Common Sense Just Went Out The Window In California
The Orange County Register reports from California. “John and Grayce Coffman could lose the Fullerton home they bought in 1977 because they can’t keep up with their mortgage’s rising costs. The Coffmans, who are unemployed and in their 60s, borrowed $552,300 from Countrywide Financial, the largest U.S. home lender, in the summer of 2005. Despite making about $50,000 in payments since then, they now owe more than $590,000 to Countrywide.”
“They took out a loan that allowed them to make a low monthly payment, but tacked the unpaid interest onto the loan balance. Now the Coffmans say they can’t afford the minimum payment of more than $2,000 a month, which has gone up from $1,776 when they first got the loan.”
“And they certainly can’t make the fully amortized payment of more than $4,500, which would be roughly 80 percent of their income. The Coffmans earn about $5,400 a month from Social Security and government assistance for five of their six adopted grandchildren, according to the Coffmans and their recent bank statements.”
“The Coffmans, who don’t have any subprime loans. Their 1 percent teaser rate ended a little more than a month after they received their loan.”
“The Coffmans admit responsibility for getting deep into debt. They bought their two-story home for $97,000 in 1977 and have since extracted all the equity gain in it. They’ve cashed out $600,000 in home equity with the help of several lenders.”
“After taking out a second mortgage in February from Wells Fargo for $114,855, they now owe about $700,000 on their home, which is worth about the same, according to a Web site that evaluates a home’s market worth.”
“There is no equity left to pay for a refinance, and they couldn’t afford payments on any other loan even if they could, the Coffmans say.”
“‘How did it happen? I can’t tell you,’ Grayce Coffman said. ‘We just made some really bad decisions.’”
“Jeff Altman, a partner with WestCal Mortgage Corp.in Orange, said falling home prices are another strike against the Coffmans. ‘Because they don’t have the equity, it’s the kiss of death in this case,’ Altman said.”
“It wasn’t until The Orange County Register contacted Countrywide about the Coffmans’ situation that the lender offered the family help. Countrywide said the Register’s inquiry led to a faster response but not to special treatment.”
“Otherwise, the Coffmans, who have missed two mortgage payments, would have had until Dec. 16 to pay or the lender would initiate foreclosure, according to an earlier letter from Countrywide.”
“‘I’m planning on staying here,’ Grayce Coffman said. ‘They are going to have to drag me out.’”
“Countrywide has offered to lower the Coffmans’ interest rate and cap it at 5 percent from about 8 percent currently. They could also skip payments until February, with all missed payments added to the principal balance.”
The Press Telegram. “Abel Rosales wishes he did earn the kind of monthly income that a mortgage broker reported for him on forms that enabled the Long Beach man to take out a second mortgage on his home. He took the broker’s advice, sight unseen, and got a second adjustable mortgage, with a promise from the broker he would get a third mortgage with fixed-rate financing.”
“Rosales earns a decent living, but the first mortgage reset to nearly $3,000 per month and the second added nearly another $2,000 per month. There was no way he could make the combined payments. And because the broker, who he only dealt with over the phone, significantly beefed up his reported monthly income, a fact he found out too late, he was unable to get a third mortgage without again misrepresenting his income.”
“Rosales, his wife and their two children now find themselves renters living in Lakewood. ‘The lesson I learned is never deal with anyone over the phone,’ he said, adding, ‘And do research.’”
“Rosales didn’t let himself go into foreclosure. Instead, he made arrangements to conduct what’s known as a short sell.”
“Keith Higginbotham and his wife saw their first, and then second, mortgage payments literally go through the roof, rising to $6,000 per month. Both say they knew it could have happened, but only as a worse case scenario. It was something they were willing to risk for the American Dream of home ownership.”
“Even before the reset, the rent was high. And when the couple took the second mortgage, it only seemed to make things worse. ‘For what we were paying before it went up, we could have rented a house in one of the nicest neighborhoods in Long Beach,’ Higginbotham said.”
“Facing foreclosure, the couple turned to their Realtor (who) negotiated with the lender and helped the couple begin the process of a short sale. The couple have since moved from their home, and are short selling it with an asking price of $440,000, far from the $551,000 they paid for it in 2005.”
“Also going through the roof is the number of short sales occurring. ‘We’ve been very busy,” said Eli Tene, president and CEO of Woodland Hills-based iShortSale Inc. The company has brokered more than 2,000 short sales in the past year, and in the last six months the company has seen short sales grow by half every month.”
“‘Every month we get 50 percent more volume,’ Tene said.”
The Santa Maria Times. “More than five times as many Santa Barbara County homes are expected to go into foreclosure this year as last year.”
“‘I do look at (the first part of 2008) to be the worst part in the process,’ said economist Mark Schniepp. ‘Then the rest of 2008 to see a gradual diminishing of foreclosure.’”
“In northern Santa Barbara County, the median price of a home in October fell by 18 percent from a year ago, according to the association, to $360,870.”
“Local experts don’t see real estate problems dragging the larger economy down into a recession. The economic trouble is ’staying there (in the residential real estate sector) because the slow-down emanated there,’ Schniepp said. ‘(There was) too big of a run-up in prices, too many sales, fostered by easy financing. The problem started there and is remaining there.’”
“Lawnae Hunter, owner and broker of Plus Property Management, blames a lack of common sense for the market’s current state.”
“‘I think there was a frenzy element that if you didn’t get in (to a home) you would never have an opportunity, so people were willing to take marginal loans just to get into the market,’ she said. ‘And there was an element of greed from unscrupulous lending practices, a promotion at the federal level to get people in housing at any cost, and common sense just went out the window.’”
“‘(We are) back to where we used to be,’ said Kirk Lesh, real estate economist for the UCSB Economic Forecast Project. ‘Back to verifying the income payment ratio, back to the old style, and making sure they are lending money to people who can pay.’”
“David Brown, a Los Olivos-based real estate broker who is also president of the north Central Coast chapter of the California Mortgage Brokers Association, blamed the rise in subprime lending on inexperienced Wall Street traders who handled these loans, who relied on models that showed property continuing to appreciate.”
“‘These folks had never seen a down market,’ he said.”
The News Sentinel. “The real estate market’s downturn in San Joaquin County and throughout the nation has not only affected homeowners, it’s also hurt the professionals who serve them. Real estate, lending, appraisal and title company offices have laid off employees and closed offices during the housing slump.”
“‘They’re laying off long-time employees right and left,’ said Lodi Realtor Rose Mendonca. ‘It’s a sign of the times.’”
“‘(Real estate) sales activity in the area has gone away,’ said John Knight, who teaches finance and real estate at University of the Pacific in Stockton. ‘The offices that were supporting 10 or 15 employees in the boom days of 2005 — we have quadruple the inventory, and sales have declined substantially.’”
“Banks own 211 foreclosed properties in Lodi. Another 354 properties were listed as pre-foreclosures and sold cheaply, Mendonca said. Those 354 properties, which were delinquent on payments, would have gone into foreclosure if they weren’t sold quickly, Mendonca said.”
“There are 500 properties for sale in the Lodi area. Normally, there are only about 100 during a given month.”
“Local experts aren’t so sure that President Bush’s plan to freeze adjustable interest rates will help too much. ‘I think it is a short-term relief for some homeowners, but it postpones the day of reckoning,’ said Brian Hyzdu, president and CEO for Service 1st Bank. ‘They have too much debt for too big of a burden that their cash flow doesn’t allow them to service.’”
The Times Standard. “In October, HSU Economics Chairman Erick Eschker predicted that home values in the county could fall by as much as 40 percent, an assertion that was widely and vehemently challenged by local developers and real estate brokers.”
“Larry Doss, president of the Humboldt Association of Realtors, took out a full-page ad in this newspaper disputing Eschker’s claims.”
“There were three years in a row — 2003 through 2005 — when the average home price in the county jumped by more than 20 percent. ‘Normal is up 2 or 5 percent,’ said Doss.”
“He believes that the market has settled back down to a normal level for the area, and that there’s no reason to expect a dramatic fall in local home values.”
“‘We experienced an adjustment positively rather than negatively,’ he said. ‘Our demand is staying strong because we didn’t have the crazy developing (that occurred) in Stockton and Sacramento, where it’s flat.’”
“But Dan Johnson, CEO of Danco, a local development company, disputes that claim. ‘I’ve been in the business 30 years,’ he said, ‘and the early ’90s was bad, but nothing like this.’”
“Danco is in the process of trying to sell units in two new subdivisions, without much success. ‘I haven’t seen prices come down much, but I haven’t seen much activity either,’ said Johnson. ‘It’s very slow.’”
