyish girl (although dressed down in jeans) about 30 waiting at the stop light across the street from a “loft” development with a pizza box and takeout bag in hand. It was dusk, and she was looking around a bit nervously. Had to “get inside” before it got dark.
Oh Yea, that’s worth 600K…….”
This is precisely why all of the condo conversions in downtown Reno will NOT work out. Sure, it is somewhat safe during daylight hours. But walking around at night? I just can’t see a single woman being safe or comfortable around drug dealers, pimps, whores, drunken gamblers, bums, and psychos. Last time I checked, the police force wasn’t going to triple their patrol and offer a safe escort service. Oh, and speaking of services, not even a grocery store to offer. Yeah, these are gonna go over well. NOT.
How about million dollar condos in downtown Stockton, which has the highest per-capita violent crime rate in California?
Yikes, what if they built a downtown Stockton and people did come? They are probably going to need more cops either way.
OK, that’s it. $1M condos in downtown Stockton is truly the craziest thing I have heard yet. $250K houses in Stockton would still be a joke. $75K condos might make sense. For those of you that haven’t been to Stockton you cannot believe how unbelievable this is. Just check out the newspaper article. The top 4 viewed articles in the paper the moment all have to do with crime!
This Week’s Most Viewed
Man, his parents arrested in slaying
S.J. officer charged in death of family’s dog
Two shot trying to leave party
Crime Stoppers — Published Jan. 22, 2007
I thought I had heard and read everything until I read this…
“Jeroen Gerrese, vice president of the Sheraton Stockton at Regent Pointe, said that since marketing began in October, there have been purchase deposits put down on 28 out of the 42 condos that will occupy the top three floors of the seven-story hotel. Prices range from about $250,000 for a 663-square-foot, one-bedroom condo to $1.2 million for a 2,275-square-foot, three-bedroom condo.”
It cannot be true that people actually bought these places at those prices. I will bet one venti iced latte that this is a lie.
I only feel bad about the dog the cop shot. That’s disgusting.
Wow. $1M+ for anything in Stockton. The goldbugs were right. Hyperinflation is here. The dollar apparently has no value. I’m going to start burning ones and fives for warmth this winter. Wow.
This market is becoming insane by the week… if not by days. LOL! I nearly peed in my pants from the laughter (and from the beer too, burp!)
Folks there is bearly a few jobs to support a $200K home or a 85K condo! This is too much for me to handle!
Reno Boy a “Baby Boomer” knew at a tender young age that once his fellow “Boomers” took control they would screw everything up. He was never so right.
BanteringBear
Right On. Downtown Reno is a joke. About 6 dead , and tired casinos turning into high end condos. No way! The Montage, Belvedere, Colonial Inn, Comstock, Hilton. POS all of them. Who can aford these? Half of these will never be completed. Crash baby crash.
How about putting down $400,000 for a studio-sized loft at 93-unit Library lofts at corner 6th and Hope st. Central Library right across the street. Wolfgang pucks, subway sandwiches,chinese take out on ground floor. All the LA dwtn cultural amenites within walking distance.
OH! i forgot, there might be some smelly cretins roaming the sidewalks at night.
We should start a pool on what that area will be like in 10 years.
I’m betting that the Chinese take out becomes the Happy Ending Massage Studio, Wolfgang’s is a strip joint, and gangs are selling crack out of the boarded-up former Subway sandwitch shop.
And those studio lofts will be section 8 housing.
“We should start a pool on what that area will be like in 10 years”
Actually you can find corner shopping centers in formerly tidy but fast degenerating suburban hoods such as Anaheim,inglewood,east SVvalley,east torrance,norwalk, panorama city,fullerton,Buena park, la palma,lynwood,south whittier,parts of downey and pico rivera,lomita,ect., where corner malls sprout strip joints, pawmshops,mexican mini-markets, payday check-cashng centers, adult book stores,mexican bars, storefront church,ect. And crack dealers/hookers just around the corner in that pink-tinted motel.
“And those studio lofts will be section 8 housing.”
Don’t worry about the supply of section 8 housing in LA dwtn. There is a ton of sparkling new section 8 gov’t subsidized mulit-housing units along figuroa st from USC all way south to slauson ave. Nice pink-toned well-gated units. The city of LA through the Russian soviet politburo-i mean the city council- makes sure that your well-meaning tax dollars go toward subsidizing the housing affordability needs of the proletariat.
Can you fit a family of 10 in a studio loft?
You might fit ten if you divide them.
No kidding, they’re dividing studios into one bedrooms here in Chicago. A poor fellow I know bought one in Uptown/Buena Park for $220k - it’s about 450 sq. ft.
He sits about 72 inches from his 52 inch screen - talk about eye strain!
are you sure it was $400k? i looked at those places a few months ago and could have sworn they were going for much higher. i was so curious about the new projects that they are building down there when i stayed at the standard hotel for the weekend.
That was the advertised prices for the lowest studio units when the library lofts first became available in early or mid 2006. The pricing went from the $400,000’s to over $600,000+ for the larger units.
Actually, the op-ed that will get people really fired up will not be Kotkin’s, but rather the one about how the US over-reacted to 9-11. I’m not a big fan of Kotkin, having read his stuff and seeing him speak at the last planning conference. He undervalues urban development, and really understands little about the housing bubble. Note in the op-ed that he think this slowdown will be more gradual than the one in the nineties — sorry, but I’m thinking this one will tank harder and faster. Last, Kotkin can never get his definitions straight about what’s “urban” and “suburban” - read his stuff about his self-coined term “the new suburbanism”.
Ben posts “‘As perverse as it sounds, what L.A. needs now is a real estate bust.”
What is perverse in trying to live in this nut town with these prices.
From my view, LA certainly has its high prices and its nuts, but “that’s nothing” compared to what we have here in SF.
Especially the housing policies promulgated by our Board of Supervisors.
Try San Diego. Besides insane prices, our infrastructure is crumbling but it is IMPOSSIBLE to raise taxes to fix anything. Everyone complains, but the second someone dares to say “raise taxes to pay for…” you’d think s/he just insisted we’d all have to kill and eat our children.
Posted from Thread topic “Their 2,400-square-foot house in Elk Grove is slowly slipping away from them. They can’t afford their $3,300 monthly payment.”
“‘If the credit people had really looked at our situation, they would have laughed and said, ‘You can’t come close to qualifying for this,’ says James Fullenwider. ‘We’re in a house we have no business being in.’”
they learn the loan agent inflated their income to qualify them for the financing. ‘But we were stupid to do it,’ Fullenwider says.”
I know we are hard on people that make choices like this….But Good God, maybe the guy never bought a house before? Who are you going to trust?
At times we must trust the Pros…. What if you need a Lawyer to fight for your life…. OR a Doctor to save your live, both are suppost to do thier best for people who can not do for them selves.
The guy ’s RE agent screwed him, then the banker nailed him again. Both should be in prison.
Oh Good God, anyone who can’t take the time to use any of the MANY on-line internet mortage calculators to get an idea of their payment ahead of signing on the dotted line deserves a bankruptcy. Stupidity and laziness are no damn excuse for overextending yourself.
Obviously these buyers are morons. But stated income loans? Come on. The entire lending industry set this up so they could generate huge profits. They facilitated this disaster, and they knew exactly what they were doing.
Of course, a little regulation and common sense would have helped to avoid this tragedy.
Bottom line: capitalism will always tend towards deception, fraud, and massive corruption, and it always feeds on the stupidity of the public.
And that is why you need regulation in a lot of industries.
I don’t trust anyone whose chief goal is to get in between me and my money. I may do business with them but I sure won’t trust them.
Wouldn’t less stupidity be a better solution?
“Wouldn’t less stupidity be a better solution? ”
Ron White, Comedian…”You can’t fix stupid.”
However…Thes folks could have and SHOULD have done the following:
(1.) Realized this was one of the most important decisions of their life and talked to someone outside the RE “Rah Rah” circle.
(2.) Ask, ask, then ask some more until they get a contrarian viewpoint and really thought about it.
Christ…$500k house??? They could’ve secured credit counseling for a nominal fee. But, alas, that still may not have worked. They were too pumped-up on kool-aide. Hangovers a killer now.
Greed+ignorance+laziness+bad advice=Finacial Disaster
DOC
If the government had stayed out of this, (HUD, FHA, Ginne Mae, Fannie Mae & Freddie Mac), there wouldn’t have been such a large MBS market for these fraudulent & subprime loans. If the Fed had not lowered the FFR to laughable levels, the bubble would have never formed.
You are counting on the very same government that created the stockmarket and RE bubble to regulate things so that the bubbles don’t form. The market itself would have been a better regulator if the government had not created this monster.
But AE, an agent showing you a house is not “your” agent. It’s like trusting a used car salesman.
AEN, I totally disagree..It’s called personal responsibility.If you are signing onboard a 600k house you better have a clue what you’re buying. I have no doubt what they were getting ,and were totally complicit that their loan was stated..The RE agent, or loan agent didn’t inflate their income without their OK. Unfortunately we have built a cociety where evryone seems to want Govt. out of their life but expect someone else to come to their rescue. I agree therese agents alloowed this to continue to their profit,but everyone is passing the buck now that it’s a crash. Noone was saying a word when their equity was climbing. I can see the bailouts getting written as we speak. Studies, commitees, blue ribbon task force on how this happened. Now all you responsible savers will have your savings taxed, and the fat cats will walk…Happens everytime,and I’m beyond disgusted at this point.
The con men and high life party crowd did make a boat load of money during this run…Now guess who’s gonna pay?…what little is left of the middle class…Sorry, Rant off.
I shed no tears for them. I agree with Eastofwest. After taking my 20% hit in the 90s in the last RE crunch, I was in no mood to get hysterical about RE so soon. Also, from the demographics studies that show a lot of boomers expect to use sales of second homes to finance retirement, I figured a RE drop will happen. Actually I thought this bubble was going to go another 4 years before it really burst. Now it’s a slow leak.
I’m responsibile for my own savings and will try my best to avoid having my wealth taxed to bail out the FBs. I won’t be taking much of any capital gains on my equities unless there is a major stock crash of 20% or more (I have my trailing stops set). I expect tremendous tax hikes to occur in 2011 and 2012, which will be the last two years of the tax-loving Congress and the last 2 years of a tax-loving executive office. If I need emergency cash, I’ll cash out my municipal bonds. I refuse to sanction FBs.