“Eschker said the most recent figures confirm Johnson’s impression. ‘The quantity of homes sold is way down,’ he noted. ‘September sales were one of the 20 worst (months) we’ve seen since October of ‘89….We’ve never seen prices go up so quickly across the nation, and never seen prices fall so quickly except in the Great Depression.’”
“Johnson, like Doss, feels that there is not enough room for local housing prices to drop as much as they have in the rest of the nation. If they do, he said, his company will start losing money.”
“‘Costs can’t drop 40 percent in the next year. We can’t drop the prices on these things and continue to sell them. You can’t give it away; you’ve got to make a living,’ said Johnson.”
“Jim Dalton, a former licensed real estate appraiser and current licensed real estate broker, said the drop hasn’t been nearly as pronounced locally as across the state and nation. ‘Based on what I’ve seen,’ he continued, ‘the (local) market has gone down to plus or minus 2004 levels.’”
“Dalton agrees with Doss and Johnson that the county likely will avoid the 30-40 percent drop that Eschker predicts. ‘Humboldt County is very insulated,’ he said.”
“According to the Humboldt Association of Realtors’ Web site, Humboldt County’s most recent affordability index, a measure of the percentage of families that could afford a median-priced home, is at 11 percent.”
“‘It was in the 50 percent range in 2000,’ said Eschker. ‘More folks need to talk about affordability.’”
“Whether or not the housing market plummets — and whether or not that’s a good thing — will undoubtedly continue as a source of fierce debate and speculation. ‘I can’t read the crystal ball,’ said Johnson. ‘I’d hope that history continues to repeat itself, but I have no idea where it’s going.’”
“When it comes right down to it, he added, nobody knows for sure. ‘None of the experts saw this (drop) coming,’ he said. ‘“So why should we listen to them now?’”
I’m pretty sure Eschker posted here a couple of times, long ago. He’s been one of the sane voices in HC. I like how he sticks to the affordability point, too.
“…Eschker said his calculations haven’t factored in nouveau trends such as the estimated 850 to 1,000 homes used all of in part for marijuana cultivation in Arcata, which displace up to 2,000 residents.
For that and other reasons, Jacoby’s Storehouse-located Real Estate Agent Phil Howard disputed Eschker’s results. “I think his report is naive,” Howard said. “I think he had the right conclusion with the information he had, but there’s information that isn’t available. He neglected this effect of extra income in the community from [Proposition] 215.”
Arcata Eye
http://tinyurl.com/2zn6j9
“Roll another one, just like the other one. You’ve been hanging onto it and I sure will like a hit.” Lawrence Wagner
Yep. I’ve had RE agents in Eureka say the same thing: pot will subsidize housing and keep prices high. Interesting because I don’t see the same effect with Meth in the Central Valley.
I think Humboldt county is home to some of the most backward, stupid a$$ people in the state. While almost every other community has now finally acknowledged a housing bubble burst, Eureka/Arcata/McKinleyville/Fortuna and environs think that prices in San Francisco may drop 50% to 300K, but in Eureka the median will stay above $300K! Ridiculous!
Arcaita houses the distinguished Cal State Humbolt, which is renowned for pushing out environmental sciences majors.
Full disclosure: I have a step brother and sister that went there. They are good people, but definitely not on the bleeding edge of financial concerns. Unless it’s their day to work at the co-op.
I like HC, but I just find it amusing that the mopes, not having Chinese investors, are grasping at Marijuana growers as “why its a good time to buy and its different here.”
Maybe Mr. Warren Buffett can buy HC. LOL
I live in SF. I wish prices would drop to 600K.
Me too - $600k doesn’t buy too much here
Come down to LA…you’ll find even more stupid people…just happens they drive around in Beemers and Benzes.
poorly managed weed growing operations are “low hanging fruit” ripe to be plucked.
Marajuana for profit is distasteful IMHO, its medicine. And as such should recieve a larger federal subsidy, distribution through the medicare/aid network and heavily taxed.
There is currently a revolution taking place in marijuana. Millions of people are learning, via You Tube and Internet radio, that it is relatively easy to grow a few plants for personal use. You avoid the dangers of scoring on the street, get better quality buds, and can do it all using a basement grow room or a Mills Pride C-13 cabinet from Lowes or Home Depot. It’s really about personal empowerment.
Mr. Green - I Grow Chronic
Marijuana Radio
Dopefiend Radio
The Grow Report
“‘I’d hope that history continues to repeat itself, but I have no idea where it’s going.’”
Sounds to me he knows where everything is going, but throws out that little bite to keep the local rabid masses from tearing him apart. It does take balls to go on record and say stuff like that.
You got it ex-nn .. Johnson is a big money name in HC area and has been throwing it around for years. Proud highlife with his own airplane and other toys. The masses “behind the Redwood Curtain” have his number.
“You can’t give it away; you’ve got to make a living,’ said Johnson.”
Just because you got to make a living don’t mean your going to. Now, can you imagine someone hanging on to a doomed stock because “they had to make a living”? We would call that person an idiot. Guess what Mr Johnson?
I see a person in denial because it that does happen he’s ruined.
Damn, Ben! You certainly know how to pick out the best stories to get everyone’s blood running.
What gets me is not only have they blown $600K+ and screwed themselves royally — nothing like the “do it yourself” joshua tree home kit — but that they’re so willing to advertise the fact, too.
I have been pissing realtors, lenders, banks off for 3 years in HC because of my selfish unwillingness to buy a house here in this ridiculous housing market. They treat me like I am taking food right out of their babies mouths. My hubby has one of the higher salaries in HC (about 90 thou) and we have savings and when we don’t qualify for a rational 30 year loan on one of the crapshacks up here. .. Honestly 350,000 for a 1400 sqft house with no yard? Also, have friends who have lost homes already up here. I guess they should have shopped at the hydroponic shop for work supplies. Pot will save us! I don’t think so. The people who smoke it up here grow their own organically!
“‘I’m planning on staying here,’ Grayce Coffman said. ‘They are going to have to drag me out.’”
These people burned through about $600,000 in equity, and still have the gall to be arrogant about their situation. What I want to know (and what they either never touch on or simply gloss over) is WHERE. DID. THE. MONEY. GO. I want the hear the story about the great time they had living it up on over half-a-million dollars, all the things they bought on borrowed money, something more than “we just made some really bad decisions”.
The $600k went PFFFT!
Make that $700K.
“After taking out a second mortgage in February from Wells Fargo for $114,855, they now owe about $700,000 on their home…”
“The Coffmans have about $1,400 in their joint checking and savings accounts, according to their November statements. Grayce Coffman said they have no other savings.”
WTF? Where did the last $114K go? They got it in February; that’s only 10 months ago? How did they burn through over $10K month (in addition to the $5400/month they receive from the govt)?
My thoughts exactly, where did it go?
And I don’t understand the attitude about having to be dragged out. Did you or didn’t you put up your house as collateral for the loan?
GREAT line!! Perry Mason (a lawyer on an old TV show, if your’e too young to remember) would be proud of that one
I see that time and time again.
Maybe it’s my Okie upbringing, but I just can’t imagine being this stupid. Especially this late in their lives.
Or is it something in the drinking water?
Very sad. it happened to older family what do they have to look forward to?
I hope they paid into Social Security and an RV.
It’s a common occurrence in Los Angeles, if I had a nickel for everyone I’ve sat across in that situation I’d be Warren Buffet.
I know of a person (in her 70s) in flyover country who this has happened to. Owned her home, took out an equity loan to buy a 4-plex (why???), never had rent paying tenants (it’s a VERY long story), wound up in financial trouble a year or so ago (I wonder why?), and ran out her redemption time without resolution.
End of story? - Lost both her home and the rental, and now lives with her son and DIL.
BayQT~
sfbayqt, I know a nice lady this did the same thing. She bought 2 4-plex’s site unseen in Mississippi but she said the guy on the phone was really nice that put the deal together . When she told me this I felt sick, I’ll see her again in a few weeks and I’ll give a update but I’m thinking the worst.
RE: Where did the last $114K go?
Vegas slot machines & state lotto tickets
Didn’t they have oodles of grandkids?
How old are they and do they have medical issues? or else why would the g parents be the Parents?
Lots of ?s of where did the $ go.
Here a classic case of doing nobody a favor by letting this thing drag out. These folks cannot afford the home, and won’t be able to in the future. What’s the point in this stupidity. The idea behind bail-outs is to get the FBV from point A to point B and then they’ll be able to help themselves. These folks will never be able to help themselves. And here’s another thing. A lot of the bail-out crowd think home values recovering will salvage the situation. What will it salvage with these people, unless of course you’re suggesting another round of equity withdrawl to support a lifestyle. It’s friggin’ ridiculous, and the OC register needs an a$$-whoopin’ for portaying it that way.
Maybe they opened a “Make your own Candle Shoppe?”
a strip mall can never have enough of those…
Sadly these people are in the point in their lives where they should HAVE $600K in savings minimum. Instead they will live in poverty the rest of their lives.
That’s the way of life for government subsidized white trash - spend everything you have - when that runs out - borrow and spend - when that is gone - go to the press whining like a loser.
And make sure to surround yourself with children to increase the sympathy factor. I’m canceling my OC Register subscription. The publish this kind of swill and do not even ask how much money these folks are getting for each kid nor WHERE ALL THAT MONEY WENT! What a crock.
An income of $5400 a month is $64,800.
For a household of 8, that is 187% of Federal Poverty Level. Little too high for food stamps (cut off is 150% FPL) but not enough to pay for everything. Comparable income for 1 person is $19,138; for 2 it is $25,661; for 3 it is $32,184 and for 4 it is $38,707.
Sounds like these are really their grandchildren and they did an adoption - probably after the death of or abandonment by the parents.
They could not admit that they could not afford the kids on their retirement income from Social Security - even with either additional Social Security payments just for the kid made when a parent dies or assistance from the state for taking in the kids and saving the state foster care costs.
They were incredibly careless financially to get in this mess. Taking in the kids was not rational in economic terms but unfortunately, this society weeps and wails ‘oh but the children’ and castigates anyone who will not beggar themselves for any brat to which they are related.
Should only be a family of 7, not 8. One of the grandchildren is an adult and (presumably, I’m sure the newspaper would have played it up if she was disabled or something) capable of taking care of herself.
No. In calucalting FPL, ALL in the household are ocunted be they children or adults. YOu could shaarea house with your adult parents and 6 adult siblings and that would be 8 people in the household.
FPL has tto do with were it is adults or children. It is a measure of income available to support everyone resident in the household.
I don’t even know *how* to blow through $550k in two years and have NO assets to show for it. Even if you blow it on cars, boats, jewelry and other houses, those are still assets that can be sold back to pay the debt. (And WILL be sold back in BK, make no mistake.)
A first-class international plane ticket costs about $10-12k. If you buy one plane ticket a month and spend another $15k on lodging/entertainment while you’re there that would be the whole $550k after two years, but I’d get pretty bored after about six or seven such trips.
yep, it’s like in that Brewster’s Millions movie with Richard Pryor, where he has to blow through 30 million in a month with nothing to show fir it, in order to win 300 million.
now, granted $600k isn’t 30 million, but you do have a point, even at 25% depreciation on 50% of the money, there should still be some serious coin left..but wait…, most consumer goods are worth zilch, once they leave the store, cars drop 25% the minute the vehicle is registered, boats (hahahahaha), motorcycles/quads/jetskis (see boats), jewelry (divide retail price by five, that’s about wholesale then multiply by .2 and that’s the pawnshop value), clothes (pfft), kitchen stuff (cooked), computers (crash),
This is the whole problem with buying using credit. All the crap ain’t worth crap.
I’d say that there are only four things worth borrowing for:
1 - a house (maybe not right now, though)
2 - a car (if you truly need one)
3 - education
4 - non-elective surgery (the hamster can stay where he is, so just live with it, it’s you who put him there in the first place)
gerbil, not hamster…
Wait a sec…..lemme get a match…….
Armageddon, armageddon! Bwhahaha. one of the funniest darwin awards ever!
http://www.darwinawards.com/legends/legends1998-10.html
I’ve seen some blondes and red heads that I’d borrow for; did.
Need handywipes. Spewed all over screen..
LOL
get a grip! they didn’t spend it they hid it away in cash and are gonna let the gov assume their house and split with 600k net profit. Dumb like a fox.
I am honestly torn.
On one hand: these people were greedy, and they deserve to be dragged out of their house by the sheriff when it comes time to take the house back to the bank. They blew the wad on new cars, a plasma tv, gifts for the grandkids, trips, whatever. Clearly didn’t live within their means.
On the other hand: what dumbass underwriter saw the serial re-financing and decided, oh, okay, a little more cash-out, that’s no problem, we’ll do that all day long? Are financial professionals these days such buffoons as to not realize they’re playing musical chairs with the note on the house? Whoever did that last cash-out refi must be kicking themselves right now.
I guess my point is this: everyone talks about how government intervention in the whole REIC is bad, bad, bad, but look at the absolute steaming turdpile we have allowed ourselves to get into without it. One stupid little federal guideline requirement could have prevented this couple from squandering _taxpayer_ money.
“Are financial professionals these day such buffoons as to not realize they’re playing musical chairs with the note on the house? Whoever did that last cash out refi must be kicking themselves right now.”
I don’t think they are buffoons at all; I think they are very intellegent sleezeballs who have it down pat how to bust out the borrowers to get the fat fees.
The last lender is not kicking himself because he screwed the borrower, he’s kicking himself because this game of musical chairs has stopped.
DId you READ the article?
The money went on adding to and remodeling the house to accomodate the grandchildren and cover househodl expenses. ($60K is not a lot for 8 people,)
No mention of “blew[ing] the wad on new cars, a plasma tv, gifts for the grandkids, trips, whatever.”
I can see how they ended up there with the American attidue of “oh but it is fo rthe children, we have to take care of the children’.
I do not, however, think they were operating on all cylinders. No way when they were over 65 and on Social Security could they afford to create housing for those kids and support them - even with Soc. Sec. surviving dependent benefits and/or assistance from the state for taking in the kids rather than sending them to foster care.
The financial numbers were just impossible.
If they did do a formal adoption of their grandchildren (it can be done if the parents die or parental rights are terminated), I’m very surprised that a judge approved the placement or aadoption. The court social worker would have done a home inspection (how many bedrooms etc) and a close examination of their financial ability to care for th children (income, debts, assets.)
My comment had nothing to do with the borrowers; my comment was describing the “financial professionals” that gave them the loans.
And mine went towards the comment above yours to which we both replied!
Sorry for the misunderstanding.
Are we talking about the same article? I saw $600K withdrawn - not $60K.
I think the $60K referred to the annual income.
Ah - now I get it. Too pissed to think straight, I guess.
look at the absolute steaming turdpile we have allowed ourselves to get into
“We” would include me, and I’m quite sure I haven’t gotten myself into any such thing. I bought a small house just after the wife and I (we) got married in ‘98 for 70k, something we could afford, and never heloc’d or refi’d or any of that crap.
One stupid little federal guideline requirement could have prevented this couple from squandering _taxpayer_ money.
Why do we need to prevent anything? I say, lets have easy credit. If borrowers hang themselves then so be it. If lenders hang themselves then so be it. The rest of us who know how to manage such a generous piece of rope will do well.
If you get too many borrowers and lenders hung themselves then it will smell really bad.
My point is when they acted in stupidity everyone will have to bare the cost of cutting them down from the tree or risk having the smell so bad to affect your life. We are not shelter from their stupidity.
I would like the govt to intervene by throwing everyone in jail that committed all this fraud. And I might not be as smart as some bank CEO’s, but something tells me there was fraud involved in this.
Won’t happen, just like the cops can’t ticket every speeder. Depending on your point of view, the genius of this debacle is that everyone is guilty of a crime.
What can I say, I am humbled. 600k in withdrawals gone. I hope they are the poster children for this housing bubble.
Its a buyers market my butt, you mean to tell me people with some morals, character and financial responsibility are suppose to bail people like this out by buying their debt. My A$$
Whatever happened to honor and shame?. The honorable thing to do would be to move out and rent an affordable home, paying back the entire loan as agreed. Whining to the liberal media is shameful.
“‘I’m planning on staying here,’ Grayce Coffman said. ‘They are going to have to drag me out.’”
They should Taser this cow on general principle, then drag her out feet first with a rope. What a disgusting human being. Let me guess: she’s morbidly obese as well. I hate to think of what “virtues” she’s imparting on the hapless adoptees in her care.
The visual of that bag tasered and drug out with her hair still smokin’ has calmed me down a bit. Thanks.
LOL. That’s about the most restraint I could muster in this case.
I thought they were recounting my life. My parents did exactly the same thing time and time again. And when their house was paid off by them ripping off us kids’ trust fund from grandparents to pay it off the last time and it was worth $1 million, my mom said exactly the same thing. After they ran it up again, dad died, mom borrowed to live until she could sell it, she only got $690 for it and after all was said and done, had nothing left. Ended up in a 1 bdrm apartment with a view of the building next door. Although, now she and dad share a lovely home in hell.
Sorry to hear that are they crazy.
No, really Sammy, don’t hold back, tell us how you really feel.