Dude at least use spellchecker!
Oui do nut kair aboot sphelling arount hear.
As fellow humans we empahthize with them. As fellow housebuyers, we rage at them- all they did was help drive up the price for everyone by being willing to meet absurd prices, and in doing so contributed directly to the sustaining of the growth. In effect, their actions helped either price out responsible familes, are helped responsible familes make way too high sacrifices.
No no, this is all wrong. Don’t blame the real estate people. Why just a few short months ago, many were regaling us with how these very same agents were helping them get the home they deserve. Obviously, since they signed, these people got the home they deserved. Of course, as many,many more will soon learn, be careful what you wish for.
I hope these people are buying flood insurance. By Easter, the streets will be filled with the tears homeslaves like these.
The only ‘home’ people like this deserve is a rusted out trailer in a rundown mobile ‘home’ park.
They knew they couldn’t afford it - that they, indeed, are only financially and intellectually suited for a trailer park - but they went for it anyway because ‘real estate only goes up.’
‘The only ‘home’ people like this deserve is a rusted out trailer in a rundown mobile ‘home’ park.”
Ironic. Actually, this probably would’ve been harder to shoehorn-in. if I understand correctly, there are few companies that will finace mobile homes–and you’d better have credit or cash to plunk down.
DOC
I tend to agree with you here. Throughout the history of this country, there has NEVER (as far as I know) existed a time when totally under-qualified people would be given home loans. You see, back in those quaint old days, the people lending the money actually wanted to see it be paid back.
Well times have changed. In this new paradigm, we trust the borrower to be able to tell exactly how much loan he is capable of supporting – and we essentially take his word for it. The only problem is that many of these borrowers come from the old school that says: “If they gave me the money, then I must be qualified.” So the rules have changed, but many borrowers simply don’t know it.
Of course there are the speculators who never had any intention of paying down their loan, but they’re a different bunch – who used to also get weeded out, but don’t anymore either.
Now we renters (and similarly cheap owners) with our super-high credit scores can look down on these FBs, but they were exposed to a new set of rules and responded the old way (i.e., if they give me the keys, I must be qualified). Perhaps we should require that they take a finance course prior to applying for a loan.
I think there has never been such a grossly obvious case of the separation of risk and profits in a way that affects the net worth of milions of Americans. The loans were sold, profits pocketed, and risk passed on to a third party. A previous poster complaining about capitalism did point out some real issues. In addition to the injustices he mentioned, we commonly privatize benefits and socialize costs. Our national energy policy is based on that disastrous model. What it always creates is unsustainable systems and shocks, but these are also opportunities because they are predictable.
“You see, back in those quaint old days, the people lending the money actually wanted to see it be paid back.”
Today the lenders are making loans using money from your 401k accounts; Wall street’s complicity is acting as the facilitator using the MBS product. The fallout will make history.
Is this like pension funds of publicly traded companies investing in private equity funds that take publicly traded companies private, and thus raise the price all equities?
No. This is like Enron’s employee pension fund buying Enron’s stock and the employees of Enron buying Enron stock with their 401k’s.
These people knew going in they couldn’t afford the house. Just because somebody is willing to lend you a ridiculous amount of money, it doesn’t mean you have to take out the loan.
Did they? I’m a bit of a math whiz, and I found it quite challenging to determine what my husband and I could “afford” when we bought a new house. In the end, even after I made detailled budgets and created loan payoff calculators, I was a bit jolted at how much the new house impacted our budget. Fortunately, we had a very good lender who worked with us to figure out how much we really could afford, and we worked within reasonable limits, and we’re doing just fine. However we frequently get refinance offers that seem to be offering us very good terms, but would actually move us out of our low interest rate fixed loan into a disaster. Buying a house is complicated, especially when more experienced people are misleading you about basics any lying on your application without your knowledge.
I agree. I think there is also a much higher level of fraud and deception in the purchase of real estate than is common knowledge. When you buy a car, you know the goal of the salesperson is to rip you off. So you have some defenses and know you should do your homework. This is not generally the perception of real estate agents, mortgage bankers, appraisers, etc. although it should be (not that there aren’t some honest ones, but just that buyer beware). People buy so infrequently and many buyers are used to dealing with straightforward honest people in their work with the occasional scam artist. I don’t know how anyone under 40 can be as cynical as you need to be when buying or selling a house.
Diane? How challenging can it be? Take 25% of what you make and don’t spend more than that.
A lot of people use that formula, then an irresponsible lender sets them up with a loan that initially costs very little per month but increases over time. And they don’t add in taxes and insurance. Then on closing day they pile a stack of papers in front of you and you are expected to have read and understood a lot of legal mumbo jumbo printed in small type. When I think of all of the documents we received and signed… well, it got very confusing after a while. I can understand how somebody might not understand that they are not signing what they thought they were signing. In my opinion, a poorly educated or inexperienced buyer should have a lawyer (or at least an experienced relative) review all of their documents, but the common perception is that buying a home is a simple project and anybody can do it without help. Most people would feel foolish asking somebody to help them review “simple” documents. Lenders should be required to create a simple document that tells the borrower not only how much they are spending initially, but also how high their monthly payments might go (including insurance and taxes). That will reduce the frequency of lenders who mislead borrowers.
Well then, walk away!
I would never get pressured into signing something. Tell them to leave the paperwork, and come back tomorrow.
If they don’t like it, tell them to f*** off!
“the credit people”. This is that mentality that I am so familiar with in my job as a trainer. I teach my classes all about credit, credit scores, credit reporting etc. It never fails to surprise me on how many people do NOT know anything about how credit works or how to budget themselves. I have witnessed first hand scores of people that have never even seen their credit report, never mind any that could actually tell me the names of the three major credit reporting agencies. It all goes along with complete ignorance which is surprising as all of this information is readily available on the internet. In the end people are lazy, selfish and greedy, these things are all to boring (not exciting as buying a gorgeous new home) until it becomes important to them and then all of a sudden they start to take notice.
Yes, the poor “victims” that they are being tricked like that by the “credit people “they were never told to read the fine print.
I do a survey each new training class I teach and each time I ask: “How many of you have a credit card? And how many of you read the documents that came inside the envelope with the new card? I am sure I do not have to tell you guys the answer to that question.
I also love how the realtor said “he is saving them” yeah right, How is he saving them? I am sure they will not be told about the 1099c they will receive in the mail. I my opinion a short sale would only benefit people that are truly insolvent so they can avoid paying taxes on the forgiven debt, I doubt these two are insolvent they are just in over there heads with that big mortgage payment.
I am also pretty that this agent is looking forward to a commission on this short sale as well.
SKB
I may have missed it, but I didn’t see anything there about “I didn’t realize that it was an ARM,” or “The payments went up.” I’m forced to conclude that these people had no idea how much they could affort to pay a month. I simply cannot have much sympathy for people who got into a loan where they couldn’t afford the INITIAL payments. If you don’t have the vaguest idea of what you can afford, you’re too stupid to be allowed to have a checking account, much less a credit card. If houses had kept going up, these people would have been spraining their shoulder patting themselves on the back for their financial acumen. Look I don’t have a budget, I don’t ballance my check book, but I can’t imagine being $500 (or whatever it is) off in knowing how much of a monthly payment I would be comfortable paying.
I know you all hate Real Estate Agents!
Please! I work with folks and they keep telling me, the banks told me I can afford this amount. They have it printed on the banks letterhead. I lose folks because I try to convince them to not treat the banks estimate of what they can afford as a target…They want the same house at 26 that their parents have. Lets hold the as responsible as anyone else. If they have a college degree they must know something….
Glenda,
I doubt you ‘know’ what tens of thousands of people ‘all’ feel. Generalizations like that don’t help. Many people that read here are in the business.
“I know you all hate Real Estate Agents!”
Not true good witch. It is just the 90% that give the 10% a bad name..! But seriously, I do really respect those ethical realtors and mortgage folks who look out for the buyers.
You are right about the sense of entitlement that young folks sometimes have. I know a woman who is a stay at home mom who has a husband that works for a nonprofit. They are both idealistic east coast expats (former Dead Heads).They had a perfectly fine 3/2 that they had paid 130k for, but she insisted on a larger house for their two kids, so they purchased a 3000 sf ~$500k home a few years back. Nothing wrong with the house, but the poor guy is trying to save the earth, not live like their investment banker parents!
Glenda, I have to disagree with you. If you are an experienced r.e. agent, then you should be able to calculate what the prospective buyers(s) can afford during your intitial consultation. Then you can refer them to a credible lender who will work with them and show them homes in their price range. The truth is that youget most of your referrals from unscrupulous ledners and you don’t want to piss them off and lose you “qualified buyer” spigot, so you go right along with the program and put them into stuff they have no business buying. And thus the runup in home prices continued for the past 6 to 8 years. You were just as responsible for the thing as the brokers/lenders. So dont go there.
I know we are hard on people that make choices like this….But Good God, maybe the guy never bought a house before? Who are you going to trust?
When we bought our first home — in our early thirties — my husband and I first sat down and figured out — with spreadsheets, calculators, etc. to see what the payment on a standard mortgage would be — what we could afford. Then and only then did we call a few brokers and have them show us some apartments. We still chuckle over the shyster who showed us something out of our price range and encouraged us to “make a an offer!”.
I don’t know how, as first-time buyers we knew how to take this approach, rather than allowing some salesperson to tell us what we could afford. I thought it was common sense, but then again, I don’t exactly walk into Best Buy yelling “I make x number of dollars and need a flat screen. What do you think I can afford?” And I don’t know anybody else who does, either. Do you?
The only thing I can think of that would pursuade someone to take this approach with the biggest purchase of their lives is greed…or narcisism. We’re hard on these people for a reason, IMHO.
Betcha the guy spent more time buying his new plasma tv than he did with the house. Give me a break..if the guy doesn’t go in knowing how much they can afford..they shouldn’t be buying a house. Take baby steps..buy a dog house first and see how it goes.
One LA Dwtn condo/loft complex i have been watching go up in all of 2006 is almost ready. VerodwtnLA is a 100 unit loft located at bixel/wilshire, a mile west of cental dwtn core area. Two other nearby condo complexes also going up. Vero lofts are a real adventure in misguided dwtn development because the entire area, known as pico-union district, is a rundown graffiti-marked slum infested with gangs and other rifraff. Maybe some young urban-wise hip artists might be interested, but no way boomers or yuppie families will go for these ghetto outreach lofts.