He is my favorite poster here, hands down.
Don’t tase me, bro!
Haha.
don’t foreclose me bro!
lol!!!!!!!!!!!!!!!
My God Sammy that was funny as all hell…
I canno9t stop laughing–my dog thinks I lot mynnd.
“They spent the money on household bills, an expansion and remodel of their home to make room for the children, and to shore up John Coffman’s struggling radiator repair shop, which was sold in 2005, they said.”
It’s a rude awakening. Looks like they thought prices would continue to increase and they could live on the equity. With all that equity they should have moved to an affordable city.
No freaking way. 700k. I was waiting for the medical bills story, you know, the heart and kidney transplants for each of the kids, but since they’re already taking the taxpayers for 5400 a month,medical care is taxpayer gift, what did they spend it on??
The dimwit wife says “i couldn’t really say”. Oh yeah?
And unemployed, still with 5,400 a month from the taxpayers, they blow thru another 100kplus in 10 months?? These people have to be major meth addicts.
And why are these useless, low-life, white-trash, thieving greed monkeys approved for government money to provide a home for their own grandchildren?? WTF??
You really need to READ the whole thing. These people are way off in their financial management and I haven’t a cluse as to what they wre thinking taking out the loans but:
(1) They are over 65 - thus receiving Social Security retirement. Think that is something that they EARNED by paying in over their lifetimes.
(2) In case you hadn’t notice, not many employers want blue-collar employees over 65.
(3) Assistance for the kids (who seem to be their grandchildren whom they are raising) would come from 1 of 2 sources:
(a) Social Security benefits for dependents whose parent has died; or
(b) Assistance from the state to encourage family members to take in and care for children related to them whose parents have died or who have lost custody.
Or would you rather pay the cost for raising the 6 kids in the form of taxes to support foster care? Given that kids raised in foster caare are kicked out and end homeless (63%) and unemployed as they lack job skills (75%), probably better to send them to family.
(3) Given the income (187% FPL), th ekids would not qualify for Medicaid (150% FPL cutoff.) If they have insurance coverage, it will be an individually purchased non-group plan for the kids. Figure around $1500 -2000 a month with a $5000 deductible. (I do a lot of healthcare policy work.)
As for the grandparents, they will be paying for Medicare ($93 per), a Medigap policy ($250-300 per) and Medicare D ($30ish per for anything with decent drug coverage.) That would around $800 a month for them.
Total healthcare premiums (nnot including deductibles and copays) for the year would hit around $30,600.
Don’t know if they have coverage or the kids but Medicare is not optional.
I may not know that but then you don’t “know” they are meth addicts.
I think they are disastorous at managing money and no way coule they afford to support their grandchildren even with assistance for the kids but you lose crediblity when you make wild accusations. You do not need to be vicious and hysterical to make the point about poor choices.
“Given that kids raised in foster caare are kicked out and end homeless (63%) and unemployed as they lack job skills (75%), probably better to send them to family.”
Oh, you must be referring to the 22-year-old slacker granddaughter in the article.
And - this pack of losers qualifies for Medi-Cal:
http://www.dhs.ca.gov/mcs/medi-calhome/
These people are f’in stupid! Worse - they humiliate and degrade their grandchildren by parading them in front of the press as charity cases - whining the whole time - they are the lowest of the low. People like this should have been sterilized before they could breed.
It’s no wonder their grandchildren were left with no assets - they probably raised their parents to be dumf$cks just like they are.
Annscott,
did you read the article?
60k is above the median income in the country.
Family of 7–one “child’ is in her 20s.
Said house, bought in in 70s, ain’t no slum. And on the taxpayer’s dime, every child does not need a separate bedroom and bathroom. Or TV. or computer.
Says they’re unemployed. For how long and why?
Kids can’t get a paper route, or cut lawns?
Florida is full of ‘retired’ people working part-time at Walmart, waitressing, etc. These folks aren’t crippled.
Their medical bills are paid by the taxpayers (crisrose got there first).
They blow thru 600k, then another 100k in ten months?
They have nothing to show for all that cash–and the wife ‘can’t say” where it went? Addicts, big time.
These folks are white-trash scamming low-lifes.
Let them rot under a bridge.
I read that article yesterday. I am glad Ben posted it. Pissed me off big time.
Even if they put a good chunk of that 700K into the radiator repair shop, he did sell it, so where the F did that money go to as well?
Where are all the questions the reporter should be asking? How do you blow 700K in 2 years?? How many bills did they have that cost ?
WTF????? If my wife took out that kind of money from our account and said “I dunno where it went”, divorce would be the only option. Vice versa as well. If I blew that kinda money my wife would KILL me, but I would absolutely know where the money went. No question.
THEY BET THE HELOC $$$$ ON Novastart Indymac, CFC, American Home Mortage…. Yes ALL THOSE WONDERFUL COMPANIES THEY KEPT GETTING MORTGAGES FROM..
oh well easy come easy go.
Not to mention that she’s apparently not aware that they really can “drag her out” if necessary.
These folks are why debtors prisons need to make a comeback.
According to the linked article, this refinancing has been going on for years.
“They bought their two-story home for $97,000 in 1977 and have since extracted all the equity gain in it. They’ve cashed out $600,000 in home equity with the help of several lenders, including Countrywide, Washington Mutual, Wells Fargo, and Greenpoint Mortgage Funding. They spent the money on household bills, an expansion and remodel of their home to make room for the children, and to shore up John Coffman’s struggling radiator repair shop, which was sold in 2005, they said. After taking out a second mortgage in February from Wells Fargo for $114,855, they now owe about $700,000 on their home, which is worth about the same, according to Zillow.com, a Web site that evaluates a home’s market worth. ”
The photo shows them with a bunch of kids- about 6 in all from ages 22 to 11 that they call their ‘adopted grandchildren.’ Since one can not ‘adopt’ a grandchild, presumably these are their grandchildren that they adopted when something happened to their own child who was the parent.
Their income is $5400 a month from 2 sources: Social Security and “government assistance” for the grandchildren. The ‘assistance’ for the kids could be either or both of 2 things: (1) Social Security payments made on behave of a dependent when a parent dies and/or (2) state assistance for grandparents who take in kids abandoned by or removed from their parents. Since 1 of the 6 kids is now an adult, I would estimate that about 1/3 - 1/2 the income comes from payments on behalf of the kids. That leaves these people with around $2500 - 3600 a month in Social Security retirement. Gotta say, the 22 year old granddaughter needs to get off her backside and get a job - even McD’s pay would help a lot in this household.
Telling the couple to go out and get a job is not productive. They are over 65 and employable in the eyes of employers.
Sounds like they have been living on the home equity to support the grandchildren and this all started around 2004-05 with the kids.
Doing home expansions and a remodel to make room for the kids when you knew you could not pay the amount back was stupid. Whatever happened to bunk beds with 2 sets to a bedroom? Assuming only 3 bedrooms and no family room or den to switch over to a bedroom, stuff the 5 girls into 1 bedroom and the boy in another, or the boy sleeps on a fold-out couch and divide the girls between 2 bedrooms. Life is tough but sharing rooms won’t kill them.
B-b-b–butt, it’s “their” house! And that $700K in refi was ‘for the children!” Do you really expect little Billy and little Timmy to *gasp* SHARE a room? And asking adult grandchildren to w-w-w-WORK (four-letter word)? How can you be so heartless? I think the government should levy a “heartless saver/renter” tax on you!
Well shoot when you have that show. Extreme Makeover, then watching TV makes ya want a LARGE room all to yourself. It is that kind of MSM that makes us all go a little loopy wanting a $500. handbag or those 21 pairs of shoes given to Oprah by Jerry Seinfelds wife as a ThankY gift..
Pure ridiculous and if you have a tv, it is hard to pass without looking.
You are being far too easy on these idiots. They will be entering the rental market soon as well as the job market. I don’t care how ‘old’ they are. I have worked with people who were 90. In almost every day and age other than the one we live in, retirement has been a luxury held for only the most wealthy. Today it is considered an entitlement. I’m sure Walmart can always use another greetor.
Clearly the grandson’s shirt was a hand me down from all previous family members
… And what a fine example they are giving to the 6 kids in their care. Here we get more Real Life lessons to pass on to the next generation, courtesy John and Grayce Coffman. Don’t bother working hard, going to school, or looking out for your fellow man. Just lie, cheat, and steal your way to get $700,000 - and then let the next generation figure out how to pay for it.
Oh! And as a side benefit, the grandkids won’t be able to ever buy a place of their own because the prices were jacked up so high because of frauds like this. Thanks Grandma and Grandpa!
that’s the 1st thing I thought of Where TF did it all go in a few years? They never even try to explain what they did with the money.