BTW, The LA developers have been eminent-domaining/razing the pico-union/central city west district block by block, and putting in new schools, condos,office towers,ect, but this is a slow process which will take another decade, and this area wil remain a third-world poverty pocket for some time.
peter m your comments are very right-on and lucid about our fair city as usuall.
In Chatsworth they are finnishing up construction on 4500 sq to 5500 sq feet homes. they are on Topanga Cyn near the 118 in a mixed ind/com zone across the street. The sign says they have 5-6 bathrooms…. I have visions of these becoming little TJ Flop house or tiny APT bulidings….What say you? Do you see any other areas like this around town?
Carson area just off the 405 west of avalon is squeezing in a few 4000 sq ft mcstuccos. A nearby 4- acre empty dirt lot is plotted for 9 more stuccos.
FYI: Carson’s version of affordable housing is it’s numerous trailer Parks: The city has sucessfully resisted efforts to build more mulit=unit apts and affordable squeezed townhomes. It is a city primarily of sfh’s.
There really is not a whole lot of building of new sfh tracts in Southern LA county outside Santa CLarita/palmcaster. The only massive new Planned community in all of S LA county is Playa Vista, which will be all condos/townhomes. S LA couunty simply lacks the open spaces for large new SFH tracts such as yoy see out in the fringe desert/IE areas.
Thanks for your thoughts.
I’m really enjoying these comments that refer to the bust as a healthy thing. Up until a couple months ago, they were nowhere to be found. Lately, they’ve been getting more frequent, and bolder.
When everybody’s cheering on low prices for RE as good for society… ahhh…that’ll be a relief.
“Yet here too, the bad news may prove to be good news. ”
When will they give it up with this kind of looking for optimism where there clearly isn’t any to be found.
Stories like this make my cry everyday. I am so desprate for work, yet these morons have jobs and now want to blame everybody else. (james & beth)
These people are the ones who keep gettig hired….and smart people with alternative views are shown the door.
I pray the housing bust hits NYC soon, so i can work 60 hours a week as a foreclosure paralegal, because i am so behind in my bills.
“I pray the housing bust hits NYC soon, so i can work 60 hours a week as a foreclosure paralegal, because i am so behind in my bills.”
Damn…..that’s some pretty tough karma.
Move to Dallas. I could find you more work than you could handle.
Come on txchick, share the wealth. I know I could pick up BK law pretty damn quick.
NYCdj,
Just relocate short term to a place with high foreclosure rates. Should be able to get some work pretty fast. Then if things get bad in NYC. Just move back. At least youll have some income.
Just a suggestion.
RE bust or no, paralegals can always find work.
“Stories like this make my cry everyday. I am so desprate for work, yet these morons have jobs and now want to blame everybody else. (james & beth)
“These people are the ones who keep gettig hired….and smart people with alternative views are shown the door.”
Hang in there. You will get another job.
In respect to–”smart people with alternative views are shown the door”–carefully look at the political structure of your new place of employment and be very selective as to the delivery and appropriateness of your “alternate views.”
Sometimes it can be employment hari-kari to offer-up unwanted views in a constricted office–especially if your moving aginst the political grain.
DOC
I’m a young woman who works for a defense contractor, with a whole bunch of retired officers for co-workers. I keep a lot of my views to myself and dress like a librarian. I refuse to discuss politics, religion or real estate with them.
That’s what my friends and the Internet are for
Texan in B
Good for you. Very wise.
I read a “goodbye all” message from a worker that put in 40 years with a very large “politically charged” company. He–laid it all out–since he was retiring and said he just hunkered down for those 40 years and just did his job–all the while watching the gossipers and drama kings/queens come and go. Got to respect that discipline.
So now he retires at nearly 100% of his wage and a chunk of savings that would raise eyebrows. I say, good for him.
I’d much rater get labled a hardworking indivvidualist/loner than get hamstringed.
DOC
Lessee,
A Texas based defense contractor in Bavaria full of retired officers. I can imagine how diverse the opinions must be around there….You are wise to keep it zipped.
“‘If the credit people had really looked at our situation, they would have laughed and said, ‘You can’t come close to qualifying for this,’ says James Fullenwider. ‘We’re in a house we have no business being in.’”
If you bend over with lube and pants down your ankles someone will come and screw you sooner or later!!!!
Fullenwider….hmm..sounds like what happened to my arse after too many years of german beer.
Guy sounds like a fool, but at least a fool that learned a lesson. Many can’t even do that.
Yea, I bet these Mortgage brokers had a month of running jokes at this guys expense.
“hey, Mac that guy sign his loan yet?
“Oh, ya!!! signed on the dotted… Touchdown!
How’d did ya leave em, Mac? (snikker)
Oh, you know…..How I always leave em….. FULL AND WIDER!!!!!
Har, har, har, har…… Oh your killing me!!!!!
Sounds just like Enron. The joy these assholes had at other people’s expense.
I suppose you could take it that way (jeez…the double entendres are endless……).
I meant a relatively “clean” joke about middle age spread, not the old gay footballer’s ” I started out as a tight end, now I’m a wide receiver…” schtick.
But coming after Ryun’s post, I suppose that was unavoidable…..
“If the credit people had really looked at our situation, they would have laughed and said, ‘You can’t come close to qualifying for this,’ says James Fullenwider…..”
Here’s how it really went down:
James Fullenwider: What can we do to get this house?
Credit People #1: Ha ha, you can’t come close to qualifying for this!
James Fullenwider: What can we do to get this house?
Credit People #2: Ho ho, you can’t come close to qualifying for this!
James Fullenwider: What can we do to get this house?
Credit People #3: We can overstate your income….that’ll get you in the door?
James Fullenwider: Where do we sign…..
Spot on Lefantome!!
I am soooo tired of hearing these sob stories from these greedy idiots. Met some here in Salinas two years ago when I arrived. They make less then half what my wife and I make and were telling us how stupid we were not to buy. My wife thought that I was the ogre because these people bought and we didn’t. Now she’s changed her tune and some are getting close to eviction, however, now its because of the mortgage company. Nah, I don’t think so! You can’t have it both ways and it’s not for the rest of us to bail them out.
Now why is it that I don’t believe this couple for some reason . When you sign loan documents they have you sign the official copy of your loan application . It would stick out like a sore thumb if your income had been raised without your knowledge . But, maybe these borrowers didn’t notice .I just don’t know who the liars are and who are the real victims .
But ,the point that strikes me is that its hard for me to believe that these people did not know that a over 500k loan was beyond their affordability . Anyway ,it goes back to a person should read everything they sign .
“But, maybe these borrowers didn’t notice .I just don’t know who the liars are and who are the real victims .”
Neither do I. That’s why I always assume they’re lying, until proven otherwise. In financial matters, I usually take this approach.
i thought there is a law in california that allows you to back out of contracts such as this within 72 hours (?). which simply means they have enough time to read and understand the contract, word to word.
I know.
And just what would they be crowing about if the market continued to go up and everything was hunky dory???
“Man, we are freakin’ GENIUSES!”
Ha! Ain’t that the truth!
“‘If the credit people had really looked at our situation, they would have laughed and said, ‘You can’t come close to qualifying for this,’ says James Fullenwider. ‘We’re in a house we have no business being in.’”
Nope, sorry Mr. Fullenwider. They saw you coming from a mile away. You were easy pickens. No sympathy here. Now you and your wife, with your abominable credit, can enjoy your new life in the hood due to your braindead decision making. You never were cut out for homeownership.
Is this kinda like a National Geographic special where the injured zebra gets eaten by a crocodile?
In their case, they were the salmon jumping right into the jaws of the grizzly.
Yup.
There’s a reason for culling.
whoa….. tough crowd…
Yea,
This blog sometimes reminds me of the crowd scenes in “Apocalypto.”
Humans jumping into the jaws of cougars, anyone?
http://www.mercurynews.com/mld/mercurynews/news/local/states/california/northern_california/16551228.htm
What I don’t understand is: Didn’t this guy realize that he was buying a 500K house? That is a HALF MILLION Dollars jacka$$.
Sometimes people get what they deserve, and this dude is getting what he deserves. Breaking a law becuase you were ignorant of such law is no excuse. Buying a house while ignorant of the price and true cost, is no excuse…you still bought the house.
Do you think he understood that he should be making $200,000 a year to afford such a house? I wonder how much he actually was making. I bet it was under $60,000 a year. Brilliant!!!
half million here, a half million there… hey this could add up to some real money!
During this boom, buyers and sellers completely lost touch with financial realities. As many have stated, not much consideration or thought was put into affordability, and the difficulty of actually paying off such high priced housing. Of course, the total of all payments was rather obscured since, with Interest only loans etc. one could not simply multiply their monthly payment by 360 to see the damage. I hope for a return to financial sanity and responsibility in this country.
“half million here, a half million there… hey this could add up to some real money!”
Let’s all pray for high inflation so a half million here or there won’t amount to much in real terms.
Why do buyers only fixate on the purchase price and not the total price of purchase + total interest over the life time?
You don’t get the house when you reach .5 Mil? You still have the interest to deal with?
I wonder if people would have bought these homes if realtors listed the total price instead?
Yep, if the house had doubled in value, he would’ve said
“Yeah, I know it was a big risk. We looked over the contract and consulted with various professionals, and you know, sometimes you have to take the risk. What can I tell you, we made a killing. Why don’t you buy a house? If you want to play with the big boys, you have to learn to face it straight up and pull the trigger. You know, I’ve always been a winner, always had that killer instinct………”
But now it’s like ” Hey, why wasn’t I protected from myself….”
“But now it’s like ” Hey, why wasn’t I protected from myself….” ”
Is anyone making a checkbook condom and marketing “Practice Safe Purchasing”?
“‘If the credit people had really looked at our situation, they would have laughed and said, ‘You can’t come close to qualifying for this,’ says James Fullenwider. ‘We’re in a house we have no business being in.’”
Laughing at someone in America? Surely, you jest.
“So what went wrong, exactly? Lenders made two mistakes, according to UBS and other analysts. They didn’t scrutinize borrowers’ incomes, and they allowed subprime borrowers, who by definition have had past problems with their credit, to take on lots of risk.”
What an observation Einstein!!!
That’s why uncle Joe who has been unemployed 10 years and is now unemployable will never get to borrow $20 from me… unless I simply donate him that amount.
Made only one mistake: BAD LOAN.
Starting back in 2004 when many people(friends and co-workers) asked me if they should buy a home I told them how others were qualifying. I explained stated income and 100% financing and how this was bidding up prices. I explained how the new loans had short term artificially low payments, and that many could not afford these homes in the long run.
The big question I had for them was if they could live without restaurant meals, new clothes, vacations, gadgets/toys, or a without a new car for the next 10 years. The other alternative is to run up credit cards to ruinous levels. Usually this worked and the person understood that their friend with the expensive house is paying a price.
Now, I can tell them the results because I am seeing people who bought in 04,05 who are trying to refinance, and I am seeing their other debt increasing. I am amazed the number of people who bought in this time period have already taken cash out of their properties (bigger 1st and 2nd loans.) Yes, this is not everyone, but it is very common, and increasing, and potentially damaging to them and the housing market. Here in SoCal, I am now seeing appraisals with values last seen in 2005.
Sensible Lender,
These lower appraisals (circa 2005) you are seeing now are not yet hitting the sellers in my area (Valencia). There are houses on ZipRealty that have been listed for > 6 months whose sellers don’t even counter-offer when I offered 15% less than asking (Offered $650K on a $790K listing). Maybe, I am fortunate that my offers are neglected so that I can buy them from the banks for less in a year or so. The house I was interested in recently sold - I’ll be interested to know for how much.
LA county is a year behind places like Phoenix and FLA. There’s no obvious pain here yet (LA).
I wouldn’t even bother looking (and I mean just looking) till spring of 2008, and I really don’t think any reasonable deals will be had till 2009. Just MHO.
PS… I think Valencia will falter eventually. It’s a classic, new construction, people stretched (for the schools and new, niceness) area. Again JMO
I don’t know…I’m seeing some cracks in LA. I sold my house 8-05 for $1.2. The FB now has it up for sale for $1,250,000 with no bites. Even a full price offer wouldn’t cover the holding, financing and realtor costs. Thats an example of pain in LA.
Obvious “pain” to me would be at least 20% from appraised highs of summer 2005. I agree that there is “tension” in the air right now….
At $1.2 there’s enough carrying cost to sweat if you’re out of a job or need to relocate. A 20% hit is a cool $250k. Try working a job and saving that kinda loot up and let me know how it goes.
The wife and I saw a condo on Beverly Glen between Wilshire and Santa Monica over the weekend. The developer has two units left in the complex and has reduced both of them at least 20% off the original asking price from last summer when we saw them. The penthouse unit was originally listed at about $1.1 and now it can be had for about 900K. Still obviously way overpriced for us but a 20% haircut is a start.
The first car on the roller coaster is coming DOWN!
Imploder, what parts of LA do you inhabit?
Antelope Valley has started cracking… and the wave will hit Santa Clarita soon. Speaking of which, a friend of mine bought a condo in downtown Santa Clarita - and they were only able to sell 20% of the units. The remaining 80% will be leased, at the fury of the condo owners. In the Antelope Valley, builders are starting to slash prices. Base price for starter home in a KB subdivision here in Lancaster is now 259K - this is roughly a 25% reduction from 2005. Builders will do anything to reduce inventory. Strangely enough, other builders like Pulte have not caught on, as their starters are still in the mid to high 300K range.
Good post Sensible Lender,
Problem with the good sense argument is that the folks who must have a huge house, and NOW, are typically the same ones who must have everything else NOW. And there are so many folks willing to loan such folks money. Either they use good sense overall, or they (the majority, I believe) are delusional and impulsive on several levels. Good lenders would historically avoid such high risk folks, not anymore.
A guy I hired last spring into a nice steady job, low $50s salary, is very bright and responsible. He is saving and following the bubble story for a proper time to buy his first home here in S. Oregon. His wife, on the other hand, insists on running up credit card debt, needs her OWN new car, insists on having a house NOW, despite his advice, and frequently quits her jobs. For marital harmony, he will probably buy a house in the next year, but it seems like the couple would be much better to just take it slow and get their house in order first. It would help the him if a lender actually rejected him, but I don’t expect that to happen.
D-I-V-O-R-C-E is his only answer. He would be smart to do it before he has kids with this woman. Once they have a kid she will be a weight around his neck for years and years to come.
It amazes me how few couples discuss money before they get married. If your thoughts on money are not in alignment then the marriage will be a disaster. She will not change her spending habits.
NYC, I agree. That guy is so likely screwed. He’ll be paying for her spending habits as long as he is married and probably after.
A few of us used have a little office pool for buying the beer when I worked in aerospace back in SoCal. When someone was going to get married and we met their future spouse, learned about their habits, etc., we would bet on how long the marriage would last if we thought it would be over relatively soon. Hey, working in aerospace was that exciting.
Anyway, we all agreed this one guy’s would last
Whoa… you guys are harsh..but could be right.
Marriage is a lot like home buying. Family pressure, unrealistic expectations, a fear you will be left out on “the dream.” All the ingredients for hasty and potentially painful decisions…
“Whoa… you guys are harsh”
Would you rather we allow people to live in their own little fantasy worlds the way the REIC does? That turns out in a disaster all the time. It is the fact that too many people can’t handle the harshness of reality that we are in this mess. We need to be harsh to try to counter all of this rampant stupidity and naivete.
We are in violent agreement NYCityBoy.
I thought so. Welcome to the Light Side (that everybody has mistaken for the Dark Side).
Would you rather we
allowencourage people to live in their own little fantasy worlds the way the REIC does?Harhness is more than justified. When folks like that are “up” they feed the very system that is now about to swallow them whole. All those pressures and expectations don’t come out of thin air - they come from people who think they’ve got the tiger by the tail and project their insecurities upon others in hopes of finding affirmation for their behavior.
“Dumpers dumping on dumpers.”
“All those pressures and expectations don’t come out of thin air - they come from people who think they’ve got the tiger by the tail and project their insecurities upon others in hopes of finding affirmation for their behavior.”
Well said, Edgewater.
posted ” His wife, on the other hand, insists on running up credit card debt, needs her OWN new car, insists on having a house NOW, despite his advice, and frequently quits her jobs.”
She really has a sence of entitlement, after she pops out one puppy she will retire.
Here’s hoping for bratty triplets with minor, unpainful but expensive and tedious health problems.
If he has even half a brain, he will get a vasectomy ASAP.
SCREW BOTH OF THEM! DUMP THE BROAD AND LET HER BUY HER OWN DAMN HOUSE ON HER INCOME AND CREDIT.
My first wife was exactly the same, and we dug ourselves into debt $5K a year more every year. One day I had enough, realized I was being browbeaten. She decided to leave. Within three months, she had bought a larger house (didn’t want ours, though I offered), a new car, and all new furniture. Four years later, she filed for bankruptcy just before the new law came into effect.
My second and final wife is much different. We put 15% away for retirement, make extra payments on the mortgage, and still live just fine.
congrats.There’s nothing as bad as living with someone who is hell bent on sending you into BK because they think they deserve everything just ’cause some dolt had it on TV.
My ex did the same. Thank god I can say ex.
you were not blame for her misfortune? something like divorce affected so much that she went into this splurge.
“His wife, on the other hand, insists on running up credit card debt, needs her OWN new car, insists on having a house NOW, despite his advice, and frequently quits her jobs. ”
Dear God. I’m not known for harsh responses, but this guy needs to drop the hammer now. Tell her to get her financial act together–or it’s over. Get Counseling, whatever, but stop this B.S. Being married to someone with limited fisal responsibility is be hell. Friend of mine is in this hell and gives me unwanted updates. I read and hear the stories and cringe. If one marries one of these beauties they’re toast–as sometimes the impulsiveness to spend is ingrained. They frenetically move to one “I want” to another–and it becomes a circus.
If my girlfriend starts pushing the big “‘M”–she’s in for a nice long discussion on finances and “pre-nupts.” She makes more than I do, so it’s good for both in my opinion. Also, a real clear agreement on BUDGETING!!
Most divorces are due to money issues and sex if I recall, and you can bet the money issue goes south before the sex goes south.
DOC
Agreed. That marriage will end in divorce; the only question is when. Might as well do it now and limit his damages.
“The Press Enterprise. “No longer are builders and land developers heatedly competing to pay top dollar for the thousands of acres of prime land straddling western Riverside and San Bernardino counties.
To say “pay top dollar ” and “prime land in Riverside and San Bernardino” is Incongruent.
Kind of like Needles and Yuma
I kind of want to feel sorry for people facing foreclosure (maybe not Casey Serin, but hardworking people who got in over their heads), but they lose a lot of sympathy points when they say things like “I didn’t read the fine print on the home loan.” WTF???
If you don’t understand a document, don’t sign it. Ask questions until you understand everything about the process. Take the time to study the subject a bit. I’ve got my college degree in Economics from UC Davis and I’m still planning on taking a course on real estate finance this spring or summer just to solidify my knowledge for when we do ultimately buy in 2008 or 2009. There’s no shame in admitting that you don’t understand something. Ask a question, two or three times if necessary until you understand everything. If your loan officer or buyers agent is unwilling or unable to clarify things then (if you don’t dump their worthless ass right then and there) seek advice elsewhere. If that inconveniences the loan officer or agent, so be it. They’re paid on commission and there’s nothing that obligates you to compromise your family’s financial security in order to make things easy for them.
I’ve got a co-worker who got into a really bad home loan early last year. He’s an IT support tech who makes (I’m guessing) around $35k/year who did an 80/20, IO fixed for only one year on the first mortgage for $325k in *ELVERTA*. He desperately needs to sell, because there is no way that he can afford the payments once it resets. This is a guy who literally spent 10 hours researching a $300 digital camera before he bought it for his girlfriend for Christmas, but who spent probably less than hour educating himself on mortgages. Unbelievable.
Well, years ago I distinctly remember a computer spitting out a long, long document in order for me to rent at Blockbuster, and, with people waiting in line behind me, I caved and signed it. I’m a little worried that, years from now, guys in hospital garb are going to show up at my door, demanding a kidney or pancreas.