The Coffmans AMAZE me! If you buy a house in 1977, in 2007 you shouldn’t have to worry about anything but property tax!
The got to go on a 600K spending spree. And seeing how generous our government is lately, this will probably be a TAX FREE one, if income tax on their forgiven or discharged debt is uncollected.
Getting 600K tax free is like getting a check for 1.1 Million dollars in california. And they couldn’t even make it last 3 years!
This astounds me! Ben, you’ve finally rendered me speechless
This is the letter I sent to Padilla:
Mr. Padilla:
I thought journalists were supposed to investigate. At least, as I teach my yearbook students how to report on the team, class, or student, I teach them to ask the question: “Why?”
Sometimes it’s difficult to print that the football team didn’t practice as often as they should have, thus the losing season. However, if that’s the story, that’s what my students write. They also often have to edit their stories for bias.
It is very disheartening to me to see that the same journalistic standards were not carried out by you in your reporting of the Coffman’s story. Perhaps if you had investigated the reasons why they took all the equity out of their home and why they have adopted five of their own grandchildren, I might understand the newsworthiness of your story. Instead, your article just sounds like another sob story about people who made poor financial decisions and are regretting the consequences. However, I cannot work up much sympathy without reported explanations as to why these people took on such a huge amount of debt.
On a tight budget, you can raise 5 children on $5400, especially if you don’t have a mortgage, and if you’re receiving foster payments from the state. Why did the Coffman’s take out that amount of money? What did they spend it on? Did one of the children need surgery? Do the grandparents not receive child support from the state? What’s the situation?
Unfortunately, your reporting of this story leaves me only thinking that this is a substandard piece of journalism that belongs on a real estate blog somewhere, instead of in a newspaper. Stories like yours are the reason why we don not subscribe to the Register in my home.
“The Coffmans admit responsibility for getting deep into debt. They bought their two-story home for $97,000 in 1977 and have since extracted all the equity gain in it. They’ve cashed out $600,000 in home equity with the help of several lenders.”
Is it safe to assume that the $600k went to consumer goods of one type or another? Point being, here is an example of just one family unit pouring $600k dollars into the economy. Think about it, that’s like six people spending $100k each or a couple of years. The “experts” think this is only going to shave a little bit off of GDP…
To me, it looks as though it will be more like a Brazilian Bikini wax.
Owwwww, Pen!
“‘How did it happen? I can’t tell you,’ Grayce Coffman said. ‘We just made some really bad decisions.’”
Just 600K of mindless spending by a couple of unemployed geezers…no decision making necessary.
Man, I think there are ALOT of 60-somethings that spent every dime they had, thinking the house would fund “retirement”. LOTS.
“Just 600K of mindless spending”
I’m not kidding, the number of Hummer H2s that seem to be “stationed” out of the local area (ie not tourists) has gone up from zero two years ago, to about 10 right now. Did I mention that we have a large retired population here?
http://www.fuh2.com/submissions.php
Anyone who detests civilian Hummers and their owners will appreciate the sentiments on this site.
The funny thing is, I don’t detest them…I just know how much they cost, and I know that retirees from Fresno probably can’t *really* afford an H2, plus a million dollar 1800 sq, foot house in Shell Beach.
A dear friend of mine just recently purchased an H3.
This is a sane lady, hardworking and honest person.
She’s happy, and I’m attempting to be happy for her.
Hubby wants to put me into a SUV vehicle. This is why he gets locked into closets.
Smiles,
Leigh
RE: H3
Underpowered, odd-cylindered (5), GM dogmobile that gets EPA “15″ (real life-11) mpg.
A brilliant choice of transport in a time when gaz could spike to $5.
Not my first choice of vehicle(s).
My friend was totaled in an accident, just happy she’s O.K.
I am NOT envious, as an H3…er…is not my cup of tea.
Maybe the crash spooked her - advertisements convince some of the safety of larger H3 type autos?
She lives in Saucier MS. Hummers patrolling the streets were natural in the Katrina days. Perhaps it’s culture now?
The closet thing, funny Liegh
We’re finding more and more people who thought they could finance retirement through real estate, yet saved less than $50,000 in diversified equities. Stupid of them. VEIEX invests in over 800 stocks. S & P 500 index is over (of course) 500 stocks. Most real estate slaves have one house and they could not even dollar cost average into that. They ignored all the financial texts and listened to “no money down” infomercials instead. They deserve debtors prisons. Let’s build them!
“‘How did it happen? I can’t tell you,’ Grayce Coffman said. ‘We just made some really bad decisions.’”
Their worst may have been procreating. Maybe they could do something worthy of a Darwin Award as an encore. A few decades ago would have been better.
I love that this sick cow gets an undeserved break from Countrywide and she’s going to think about whether to take their offer. Carry that pig out on a stretcher on all fours with an apple stuck in her pie hole.
“‘How did it happen? I can’t tell you,’ Grayce Coffman said.
My bet’s on Vegas or Indian casinos, lottery tickets and the Home Shopping Network, if not meth.
Or crooked contractors/sub contractors who sold them top prices on the remodel.
Catherine: The lots better get used to cots.
Here is what is really sad. Think about the year 1977 for a minute. There, now add 30 years. Yup, that 97K would have been paid off by this month, AT THE LATEST ON A CONVENTIONAL 30 YEAR DEAL! $5400/month free and clear, for the most part beg. in Jan. 2008. What a Christmas present and what a way to ring in the new year.
BUT NO FREAKIN WAAAY!
Hope all the junk you spent 700K on was worth being free and clear, except for prop taxes and upkeep for the rest of your lives.
What dolts!
No more homedebtors. Man, we could all dream to reach such a point.
“‘(We are) back to where we used to be,’ said Kirk Lesh, real estate economist for the UCSB Economic Forecast Project. ‘Back to verifying the income payment ratio, back to the old style, and making sure they are lending money to people who can pay.’”
How quaint.
Which is what this boils down to:
“Rosales, his wife and their two children now find themselves renters living in Lakewood. ‘The lesson I learned is never deal with anyone over the phone,’ he said, adding, ‘And do research.’”
No, the lesson, you stupid b*tch, is to not buy things you can’t afford!! AHHHHHHHHHHHHH!!!!!! I feel a JT rampage comin’ on.
How typical of these retards to “learn” all the wrong lessons. Two leap out at non-morons:
1. Don’t buy things you can’t afford.
2. Never trust anyone with a vested interest in selling you something.
3. Do your own due dilligence.
This guy acts like nobody has ever been taken for a ride face to face. If this is so, why do used car salesmen have such a bad rap? My rule #1 as a consumer, NEVER TRUST A SALESMAN!
Caveat emptor.
Who said Latin is a dead language?
Gee that means that 90% of the people that wish to buy, are not qualified to buy AT THESE PRICES.
You mean 96%, right? This is Clownifornia, after all.
“The Coffmans admit responsibility for getting deep into debt. They bought their two-story home for $97,000 in 1977 …”
ok, my math skills ain’t no wears nears as good mine gramma skills, but hear goez anyhow..
2007 - 1977 = 30, if theyz bought in 1977 widda 30 yr mtge, then they should bees paid off rights about now…
“The Coffmans, who don’t have any subprime loans. Their 1 percent teaser rate ended a little more than a month after they received their loan.”
When will the MSM learn. It ain’t a subprime thing. We are talking about the ENTIRE $10 plus trillion dollar residential mortgage market, the trillions in commercial loans, auto loans and credit card loans………………..not the mention the hundreds of trillions of credit default swaps. Does anyone think that Citi raising $7 billion at 11% is a big deal, what about UBS raising $10 Billion at 9%. Since when were those kinds of margins baked into the banking business.
UBS halting withdrawals on $10 Billion RE income funds. BoA shuttering a $12 Billion money market fund.
Anyone know what is going on? What’s next, rationing withdrawals in savings accounts?
> Does anyone think that Citi raising $7 billion at 11% is a big deal, what about UBS raising $10 Billion at 9%.
At least in Citi’s case the loan was combined with a stock purchase of the investor. By paying high interest on the loan, Citi could hide the low price of the stock they had given away, to not frighten the stock market. I don’t know if UBS’ case is similar.
Coming soon to a bank near you.
Time to start stuffing the mattresses, putting your money in a coffee can (Folgers, Maxwell House, your choice) and burying it in your backyard, buy a fire proof safe and store your money there or any other place where you think your money will be safe.
Cash in the matress. That’s what I did and wifey looked at me like I was from Mars. However, she deferred to me and is very conservative about finances. However, she does trust the banksters more than I would at this point in history.
You guys are scaring me though. The thought if having high 5 figures in the house is not a pretty picture. However, it does seem like this is becoming the safest bet of all.