There are people who you can hire on an hourly basis to examine contracts before you sign them and protect your interests, without any conflict of interest on their part.
They are called “lawyers” and “accountants”.
If the people falling into the 80/20 ARM traps were financially savvy enough to know to have a lawyer look at the contract, do you really think they would be falling for the bait so easily?
“If the people falling into the 80/20 ARM traps were financially savvy enough to know to have a lawyer look at the contract, do you really think they would be falling for the bait so easily? ”
I assert 99% of FB’s did have the saavy to ASK before signing but didn’t.
Christ. I remember even as a young boy–the only people that could buy houses were PEOPLE THAT HAD THE DISCIPLINE TO SAVE UP A SIZEABLE DOWN PAYMENT.
Now I sit and wait for sanity to return to the loan industry–which will probably happen much more quickly than house prices getting somewhat in-line w/ equivalent rents.
What a frickin’ pain.
Rant off.
DOC
Well part of the problem here is that asking probably doesn’t help much. You don’t hear it in this case, but we’ve certainly heard sob stories where the FB accuses the mortgage broker of materialy misrepresenting the terms of the contract oraly to get the signature. If the mortgage broker is willing to lie in writing to the government on the HUD form, it’s no great stretch to believe that they’re lying orally to the FB.
“‘They lost the motivation or incentive to send in the checks,’ Liu said.”
If someone knows their going to lose their house, paying whatever you can to the bank, must feel like throwing good money after bad. Perhaps it’s better to start squirling away money with a relative and get a rental property before the foreclosure hits.
“If someone knows their going to lose their house, paying whatever you can to the bank, must feel like throwing good money after bad. Perhaps it’s better to start squirling away money with a relative and get a rental property before the foreclosure hits.”
Especially when the payment is $3300 per month. Four months of socking that away will go a long way towards the rental. Of course, rather than put it aside, these types would probably just increase their standard of living due to their newfound cash, and be flat broke come foreclosure day. Aside from a financial babysitter, they are destined for BK.
Since the foreclosure stats hit on Friday, journalists are apprised that all they have to do to come up with a great human interest story is find a FB like the Fullenwiders. Look for them to start popping up on Oprah and Dr Phil. They’re easy to find, just get a foreclosure list and start calling until you find one that wants to cry on camera, spill their guts to the world. This snowball is rolling downhill, growing exponentially.
Yeah, that will really annoy me.
Buyer as victim.
Is there anyone left that isn’t a victim? Anyone willing to say “yeah, I’m a dumbass, now leave me alone while I put my life back together”….or is everyone now a big candyass willing to “share” their pitiful life on a reality show???
Criminy.
On the bright side, once you have Joe JackedUPFord150 and his tubby wife on Oprah crying about how badly they have been screwed it will send a cascade effect though the entire economy that doesn’t watch the cheerleaders on CNBC, further speeding the process.
Yeah, that will really annoy me.
Buyer as victim.
Ha! That gave me an idea. That one major political party that every 4 years parades a group of “victims” to speak, will, in 2008, present FBs!!!!!! They will blame GWB for FBs!
Bill, you’re a serious troll. I don’t see where in that thread anyone brought up politics but YOU.
he really cannot help it. sad.
Actually I think it’s the other way around. The FB’s are responsible for GWB. The same people who don’t think before they sign a contract, are the same ones who don’t think before they vote.
At any rate no politician is going to champion the cause of FB’s. There are not enough of them in any one district. The majority know damn well that any FB bailout would come out of their hides.
I agree. Sometimes people on this board sound like the Fullenwiders. “How did these politicians happen to us? There’s no way that I can afford my current government. Why are my congressmen always spending so much money?” - Because you asked them to babe.
Picture this two politicians are running for office. One talks about tough choices, raising taxes and cutting funding for popular programs. The other promises to increase revenues by cutting taxes and increasing funding for popular programs bu issueing bonds. Who gets elected? If you believe that the second gets rejected as an obvious wingnut with the fiscal sense of a turnip, I’m sure that we can find a bed for you in the mental ward because you’re delusional.
There should be no surprise that a populace with maxed out credit cards, a negative savings rate, and little in the way of retirement savings has elected these guys. News flash, It wasn’t the FBs listening to politicians that got us into this mess. But politicians listening to profligate consumers didn’t help.
The Fullenwiders, who received an interest-only loan, considered walking away from the house and becoming a foreclosure statistic. But real estate agent Mike Toste of Antelope is trying to save them with a short sale.”
Mike (AKA “you’re toast”) Toste of Antelope is trying to save himself by salvaging the last vestiges of commission sales vis-a-vie short sales before the whole house of cards collapses on his head and foreclosures/REO’s shut the door on his livelyhood. Probably the same guy who recommended the I/O stated income loan to these folks to begin with.
You hit the nail on the head Auger-inn .
How about a round for these guys!
‘Overall, this sector is going to feel like a recession,’ Adibi said of mortgage firms. ‘You should expect to see a much weaker employment base in all of the sectors related to real estate.’”
Good thing we have been reassured that the weaker employment in real estate will not spill over into the rest of the economy.
“Good night, sweet Goldilocks.”
Let me see if I’ve got the sequence down from the REIC:
Jan 05: Housing prices will never go down again and will continue to rise 20% a year until the end of time.
Jun 05: Housing prices might one day stop climbing 20% a year, but will still always go up.
Sep 05: The increase of housing prices might pause now and then, over there or over there, but not [here].
Jan 06: Housing prices will continue to go up even where the economy has weakened because rich [CA/NY/whatever] baby boomers all want to retire everywhere.
Jun 06: Housing prices might not increase over 20% every year, but 15% is in the bag for this year
Sep 06: Prices might not increase very much, but they definitely won’t go down because the local economies everywhere are all quite strong.
Nov 06: The slowdown in housing will cost hundreds of thousands of jobs throughout the mortgage and construction industries (any everything that supports them), but it won’t spillover to the broader economy.
Dec 06: Prices have dropped 5-10%, so its never been a better time to buy or sell a home!
Jan 07: Economic growth will be hindered by the slowing housing market, but it won’t actually turn into a flow-blown recession.
Mar 07: The Fed must cut rates soon, because high rates are keeping people from being able to afford homes!
Jun 07: The record job losses in construction and the mortgage industry are painful for those directly involved, but everyone else working in other sectors should be fine. So long as they don’t ask for big raises.
Aug 07: 1 out of every 3 homes on the market is now a REO. Damn the Fed for not cutting rates!
Dec 07: Housing prices have fallen 25% in some markets. Hey, it’s never been a better time to buy a home!
Apr 08: GDP in the first quarter fell 5% annualized. When will the Fed cut rates?
Aug 08: No one is buying any homes in California or Texas because the only ones still with jobs are illegal beaners.
Dec 08: Home prices have fallen 35%… now HAS TO BE the best time to buy a house!
Mar 09: 它从未是更好的时候买或卖房子!
Walt, that is hilarious!
LOL
What a crack up .
You had me at “illegal beaners.”
Yeah, racial slurs are always a sign of great wit. Not.
really great; thanks!
I know a few Chinese RE investors planning and getting ready for March of 2009.
Someone is going to have to buy a lot of Fords!
“Economists say areas like the Central Valley that had an explosion of new houses and now wrestle with falling home values are particularly vulnerable to ‘payment shock.’ Many ARM borrowers owe more on their loans than their houses are worth. They can’t sell and they can’t refinance into cheaper loans, which raises their risk of foreclosure.”
Umm, let’s replace “raises their risk of” with “guarantees”. Yes, that sounds better. Because if these idiots could have afforded the place to begin with, they wouldn’t have gotten and ARM. End of appreciation=end of homeownership=end of story!
Right!
Someone wrote yesterday…”No interest loans mean no interest in paying the loan back.”
And once they got into the house they couldn’t afford, (all 5000 granite and stainless steel sq ft of it), it became suddenly apparent they couldn’t furnish it with their dorm stuff, so they immediately took a second and bought all kinds of furniture, pools, tattoos, Outback dinners, SUV’s, 400″ HDTV’s, Gucci bags, etc, cause, dang it, they deserve it, and besides, when we sell, we’ll make a bundle, pay our bills, and retire.
cuz they were so smart to make such a great investment
All that stuff isn’t going to fit in the 600 sq ft one bedroom apartment they are going to end up in.
That’s such a great description. I don’t know what neck of the woods you’re from, but I sure find it funny how so many posters seem to be making the same observations no matter where they live.
Oh, you forgot the dog, every young loving couple must have a dog to keep captive all day while they are out working.
“James and Beth Fullenwider are living inside a bad dream growing ever more familiar across the Sacramento region: Their 2,400-square-foot house in Elk Grove is slowly slipping away from them. They can’t afford their $3,300 monthly payment.”
Sounds like they are Full&wider with debt…
“He says the couple didn’t read the home loan’s fine print. Only after moving into the $500,000 home last August did they learn the loan agent inflated their income to qualify them for the financing. ‘But we were stupid to do it,’ Fullenwider says.”
Who is at fault here? Does the buyer’s income show up on the loan papers they signed? Could a loan agent truly have lied about their income to qualify them without their approval?
What does overstating their income have to do with reading the amortization table?
Now that is the part that I’m questioning Getstucco .My guess is that in most cases the borrowers approved what the scum loan agents did (course loan agents are a bunch of liars ). But, I’m sure there were cases where some how borrowers were deprived of information or maybe disclosure documents were signed by a party other than the borrowers . Maybe borrowers just didn’t read sh-t .
I’m shocked that borrowers would of approved of going on pre-payment penalty adjustable loans , especially when the borrower knew they only wanted the loan for short term .
Oh, by the way . The official final loan application ,which states income ,is signed by the borrowers ,(which has a perjury clause I think ).
“In December 2005, Richland Communities, a Newport Beach developer, agreed to buy just under 18 acres in Ontario from Wilbur Bootsma’s family dairy for about $500,000 an acre, Bootsma said. But when the Bootsma family declined to lower their price or extend the option period, Richland Communities walked away from more than $1 million in deposits, said Bootsma.”
Sounds like someone is suffering from bovine brain syndrome…
Moo!
Easy money for those dairy farmers who probably didn’t care to sell anyway.
God, just the thought of some developer from Newport Beach on his knees in front of a farmer with manure on his boots.
Thought I caught a glimpse of this picture on the cover of a CD in an X rated bookstore…… I mean as I was just walking by the store window and all……..
Me too. I think it was called:
“The Milkman Always Gets Slice”
I’d wager the “dairy farmer” is more likely a multi-national conglomerate rather than a guy with boots.
Maybe I didn’t catch it in the DQ release the other day, but are they still claiming that signs of market distress, such as foreclosures are “largely absent”?
No, they casually changed their tone and dropped that line calling defaults in the “Normal” range… But they think defaults will level out by summer LOL!!!
You need to look at the charts. They’re exploding. Increases in defaults look a lot like a vertical line. Sure, they’ll level off, once we’re >3X the last record…
Wow LA times, wow!
LA Times Motto:
Put lip stick on the pig, until everyone knows it is a pig!
This blog has become increasingly more disturbing over the last few weeks. I don’t know what is worse, the poor bastards that got caught at the top, or you folks, salivating at their bad fortune. I think I will sign off for a while.
“I don’t know what is worse, the poor bastards that got caught at the top, or you folks, salivating at their bad fortune.”
If you don’t know the answer to that question then you probably shouldn’t be here any way. Bad fortune had nothing to do with this $hit. Getting hit by a bolt of lightning on a clear day is bad fortune. Committing fraud and thinking you are smart is a combination of stupidity and arrogance. That needs to have consequences.
These people are not victims. They were all so smart and cool while they pulled this crap. Now they want to blame everybody else for their stupidity and greed. They deserve to be shamed for their actions and if you can’t handle that then you don’t understand just how serious their mistakes are.
I already told you that I signed off. Why are you responding? Did I hit a conscience bone?
P.S. I am addicted. Got to get the patch or something, any suggestions
This is a feel good meditation site….
http://www.thebubblepatch.com/
This site IS addictive, but I’m getting a little tired of the tone as well. There are going to be hundreds of thousands and perhaps millions hurt by the lack of appropriate lending standards. There will always be some idiots taking the rap, but to be honest the market forces operating on these people are immense. The cigarette industry is analogous; would you rage against 14 year olds buying cigarettes from machines if they are bombarded by advertising all day? I think as educated observers we should focus our outrage on the industries that perpetuated this insanity and profited most from it.
Comparing the FBs to 14-year olds trying cigarettes is one hell of a big stretch.
…would you rage against 14 year olds buying cigarettes from machines …
Nah. At that age, it’d be their parents’ fault.
When I put myself in young first-time home buyers’ shoes, I remember how naive we were when we got started. We were experts in our own little areas, and knew how to live within our means, but we really didn’t understand how mortgages worked. And the lenders required at least a 5% down payment. Nobody would have tried to even show us a house we couldn’t afford, and we didn’t know anyone who had done such a thing. The only people who victimized us back then were an insurance agent who talked us into paying for whole life for a year when we were childless and a car salesman. After that we got wise.
Nowadays, young people are surrounded by people giving them the same bad information they were fed. Of course, this will all sort itself out in the next few years. Luckily young people have some time to lick their wounds and start over. And finally prices will become affordable.
Well I’m sitting in a 2 bedroom apt with 3 kids because of these FB’s so I have no remorse. Many families that make decent money with financial sense are priced well out of the market now.
And yes I could rent a home but that would cut into my savings for a down payment by like 400 dollars a month so I’m not ready to do it just yet. If this bubble takes to long to wind down I am considering simply renting a decent home forever screw buying. If housing does not come back down closer to renting I just can’t see it being worth it ever.
In any case my kids are very young and its a big two bedroom so no biggie I’ve got time to decide.
I do think that long term rental of a decent place is starting to look pretty good esp if you consider I could down size quickly after the kids leave for college. So with my kids at 5,2and newborn. I’m looking at the following.
2-3 years in a 2 bedroom or small 3 bedroom place.
8-12 years in a decent 3-4 bedroom house.
Back to a smaller place if soon there after.
So I’m really only looking at 8-12 years when a bigger place is useful before renting a smaller place again makes sense if I want too.
To me this means saving enough money to cover the difference in rental on a small place and a big place for 10 say ten years. Lets assume this is 500 a month. Thats just 60 grand. A very safe return is 5% which gives 3000 a year in interest income. 500 a month is 6,000 a year so the extra cost or loss is 3000 a year. Or 30k over 10 years.
Considering taxes interest repairs etc etc I’m willing to take a 30 absolute loss. I suspect that real home ownership generally results in about the same loss once all expenses are considered. Of course any money I save over the 60k can be put in higher risk investments with a better return. And we can assume that over a 10 year period interest rates won’t remain as low as they are today. Eventually risk will result in better returns on investment.
Next I’m assuming housing somehow manages to stay 1/3 higher than rent. I win on being able to maintain liquidity and investment options on the additional money I save.
So I could easily beat the loss with higher returns on additional savings/investment.
Finally with that much cash in the back I can afford to pay cash for all my cars never carry a credit balance etc. These extra interest payments normally incurred by homeowners probably eat up any gain in the house over renting in the long run.
In short unless purchase prices for houses are close to renting
they buying just does not make sense if your looking for a reasonable size house during the time you need one.
You can easily adjust the number up to say 1000 extra over a good 2 bedroom or small 3 bedroom apt and up the savings to 120k and the numbers work the same. You can also adjust the return to 6% and still be safe or 7% with some risk.
In addition you have say a 3% loss from inflation taxes vs investment returns are again debatable.
My opinion is the loss on a home each year overall is actually close to renting a two bedroom apt vs other uses for the money as long as rent and housing cost differ by say more than a 30%.
So if you actually only rent a large place during the time period that you need one and stay small both before and after
renting instead of assuming your renting a 4 bedroom home for the same time that your owning one renting if you can keep a healthy savings seems good sense for some time to come.
Finally in closing with the age span of my children the minimum I’d really want a 4 bedroom house is about 6 years
when I’d have teenagers at home. So this could be used as a minimal case.
At 6 years and say and extra 1000 a month thats say 72000 I’d
“lose” renting. But we can always subtract gains from investment lack of other interest payments the ability to rent close to work and thus lower gas bills more time with the family lower car payments since they last far longer etc etc.
Almost done. Finally I make a good salary 130k a year so if my wife just worked part time enough to make 15k after taxes a year during this time period ( she stays at home now ) I’d not really losing any money. If she made more great but I’m happy to live on one income for a long time. Part time work for my wife when my kids are older is not a big deal. And of course my salary will probably increase in time but its pretty high now and at worst this will cover inflation issues.
Sorry for the long diatribe but I figured maybe someone should write about how “none” FB’s live.
I’m pretty happy I’d like to buy a house but I don’t need too. I can afford to rent during the time I could really use a big house if I have to. We are pretty happy now so why bother ?
So we should just turn into daytime TV and rant about how infantile the American consumer is, pass judgement for entertainment, and miss an opportunity to focus on making the industries who profited reform or pay for this travesty?
FB?
Exactly my point. Under normal circumstances (before the ARM age) I would have been able to comfortably finance a nice house. But now, having these nitwits betting up the price out of common sense, they not only set themselves up for BK, but made it much harder for me to finance a house, and that is 100% without me doing the thing. For this reason alone they deserve it to be punished, not only because they cheated me out of being able to afford this house, but rather they cheated a whole “generation” of first-time buyers. Thence they are in a sense “vermin” to the society (as opposed to useful members). Sorry for the terminology, no slurs intended, just to make my point…
First off, nobody would believe that anybody on this blog can quit cold turkey.
“Did I hit a conscience bone?”
No. You hit my “I’m pi$$ed off and none of these a$$holes deserves even the slightest sympathy” bone.
Right on! These greedy, self-rightous SOB’s need to be smacked in the head!! Let’m rot!
Put yourself in a young couples shoes. Someday you want to buy a house. Your putting money in the bank trying to save and your getting what 2-3% in a CD in 2003. You do not trust stocks because of the dot-com blow up and housing prices are runing away from you. Maybe there at 5 times family income (2003) now and you wait any longer every one is telling you they will be a 10 times income. More power to those who decided to rent but I think this was not a greed issue for most buyers. It was either buy now or be priced out in their minds. This was deliberate policy by those above to weaken credit standards to stimulate the economy.
It was either buy now or be priced out in their minds.
Pretty feeble minds to fall for such a ridiculous idea. Still no sympathy!
Good retort, NYCityBoy!
The violent agreement continues.
The Fullenwiders epitomize the sort of lawlessness and entitlement that screwed up the market for everyone. Since there are no remaining ethical or legal standards that limit these thing anymore, cause and effect must step in. Some gambled and won (bubble upsiders who got out), but many coudn’t leave the table and will lose their shirts. They should. If enough get torched, we may not have a debacle like this for a while. Otherwise, they will never learn.
posted ” The Fullenwiders epitomize the sort of lawlessness and entitlement that screwed up the market for everyone. Since there are no remaining ethical or legal standards that limit these thing anymore, cause and effect must step in.”
But follow the money! The ER agent and the Damm Loan agent profited from this event. That was most likley against the law. If there we a trial I would love to hear what a Judge had to say…. and how the blame was divided up, who knew better and who when to jail.
All had motive…. big butt wanted a house. The REagent wanted $…. the lender wanted $…. Who was suppost to have known better?
You don’t get it. It doesn’t matter whether they are victims or not. The mass foreclosure of all these fools is going to wreak havoc on the economy. All of this has happened before and we know that allowing nonsense mortgages caused much of the problem this time around. Getting real and putting in place some mortgage reform could prevent this kind of thing, but there is more interest in having idiots suffer than there is in making lenders confirm some level of equity and sanity. The question here is not whether or not to feel compassion for the deadbeat borrowers, it is how to spare our society this kind of nonsense in the first place.
I’m with you, Mole. Laws and regulations shouldn’t reflect the way an ideal person acts, they should reflect how people actually DO act. An engineer doesn’t design safety railing on a freeway based on people always driving the speed limit, he or she would take into account that some people drink and drive too fast, and even though it will cost a little bit of extra money to build these railings, it’s better than having some drunk idiot crashing down on some innocent’s house. The FB’s are of course the equivalent of these drunk drivers and I resent the fact that no one in power (in government or in business) prevented these absurdly loose lending “standards.”