CASH MAY NOT BE KING, UNLESS IT IS IN YOUR FILTHY STICKIN’ HANDS!
I’m feelin’ you Dan. While I sleep a little more lightly knowing I’ve got 6 months reserves in an undisclosed location (not my home), I live with much less stress day to day knowing that the closure of my bank will not leave me penniless.
A fire safe would be better don’t you think?
Never hide cash in a mattress. It’s one of the first places a thief will look. Buy a good safe. One that can be set in concrete.
“What’s next, rationing withdrawls in savings accounts?”
I wouldn’t be surprised to see runs at ATM machines sometime in the not-too-distant future when the public discovers that cash is king.
Just wait until some upset at all of this, people start spreading bank run mass emails. Now thats what should be the response to Warren Buffet buying all of these companies.
Because “everything” is unsafe, I am not too unhappy to have approved two new MORTGAGE LOANS this week. Gaaaahhh, the devil makes me do it! …$85K @ 10%, $75K @ 9%.
How much down darlin!
Good for you!
Leigh
(Posted below: 23% down in the 10% interest case, 38% down in the 9% interest case.)
Quite don’t give them ideas.
“How did it happen? I can’t tell you,” Grayce “Penelope” Coffman, 64, said. “We just made some really bad decisions.”
Bad decisions! That’s an understatement. These two are idiots!
Those two are toast and noboby, especially the OC Register, are doing them any favors by letting feel like victims with a glimmer of hope. They’re done, end of story, and folks should do ‘em a favor and tell them so.
As one poster put it:
“What happened to this place (our country)?”
These people are bringing in 5400/month. It would take them 12 years to blow through 600-700K.
What has become of this country where people do this? Depsite all the blame and responsibility for this bubble, the bigger question I have, is how did this mentality ever set in?
Sure, there are a lot of big ticket items I wouold like, but I would never go into debt to the tune of 600K for it all.
Lunacy, sure lunacy, I say!
LOL it’s funny how folks seem to have problems grasping that reality. It’s like the money fairy is going to come in the night and leave them a boatload of cash…funny stuff.
“It’s like the money fairy is going to come in the night and leave them a boatload of cash…funny stuff.”
Bernanke is coming? That will probably be part of the Democrats’ Homeowner’s Debt Relief Act of 2009…$100K ACH to your checking account if you’re a “victim” of the housing fiasco.
Funny, the tendecy is to reward/encourage bad behavior. We should be “bailing out” those who lived within our means and encourage people with high credit/incomes to buy houses through monetary incentives. Instead, we help deabeat subprime idiots who never should have been approved for a CC, much less a mortgage.
And public shaming would be time well spent as well!
Death by unga-bunga!
Well ,what I see with this case of the retired couple with grandchildren is a fraudulent refinance to start with ,they didn’t qualify . This couple should of been turned down on the last refinance . At that point they would of been forced into selling ,and at that point they could of actually cashed out with some equity and rented a nice 4 or 5 bedroom place, maybe in a cheaper area . What was the point of them holding on to a house that apparently was to small for their needs anyway and renting would of been cheaper ,or buying a cheaper home .
I also would imagine that all those refinance fees took a big chuck of the 600k pie they took out . What ever drained the resources of this couple ,it doesn’t matter anymore ,they still can’t afford the loan modification rate . The fact that they claim that they will need to be dragged out only tells me that they are going to declare bankruptcy .
As a lender I would of filed foreclosure if they defaulted and hopefully it would trigger them selling the property before it goes down in value . It’s not as if this house is their source of income (anymore anyway ) like a farm or something like that, where moving would of decreased the income .
But if you go back to the heart of the issue ,the loan was a fraudulent loan ,therefore that might be the reason the bank is going to loan modify . Because these people took out so much money,something is awry ,and maybe they just pocketed the money and are screaming victim so they can get the lower rate until they figure out how to get the better of everyone .
Public shaming? These people are gladly advertising themselves as idiots.
Local experts don’t see real estate problems dragging the larger economy down into a recession.
Have we seen enough now to qualify “local expert” as an oxymoron, along the lines of “government intelligence”?
“‘How did it happen? I can’t tell you,’ Grayce Coffman said. ‘We just made some really bad decisions.’”
Right THERE is the main reason I left Clownifornia two years ago and will never be back… I just couldn’t keep up with all the clowns, posers, suckers, cholos and users that inhabit the boulevard of dreams.
These people spent $600K they DIDN’T EARN and now can’t, or won’t, say where the money went. Poor, poor victims!!!!! The big, bad bank made them sign refi after refi under threat of death!
PATHETIC. To be so old and so irresponsible.
They spent the money on household bills, an expansion and remodel of their home to make room for the children, and to shore up John Coffman’s struggling radiator repair shop, which was sold in 2005, they said.
Wise ways to spend your equity? Probably not.
..meanwhile, you buy a cheap (price and quality) replacement radiator from China for probably less then $100..
I understand the human side of this, but $600k? c’mon..
My uncle is a partner of Lucille’s automotive repair, once popular PBS series.
He often tells me even in the worst of times, an automobile machanic is worth his/her weigh in gold.
I’ve listen to his reasoning over the years (he’s from the old country and tail end of GD) and his methodology seems sound.
Now I see the possible flip side of Uncle Jaques’ reasoning:
-Closer to work (cycle /walk)
-Cost of repair vs replacement
-Ones who lose hope entirely
-Feel free to add your own
From the ailing radiator repair shop, perhaps automobile repair is another industry hurt by all this insanity?
Leigh
You could buy some Bar’s Leaks for $3.99 as well. That stuff kept one of my old pickup trucks going for an extra 5 years!
Extensive remodel for Coffman’s (recently abandoned?) grandchildren: $150,000
Cashed-out equity so grandma & the Bratz can keep on living “in style”: $200,000
New cars, boats & European vacations over the last 30 years, when the Coffman’s should’ve been paying off their mortgage: $250,000
Look on idiot FB’s faces as they get evicted from your new, reasonably priced home?: Priceless.
Exactly. New from China is cheaper than rebuilt.
What did John Coffman’s do with the money he got for the radiator repair shop sale ? I think these people have money in bank accounts and they are just screaming victim to get a loan modification . They need to sell the damn place now .
“There is no equity left to pay for a refinance, and they couldn’t afford payments on any other loan even if they could, the Coffmans say.”
This, my friends, is why the economy and housing train is out of steam. The talking heads on CNBC, FBN, etc. will claim that the consumer is resilient and will continue to support this economy, but there is no money left in the housing ATM—the show is over. Adding insult to injury, how many people have managed to double; triple; quadruple (and more) their mortgage payments via refi? Sure the people got a lot of cash from their homes, but their future cash flows are now going to be sucked dry by their mortgage payment. I may sound pessimistic, but this does not bode well for the economy in the long term.
I hate to tell you this Brandon, but you are probably being overly optimistic.
Yep - 2/08 will be ugly IMHO.
“When it comes right down to it, he added, nobody knows for sure. ‘None of the experts saw this (drop) coming,’ he said. ‘“So why should we listen to them now?’”
Exactly.
‘“So why should we listen to them now?’”
because it’s different now..we are in a new paradigm….they learned their lesson from their past mistakes..
Ah, but some of the experts (e.g., Shilling, Thornburg), as well as many on this blog, did see it coming years ago. So, is he willing to listen to those that did foresee it? Because those that foresaw it are pretty bearish on what’s going to happen.
But don’t you see? We are all overshooting the mark. The shills are now the contrarians. It’s the new black.
“It was something they were willing to risk for the American Dream of home ownership.”
Since when is buying a home about risk?
By the way, NNV, something relating to the casino business there — the other thread had gotten crowded. I’m going to Reno over MLK weekend, and I checked hotel rates this morning. The major hotels have dropped their rates quite a bit in the past month, and you can now find decent rooms at the big hotels for under $200 for Sat/Sun nights combined. This for a holiday weekend everyone gets off now.
You won’t have a problem finding a seat at the local restaurants either.
ugly fallout will continue to commence…
deflationary signals mount in the “what happens here stays here” arena.
Reno and Laughlin have been slammed by the spread of Indian casinos in CA.
Vegas is more of a ‘destination’ and so hasn’t been affected quite as much.
PassTheBubbly: Thunder Valley Casino in Roseville ,I believe has been taking a lot of the casino’s business in Reno. The sportsbooks are the only thing that separates them from the Indian casinos.
When did home ownership become the “American Dream?” It should now be called the “American Nightmare.”
Do you live on Elm Street? jk : )
“‘How did it happen? I can’t tell you,’ Grayce Coffman said. ‘We just made some really bad decisions.’”