That’s a really good point. Yes, we can sit around crowing at the FBs, but they are likely to be the first step in an economic nightmare that will affect us all. Maybe those of us who aren’t FBs will be a little better off, but it will hurt. My husband and I own our place outright, but I don’t expect that we’ll get out unscathed.
You know I get it, since I’ve been stating the end result will be a depression. The collateral damage will be huge.
I also get that the “original sin” emanates from the highest levels, preying upon the (unfortunately) ignorant masses. Funny, though… even their actions are ultimately compelled by the forces of collective human nature.
That said, being one who truly believes in the concept of personal responsibility, I still have no sympathy for the FBs.
First of all you have to be 18 to smoke!! Second, these are adults that lied and cheated to get in on the deal! They knew exactly what they were doing, going for “A quick and easy buck ‘ cause noby want’s to work for it” (Boiler Room)Are you going to blame the Tobacco industry because a kid steals a smoke from his parents? That is a parenting problem. I also thought this was America, a country of choices and freedoms. These people did whatever they had too to get in on a scam. They lied on the loans to make a ton of money and lost. Nuff said. Now they cry foul and claim ignorance? I have zero sympathy, none, zilch, nada. Infact, I detest them because I was looked down upon and called a fool for not drinking the realestate kool aid. I hope they have to rent the same hell holes I had to rent working my way through college and first few years of work to pay off my debts and build a career. Now my wife and I make great money, top 5%, and want to buy a home at 25% of income max. Prices are outragous for a junker. I think there are plenty of other, hard working honest people on this blog who are just as mad and frustrated as me because we are playing with real money, our earned money, not monopoly money!
>> I don’t know what is worse, the poor bastards that got caught at the top, or you folks, salivating at their bad fortune. I think I will sign off for a while.
Bubba, well, your calling those ‘poor’ people ‘bastards’ is by itself quite ‘disturbing’ …
And if you are so kind-hearted, why don’t you cry some for tons of nurses, teachers, policemen, and other hard-working people who these days cannot afford to a have simple house to call their own, while a 23-years old barely-educated guy has 3 houses right in my area all purchased with other people’s money and planning to rent them out to these social workers for high rents. From what I have heard through the grapvine, he got them using stated income loans while he barely has a decent paying job.
If you have any open and sound eyes, you can see that we are hoping for a fair chance for everyone, not those who lie on their loans and try to stick it others while using ‘free market’ to justify their deeds. What you are saying to people like us is just short of being hypocritical, unless you have a personal financial gain attached to it, in which case this blog is not the right place for you to be.
“If you have any open and sound eyes, you can see that we are hoping for a fair chance for everyone, not those who lie on their loans and try to stick it others while using ‘free market’ to justify their deeds. What you are saying to people like us is just short of being hypocritical, unless you have a personal financial gain attached to it, in which case this blog is not the right place for you to be.”
AWESOME! And spot on!
I’ll feel sorry for sick children, victims of violent, random crime, and the many, many TRUE victims of what this world can dole out…but I’m be damned if I’ll have sympathy for these dimwits.
Now we know who to go to find out if someone belongs on this blog.
itchyrealestate:
“in which case this blog is not the right place for you to be.”
NYCityBoy:
“If you don’t know the answer to that question then you probably shouldn’t be here any way.”
No sympathy!
Agreed.
No sympathy!
If the run up would have continued we would be hearing how these people were geniuses because they doubled down when things starting looking bad. Also they would be bragging at the neg-am toxic loan they took out that paid off big…
they won’t sympathy either. how about envy then?
oops. i mean … won’t get sympathy …
Also, I am sure that if things would have continued the upswing we would be infested with the likes of - Va_Investor, Ma_Homeowner, DCBubble, LV_Landlord, etc…
No mercy for the bastards, however I do feel sorry for the FB’s who were conned. I need more SCOTCH!!!
No mercy for the bastards, however I do feel sorry for the FB’s who were conned. I need more SCOTCH!!!
No mercy for the bastards, however I do feel sorry for the FB’s who were conned. I need more SCOTCH!!!
Woops. Sorry about that.
No problem, dude…just get some more SCOTCH!
LOL.
Wow….Loud and clear, they all get the rope! No mercy.
GET LOST, BUBBA. NO FEELING SORRY FOR THESE JACKASSES OF SOCIETY WHO WOULD SELL THIS COUNTRY DOWN THE RIVER FOR A CHANCE TO LIVE LIKE KINGS.
Alternatively, and without the all caps drama, no sympathy for the irresponsible asleep at the switch regulators who allowed these loans to be written. The loans themselves are obviously fraudulent since there is no possibility that they will ever be paid back. The fools in this story would find something to stumble on in any case. It is the predators who made their money off of trapping them that deserve punishment. It seems really weak to me that there are so many here who think that lenders deserve a soft hand, understanding, foregiveness, and ongoing license to commit fraud on a grand scale.
I don’t think I’ve heard many here say …”that lenders deserve a soft hand, understanding, foregiveness, and ongoing license to commit fraud on a grand scale.”
In fact, I’ve heard some of the harshest criticism for those people.
agree completely. just look at that a$$hole Mozilo at Countrywide getting rich off this scam he helped perpetuate
Alternatively, and without the all caps drama, no sympathy for the irresponsible asleep at the switch regulators who allowed these loans to be written. The loans themselves are obviously fraudulent since there is no possibility that they will ever be paid back.
I think I will use that line at work tommorow. Back to the audit slave mines for me anyway. Well maybe, don’t know yet.
LMFAO!!!
Did you feel bad for the wall st day-traders that got caught at the top? Do you feel sorry for the gamblers in Vegas that lose everything and do you blame the casinos?
Sheesh. These dopes had it coming. A lot of others have it coming too and many more desrve it but got out in time. They did a lot of harm to the country and we’ll all end up paying a hellova lot more for it than they will. They’re simply walking away.
By! By! Bubba! Are you the Bubba I keep hearing about that is everybody’s friend in The Big House?
I can’t speak for everyone, but for myself I had to put of with plenty of crap over the last few years. I was a fool for not buying, pitied for renting, an outsider amongst friends and co-workers, overly negative for expressing my views (which now were correct), etc. I have no pity for those who had no pity on me, which is pretty much everyone I know who owened or bought a house during the boom.
The added factor of greed many of these people showed is another issue.
All of their brain cells were dead when they signed. No sympathy from me for fools like this. Not to be cruel, but you play, you pay. A pencil/paper/high school math understanding and 30 minutes with a calculator would have saved their sorry A$$es.
Pay what exactly? They already freely acknowledge they are ready to walk away. They lose nothing since they wagered nothing.
Help, I shot myself in the ass. Please feel sorry for me.
Just turn the other cheek.
LOL!
I with you too, NYCityBoy - no sympathy.
Boy, oh boy. I’m already sick of hearing these greedy fb’s excuses and the property crunch has only just started. I suppose we can look forward to at least 3 years and possibly 5 years of them bleating, “If we had known that our payments would increase….” and “The small print wasn’t explained to us…” and, “We didn’t realize they had inflated our income…”
Yeah, sure. You didn’t understand, sweetheart. These nasty mortgage people sweet talked you and took advantage of your good nature. Give me a break. They took advantage of your GREED. You would think they were 10 year olds in which case I would have some sympathy. As it is I have NONE for any of them. They brought into the boom because of one thing….GREED.
They figured (assured by realtorwhores) that prices would always go up and, “That now is a great time to buy.” All they could see was a new Mercedes sitting in the driveway to impress their neighbors and a vacation home in some beach area bought, in a few years, with the rapidly increasing equity in their shiney new $500,000 tacky sh*tbox which, because of that nast mortgage guy who lied to them, they were buying for $200 a month.
Now comes the reckoning as that $200 goes through the roof. All their lives they have heard the expressions like, THERE-ARE-NO-FREE-LUNCHES and, IF-IT-LOOKS-TOO-GOOD-TO-BE-TRUE, etc. Now they whimper and cry because they ignored those age old pieces of sage advice.
Okay, if they accepted they had fu*ked up, bit the bullet and dealt with it I wouldn’t mind but that isn’t what’s going to happen. This is the new America. Cheering Bush on to attack Iraq, standing on corners waving flags and blowing whistles during the invasion - and now 5 years later bleating and whimpering and crying that we shouldn’t be in Iraq. A few years ago they smiled and celebrated with an expensive dinner when they signed those mortgage papers and now they are whimpering and crying that they shouldn’t have done it. Pathetic.
It’s almost a certainty we are on the way to seeing these sad fb’s, the young couple with the wife dabbing the tears from her her eyes, appearing in front of politicians at multiple hearings in Washington, crying about how they were duped and pleading for help because this situation was destroying their marriage.
I’m a liberal but I’m concerned that some of these politicians, who always have their eye on the main chance and do everything they can to cultivate the impression of being “a good guy” when most of them are a**holes, will somehow figure a way that the tax payer will finance these cry babies.
So, you are saying that all these people are totally to blame and the mortgage artists who set up the bear trap loans should be allowed to continue to do so?
Don’t you think the possibility of not offering stupid people stated income loans might at least be worth some consideration?
The real issue is not protecting these people from their stupidity, but protecting society at large. As I think we all know, the coming housing collapse will have large negative implications for many more people than the FB’s.
That’s the real issue. It’s the reason they have the concrete divider in the middle of the freeway. Not to save the drunk driver, but to protect YOU from him.
Yes, I am tired of the whining. In all areas of life. For cripes sake, I get tired of people failing to use whatever little bit of common sense they were born with. Politically, I am a devoted independent, and I swear to god if the democrats trot out another “victim of society” at the next debate I am going to throw my shoe through the TV. Everybody should be planning for that potential “rainy day” in their lives. Use some common sense. Save your hard earned money! Don’t waste it on frivolous $hit! Read the fine print! Assume everybody you do business with is a con man out to get your money- b/c the majority will be! Stay in school! Go to technical school, or college, and grad school! Retrain to a different career if you have to! Use some self-discipline!
Apologies for the high number of exclamation points. Lack of discipline and poor work habits/financial habits really set me off. And taking advantage of stupid people (hello, mortgage brokers) is even worse. I am just disgusted with what has happened.