..as she wraps herself in a diamond studded shawl, she spoons half a jar of Beluga Caviar for misty and Mr. Jingles her two cats. Looking over I notice Mr. Coffman thumbing through the owners manual of his Dodge Viper inquiring “what does “V-10 mean?”
Mrs. Coffman: “I’m planning on staying here. They are going to have to drag me out.”
Mr. Reality: “OK.”
They got $600K out of what is now likely only a $400K home. And they never were in a position, as retirees, to ever pay it back. Wow.
Wow, I’m nearly 40 and have never even “owned” a home (or been owned BY one, as seems to be the case here in CA). I just keep going to work and paying my own bills and taxes. Where’s my “Victim!” sign? It *has* to be around here somewhere…
I’ve closed out my NOD numbers for November for zip 93552 Palmdale.
142 total for the month, which is 7.5% above Oct. and 308% above Nov. last year. More importantly, neither the 3 or 12 month trend shows any sign of nosing over. Alas, trees don’t grow to the sky, so I know that sooner or later NODs will begin to decline. I will, however, continue my meager existence as a bitter renter and wait for a declining trendline before I even think to look at making an offer.
BTW, that 142 number is nearly 5 times sales closed in Oct. for same zip.
Dude,
So 28 homes closed in Oct…
I have coworkers from Palmdale. One bragged forever about his new home. Now he’s quietly telling his few friends on how he was never able to sell his old home. Most of his life savings is tied up up the old home.
My point? There are quite a few who haven’t given up yet. Foreclosures in Palmdale have a ways to grow. To the sky? No. But those hedges are going to become redwoods.
Got popcorn?
Neil
Indeed, the 142 is a record for this stat. The % increase YOY has fallen off, though. It was half that of any month prior since Feb. ‘07.
I knew a few who got out by the skin of thier teeth on the 2 home thing. I agree that Palmcaster is in for a whupin’ big time. The natural base even at 5X income is 260K and last month’s median sale was 294K.
Now if we get down to 3X income we’ll be talking 156K, and that’s where I think we are headed.
Dude: Just curious as to where you’re getting your info on NODs by zip code. I’d be interested in doing this for a few areas that I would consider buying in (a couple years down the road, but I like your idea of tracking these to at least watch the trends). TIA.
foreclosure.com They are listed as “preforeclosures”. You need to sort by date and check every day from the end of the month through about the 7th day of the following month as they lag in reporting.
so,…er, what does “NOD” stand for anyway? I could never find out at foreclosure.com…
Notice of Default
Notice of Default
Notice of Default
So funny. I picture Pen and mrincomestream and Steve W in some sort of a chorus line, doing the Can-Can:
No-tice of de-fault you know it’s
So amusing ho ho ho…
It is quite amusing.
Follow the yellow brick road!
Why bother checking stats in Palmcaster? Unless you are a developer waiting to build out, is there any reason to bother knowing about that area?
Early retirement, single earner, good public schools, seasons, nearly zero rainfall, still has white people.
“The Coffmans, who are unemployed and in their 60s, borrowed $552,300 from Countrywide Financial…“‘I’m planning on staying here,’ Grayce Coffman said. ‘They are going to have to drag me out.’””
I should get to keep it, no matter what, even though I borrowed half a million dollars from you. Heads I win, tails you lose.
They should be dragged out of their house, then be tarred and feathered.
Then again, the people lending someone 1/2 million that are in their 60’s without any equity should be thrown in jail. When did they think they would pay it back in their 90’s.
This is the whole crux of the issue, it was other people’s money. You can bet Mozillo wouldn’t make a personal loan in that case, but he’s more than willing to use shareholder or investor money to do the deal just to make the numbers so he can cash out his stock options. What a total crock of …
I was amazed back in the 80s when a friend of mine got a 30 mtg and he was in his 70s. Must have been an AARP or Grey Panthers thing. He didn’t care, his realtor DIL talked him into it even though he was ret. military and had always rented. It worked out okay but I didn’t realize someone that old could get a mortgage.
Yep.
It is illegal to discriminate in loan underwriting based upon age.
I don’t have a problem lending to older people, so long as the appropriate value is in the property. When they die, their heirs sell the property. The key is, keep the loan-to-value ratio within reasonable bounds. The two new loans I mentioned above have (a) LTV of 77%, which is a little high for me, but since the term is only 10 years, the 77% comes down fast without any price appreciation (hopefully keeps up with the DEpreciation!) ; and (b) LTV of 62%, to be reduced to under 50% when somebody’s CDs mature in June.
You misunderstand how banking works. Banks don’t “lend” other peoples’ money. They simply create it out of “nothing”. I know this sounds hard to believe, so here’s a nice little video that explains how the practice works: http://video.google.com/videoplay?docid=-9050474362583451279
If enough people understood how banking works, they would be marching on Washington D.C. with pitchforks and dragging their congressmen out of their offices to be tarred and feathered.
Banks don’t “lend” other peoples’ money. They simply create it out of “nothing”
Then what are all these MBS, CDOs etc?
The lender got their fees; but the people who loaned that half-mil don’t even know about the Coffmans - in fact, it’s a bunch of run-of-the-mill savers and investors in Outer Slobovia who don’t even know they’re involved in such shenanigans. But, as has been noted, once they find out and get a lawyer, somebody at the lending institution could wind up in jail.
It’s illegal in the USA to use age as a disqualifying factor. It can only be a “positive” factor, i.e. older age = more likely to be approved for credit.
“I should get to keep it, no matter what, even though I borrowed half a million dollars from you. Heads I win, tails you lose.”
sounds like he could work on wall street or manage a hedge fund.
so ex-californian . . .
where do you live now? did you make trustee/any time off for good behavior?
“And they certainly can’t make the fully amortized payment of more than $4,500, which would be roughly 80 percent of their income. The Coffmans earn about $5,400 a month from Social Security and government assistance for five of their six adopted grandchildren, according to the Coffmans and their recent bank statements.”
These people don’t even actually EARN a living, they burn through $600k, thats SIX HUNDRED THOUSAND DOLLARS!! and we are supposed to feel sorry for them??
if they bought in 1977 with a 30 yr fixed, and paid it off by 2007, then they should be free and clear..assuming no mtge and an income of $5,400 with at least five dependant deductions, they should have been pretty much good to go..no?
Six adopted grandchildren?! Hmmm… I smell a story here. I wonder why they had to be adopted. Were their parents crackheads? Perhaps the deadbeat parents managed to get their hands on the money the Coffmans took out of their house….
“The Coffmans earn about $5,400 a month from Social Security and government assistance for five of their six adopted grandchildren…”
I keep telling my wife that we should our kids.
Geoff, you better fill in that blank or you may get reported to DCFS.
I know this 18 year old Swedish Aupair that I would like to adopt.
What’s an adopted grandchild? Is it your grandchild that your child abandoned and that you adopted? Or your child died and you adopted the child’s children? Why adopt? Can’t you just be the guardian or foster parent?
Or is it if you adopt children 50 years younger than you are you simply call your adopted children grandchildren?
I don’t get it.
I explained above. When the parents die or permanently lose custody, it has become common for the grandparents to adopt the childen. It makes it cleaner in terms of their rights and responsiblities to the kids. It also keeps the kids from being made wards of the state who then gets to decide where they live and with whom and can shove them into foster care - and would always be in inspecting the home even if they were placed with the grandparents as the guardians.
First big mistake–kids should have been made wards of the state and placed in foster care. At least then they would have received an education in the realities of life.
Plenty of retired folks in this country scrape by on a lot less then 2500 a month in SS–and these two aren’t crippled.
If these two can’t, apply for section 8,and seach out the nearest food bank.
Actually, shouldn’t the banks have to take it in a$$ with a JT on this one? Wait. They ARE.
“The Coffmans earn about $5,400 a month from Social Security and government assistance for five of their six adopted grandchildren, according to the Coffmans and their recent bank statements.”
In other words, the don’t earn anything.
Financing half a million on government handouts: how to build your way to wealth!
I smell a book deal.
What’s more, that’s enough income to start over. Why don’t they walk?
With all those refi’s, they can’t “walk” - the bank has recourse.
“David Brown, a Los Olivos-based real estate broker…blamed the rise in subprime lending on inexperienced Wall Street traders”
Yes, mMr. broker, it was “just the wall street traders” that got us here. It wasn’t the borrowers, the brokers, the loan officers, the Realtors ™, the appraisers, the rating firms, the bank presidents, the brokerage houses, or the investors…it was the traders that screwed everything up for everyone.
We can’t have nice things because of the traders.