My better half had an interesting comment today. We were driving through our neighborhood and I commented on what would happen to all the homedebtors when the Big One hits (we live a few miles from theSan Andreas Fault). Very few have earthquake insurance. She said they will expect the government to declare a disaster area and will bail everyone out. Very insightful and very true I suspect.
Why should the rest of america have to foot the bill for head-in-the-sand homedebtors in the earthquake zones of CA, flood plains of the Midwest, and hurricane alley of the Southeast? Why are we rebuilding New Orleans. Tell me how much sense that makes? And from what I know, still no plan to really safeguard the city from another Category 4/5. Brilliant.
“Why should the rest of america have to foot the bill for head-in-the-sand homedebtors in the earthquake zones of CA, flood plains of the Midwest, and hurricane alley of the Southeast?”
Why not take this idiocy all the way and just dissolve the country altogether? Looking out for each other is such a horrible thing. Jesus would be horrified. Oh, wait. He was a socialist.
He would agree it is virtuous to donate hard-earned money to those less fortunate. He would not agree it is virtuous to force somebody to do so.
You’re not forced. You can move to Mexico where the government spends no money.
posted ” You can move to Mexico where the government spends no money.”
They only steal it there.
Mike , I think your take on the FB’s rings pretty true . I think the FB’s knew the loan agents were commiting fraud and they went along with it . That doesn’t leave the loan agents off the hook does it ?
Maybe in some cases some of the borrowers were really deprived of disclosure documents ,but it seems like most of the FB’s didn’t read what they were provided anyway .
During the mania everybody was in a hurry , everybody was in a rush . I find it hard to believe that the front line people (loan agents ), didn’t know the loans were bad or that they didn’t know the appraisals were inflated , and that they didn’t help the borrower with the fraud ,(maybe the realtor helped the greedy borrower fill out the loan application ).
My point is that it takes more than the borrower usually to set up a bad loan package/RE deal . They were all in on it together and now they are all trying to blame each other . All parties,(realtors ,loan agents ,borrowers ,brokers ), stood to gain had real estate continued to go up so it would hide all sins .
Please ,I’m not attacking honest agents and realtors .
In reference to FBs… 4 of the 7 deadly sins are committed:
Greed, Sloth, Envy, and Pride.
And I suspect the other 3 sins are involved during other instances.
ANyone in LA should turn on CBS news. They’re about to have a report on “a potential record number of homeowners who are about to lose their homes to foreclosure”.
While I DO feel sorry for those truly taken advantage of, it is gratifying at a very basic level to finally see the other side of the coin after several years of being told we were fools to not immediately turn over the proceeds from our condo sale into a house here in San Diego. Our realtor was quite insistent that we were making a poor choice by renting and investing in our money…. As my father always says, “He who laughs last…”
“I’m a liberal but I’m concerned that some of these politicians, who always have their eye on the main chance and do everything they can to cultivate the impression of being “a good guy” when most of them are a**holes, will somehow figure a way that the tax payer will finance these cry babies.”
I will LEAVE this f*ing country and NEVER look back again if the FB’s get ANY kind of government assistance in ANY fashion, because it would mean that our government now caters to the pleas of the criminally ridiculous and the stupid.
Agreed! I am an ex-Marine turned Silicon Valley executive and I just got my residency papers for New Zealand. They are valid for life. I can up and go to a country that is very much like what the USA was in the 1950s - a country where you can meet the Prime Minister in the grocery store doing her groceries herself! Imagine running into GWB at Safeway…
Excellent public schools, no illegal immigrants (hard to break into an island separated by at least 1000 miles of ocean from any other place), reasonable real estate, and top quality private health insurance for a family of four costing $700 a YEAR!!!
Semper Fi:
I’ve been to NZ 9 or 10 times since 1981 and i’ll second your opinions about this “last good place” in the world.
Amazingly friendly people that have it figured out.
SF, what did you have to go through to do that?
NZ admits people (immigrants) in several categories that mainly fall into two groups: 1. Individuals who are highly skilled and experienced in occupations that are in demand in NZ, and 2. People who have either money to invest and/or proven business skills. Once you get in, it is very easy to get an “indefinite resident visa”, which is basically permanent residency for life. What’s more, once you put in five years of actual residence there, you qualify for an NZ passport.
Just go to the official government website:
www dot immigration dot govt dot nz
Good luck!
Sounds good. How is it for opportunity & what’s the median income like?
I know for sure that IT skills are in high demand there right now. Don’t know about other fields as I am in IT myself.
Oh yeah, now’s when we really have to keep our eyes open. You just know some pol is going to play populist to the bk masses.
Wait a second . I just thought of something . Didn’t a bunch of realtors submit offers based on borrowers being pre-qualified for the loan . This means that the loan agents/lenders where taking the position of being the qualifying party . But where does that leave the borrower if they lied on the loan application ?
I just can’t seem to get it out of my head that Lenders hold themselves up as being the party that is the responable party for a borrower qualifying . If it was a fraudulent loan package than the lender is off the hook ,but what if one of the lenders agents/appraisers helped with the fraud on the loan package .
Does anybody see my point ,in spite of the fact that we know the greedy borrowers just went for it out of greed /fear.
BUILDING on dairy farms?
In the Vancouver area, that would be illegal. Farmland in the Greater Vancouver area and other urban areas in the province falls under the ALR (Agricultural Land Reserve) which was set up in 1973.
A “good thing”, as Martha would say.
After all, there IS only so much farmable land.
Yes, and we pissed it away here in Oregon with Measure 37.
I know that area well — grew up in San Diego but my dad’s family has deep roots in the western Riverside County/San Bernadino County area.
When I was a kid (late 1960s/early 1970s), the area was full of farmland — dairy, grapes, oranges and other citrus, horse farms, you name it. Irrigation was required, with less than 15 inches of rainfall per year, but other than that it was fairly easy to farm. The problem is, it’s close to Los Angeles, so as LA expanded, people had to go *somewhere*. A lot of the farmers sold their land. For a while it seemed to mostly become light industrial/warehouses (because LA is out of warehouse space, and it’s much less expensive to have supply and distribution centers outside of LA). In the 1980s boom, more of it became housing tracts. Eventually not much besides dairy was left… The last land to be developed is the dairy farms because of the smell and toxics issues, since the cows are maintained on feedlots, and because dairy was always a bit more profitable than other farming, so the farmers held out longer.
A fair number of areas in California do have agricultural preservation zones; I don’t know why that area doesn’t.
Reno Boy a “Baby Boomer” knew at a tender young age that once his fellow “Boomers” took control they would screw everything up. He was never so right.
We’re f&(#^@+ nuts in this country. It use to be a home is what you lived in. Now they are investments. BS. Investments are stocks, bonds, money markets, owning your busness, etc.. This is too crazy. We need a depression, and we need it something bad.
So ,in the final analysis ,it was peace ,love ,and rock and roll that was the great evil, like the authority figures said at the time ,that now has caused the housing crash .
Well, if houses aren’t investments then neither are beanie babies, cabbage patch dolls and tulips.
There goes my retirement.
Reno Boy a “Baby Boomer” knew at a tender young age that once his fellow “Boomers” took control they would screw everything up. He was never so right.
Boomer-bashing has become a virtual cottage industry. They’re labeled “the worst generation.” They’re accused of infantilism and self-promotion.
Now the generation who marched in the streets against the war and made free love, and mainstreamed drug addiction and divorce.
How will history look back? Time will tell.
Umm…some of us boomers (myself, included) are our own worst critics. I’m a tail end boomer and was a grade schooler when the older ones were hippies dropping acid. I always felt in a different generation from them anyway. I never did drugs. Maybe not reading the purchase agreement on these overinflated homes is an after effect of all the dope they smoked in the 60s and 70s.
I don’t buy that boomers are that different. They are juwst modern Americans. Therefore, they feel entitled to be considered best without earning it and to have a standard of living higher than anyone on earth in perpetuity. We have been coasting on the goodwill of WWII for 60 years. GW Bush just personifies the modern American approach to jump in and meddle, but don’t bother knowing what you are doing. Americans are right, just because.
My hope that the busts in RE and Iraq will teach us that reputation is no substitute for hard work and knowing you chit!
MacAttack,
Please explain what “Measure 37″ is/was…
Yea - to paraphrase it said that government had to compensate you if they prevented you from dividing up your land for development. Since government doesn’t have (or claims not to have) that kind of money, they’ve had to now remove most of those restrictions.
I guess the old way worked well if you were not one of the land owners.
“But we were stupid to do it,’ Fullenwider says.”
BINGO!
I guess the Fullenwiders will be changing their name to Doublewider soon.
I guess the Fullenwiders will be changing their name to Doublewider soon.
I like it! The Fools & Whiners in a Doublewider!
Once the lawyers get a hold of these cases of FB’s its going to be interesting what the legal points are . I bet cases are going to end up in the highest court in the land . The thing that seems to stand out to me is that none of the parties in the RE purchase transaction seem to have “clean hands “. Usually it pretty clear when you have a victim . The lenders made loans they shouldn’t of , the borrowers lied to get the loan , the RE agents put unqualified borrower in to homes based on hype that the loan agents somehow got approved ,while the appraisers some how always seems to hit the mark while the escrow and title companies seem to be sleeping on the job .
The legal system is going to try to figure out what is “just “in the mania that was taking place where everybody justified whatever they did ,right or wrong ? It seem to me like it was a team effort in alot of cases ,not to say that some people were really victims . What am I talking about ,we are all going to be victims of this mess . I guess thats what I resent the most . Its like people during the Great Depression that suffered who had never even purchased a stock or bought something on margin .
Diane said:”A lot of people use that formula, then an irresponsible lender sets them up with a loan that initially costs very little per month but increases over time. And they don’t add in taxes and insurance”.
It’s the buyers responsibility to know how much insurance and property taxes will cost before buying a house.
If the mortgage amount seems to good to be true, then it probably is. If a home costs more than 2.5 times income, its unafordable. How hard its that?
Its always easier to blame someone else.
The urban condo thing really is a huge scam. If you live in downtown Los Angeles in one of those fancy McCondos right in the middle of the ghetto, what the fuck are you going to eat? Are you gonna drive to the nearest supermarket which is around 4-8 blocks away ( 45 min of hellish traffic, slums, stray bullets, H0m3land S3curity checkpoints, gangs) and take your car, or walk to the nearest store and breathe the solid smog which turns your boogers black and walk home with an armful of groceries?