I read it differently. My interpretation was if Wall Street had used a model that was not biased to the upside then moneys would not have been lent fueling the insanity. Which is somewhat true, the entire MBS/CDO/CLO is based on raising asset values.
But like all Realtors, lenders and mopes, he blames it on subprime without defining “subprime”. America is subprime.
He “blamed the rise in subprime lending on inexperienced Wall Street traders who handled these loans, who relied on models that showed property continuing to appreciate.”
Would somebody tell me why I should care about any of the this anymore. It’s getting really tiresome to read the retreaded stories of stupid people who made really stupid decisions and how we’re supposed to feel bad for them now.
Now to top it all off the NAR has come out to say we have found the bottom of the Real Estate market and next year prices will restart their ever upward climb.
I’m starting to feel like Bill Murray’s character in Ground Hogs Day where it is the same every day, day in and day out. The housing market is up….no it’s down….no it’s up…..no it’s down.
Regardless of what it is, my household income is in the mid 100k area and living here in the Bay Area where we still can’t afford to buy a median priced home without giving up our freedom and becoming slaves to a mortgage payment.
As they say in middle school…….whatever!
I’m with you—I’m becoming more interested in the broader economic ramifications of the housing and credit mess.
“I’m starting to feel like Bill Murray’s character in Ground Hogs Day where it is the same every day, day in and day out.”
Hence my “screen” name.
Great. Now I have that screeching radio announcer chorus stuck in my head…
I knew that, Groundhog! give us some credit…
[no, I don't mean credit as in credit-card]
It’ll get worse with the spring dead cat bounce.
or lack thereof…
Lawrence Yun: loves flirting with the camera.
My god where did they find him? He would be comfortable in a Trojan commerical as long as he was in front of the camera.
There is hope. A house I know in San Jose sold in 2005 for 670K.
It’s now on the market for wishing price of 649K. Guess the 2/28 IO is resetting. Knife catchers may try for 600K, and list again in 2009 for 500K!
My operative assmpton is about half the FBs sob stories we hear will google themselves after making the local paper. Hopefully some of them find there way here. Hopefully the “cow-tasering” they recieve will make them stop living in their own sob-story.
Hopefully …
Seriously, mortgage lenders seem to be right up there now with the Realtors.
John and Grayce Coffman got a super deal and great life from their house. They got $600k from the house which is worth 10 years of their income. They are loaded with free money. They already cashed their house in the highest market value. A gain of $600K. Did great. What the F**K in the whole world they are crying about?!! I would laugh a the way to heaven if I were them!!!
I’m with you.
Now how old are they? How long do they have to live? Either:
1. The money is in Cayman and they’ll plead bankrupt until they have access.
2. They’ll make the press as they fill the home with rations and ammo fighting off ‘the bank’ to keep their home. Heck, if there isn’t much time left, why not give the grandkids a story they’ll never forget?
3. All of the above (with the grandkids getting a check in a few years. Deposits in swiss francs, of course).
Got popcorn?
Neil
They want to keep the money AND the house. And the newspaper dorks see nothing wrong with that concept.
You are right John S, these people should be thrilled that they were basically able to cash out 100% of the highest possible value their house ever was (in 2006). They should be jumping for joy.
It is obvious that they do not have the income to make a dent on the amount of debt they have at the moment. Why not just stop making payments and wait for the bank to take back the house it rightly owns? They admit they have no equity left.
They can rent a crappy apartment with their SS checks. Why are they living in CA anyway?
Am I too late to try to get a 100% home equity loan on my own home? I keed, I keed.
Good point on renting. $5400 would go a long way in AZ, TX, etc.
“Johnson, like Doss, feels that there is not enough room for local housing prices to drop as much as they have in the rest of the nation. If they do, he said, his company will start losing money.”
“‘Costs can’t drop 40 percent in the next year. We can’t drop the prices on these things and continue to sell them. You can’t give it away; you’ve got to make a living,’ said Johnson.”
Like I’ve been saying, denial is deep in Eureka. Everyone here thinks this is Laguna Beach North, and that we will soon be “discovered” and RE values will shoot up to the moon. Property values here are not only absurdly high, but they are also absurdly high compared to places like San Diego, which at least has a great climate (unlike the constant cold and fog and rain of the north coast), good airport, and decent jobs. This place has had no population growth since the 1960s, and most homes are from that era or before…yet people in Eureka constantly say that because of the lack of land, prices must go up.
I can’t wait til this place finally does crash.
Looks like you, me and Mo Money all had the same idea about the same time.
Anthony, haven’t you heard, “we’re the cheapest on the coast”. That’s what all of the REALTORs’ tell me. So hurry up and buy now before everyone else finds out.
[Sarcasm off]
Julie
“Johnson, like Doss, feels that there is not enough room for local housing prices to drop as much as they have in the rest of the nation. If they do, he said, his company will start losing money.”
Looks like these guys have their own Reality distortion field where prices can’t possibly drop because that would be bad !
Johnson is a classic example of Upton Sinclair’s quote: “It is difficult to get a man to understand something when his job depends on not understanding it.
——————————–
“Johnson, like Doss, feels that there is not enough room for local housing prices to drop as much as they have in the rest of the nation. If they do, he said, his company will start losing money.”
“‘Costs can’t drop 40 percent in the next year. We can’t drop the prices on these things and continue to sell them. You can’t give it away; you’ve got to make a living,’ said Johnson.”
——————————–
Johnson, just because you can’t afford for prices to fall by 40% does not mean that they cannot fall that far.
Morgan Stanley issues full US recession alert
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/12/10/bcnusa110.xml
or in another language for tomorrow..
25 bps won’t do it,
give us 50 bps,
or else!
If BB goes .25 will they crash this pig to get an emergency cut? The boyz are a long ways from being off the “junk”.
Question for you banking/loan guys: Is the credit crunch driving loan rate s up yet and if so how high do you see them going ? Will this affect rates paid by funds like Emmigrant ?
Currently, I see the 30 yr fixed at 6% or so.
I am very surprised that the rates are not spiking.
Yes, deposit rates will continue to drop as they are the casualties of the war on savers. Collateral damage.
I think it is getting to point were there will be too much risk of default by the banks to leave the money in an account earning a paltry 4% (pre-tax) rate.
I’m starting to think 3 month TBILLs. Sure the yld is crap, but if you lose principal there, then the game is pretty over anyway.
Did you see the news today about new limits on annual T bill purchases? I think it was 10K/individual.
WaMu is now laying off and closing offices.
“Washington Mutual Inc., the nation’s largest savings and loan, said Monday problems in the mortgage and credit markets are forcing it to close offices, slash over 3,100 jobs, and set aside far more than expected for loan losses in its fourth quarter.”
“Johnson, like Doss, feels that there is not enough room for local housing prices to drop as much as they have in the rest of the nation. If they do, he said, his company will start losing money.”
“‘Costs can’t drop 40 percent in the next year. We can’t drop the prices on these things and continue to sell them. You can’t give it away; you’ve got to make a living,’ said Johnson.”
No. You don’t have to make a living. The bank doesn’t care. If you don’t sell, at market price, the bank will simply take them away from you. Hello?? Hello? Anybody home?
This story shows why the Bush plan will fail - Who makes the decision whether you can afford a higher reset rate? On last week’s Peter Schiff show, a caller (I assume tongue in cheek, but you never know) explained how happy he was about Bush’s plan - he was going to run out and buy a H2 Hummer knowing that he saved a bunch of money with a teaser freeze. Peter, used the call to agree - what about people that took out equity money to buy a new Mercedes? Is Countrywide going to tell the borrower that they need to sell it? For how much? I’m afraid the Dem’s plan of just letting everybody in desperate straits go thru bankruptcy and have authority for judges to modify loans - I assume when lenders really face massive bankruptcies/foreclosures they will find it in their interest to work with people before letting a judge order the changes. Also, I think bondholders would respect a bankruptcy judgement more than some CFC mortgage officer capping interest rates.
I don’t think the court system could handle all the cases that could come down the pike as a result of the housing meltdown ,especially if you include all the criminal cases and investor lawsuits ,building defect cases and you name it . Talk about bogging down court systems. There would not be speedy Justice .
WaMu news, the song remains the same.
I composed a very well written article for the Eureka Reporter (the other local newspaper) about a month ago when there was a similar discussion about the housing market. They refused to publish it! Could it be that since the Eureka Reporter is a FREE daily newspaper, most of their revenue comes from the colorful ads taken out by REALTORS?
Nah, just my conspiracy theory again. Humboldt county is different–the Boomers from SoCal, pot, and rapidly diminishing land will keep home prices on a “permanently HIGH plateau,” just like the people here.
A word of advice concerning too much doom and gloom over the future of banks like WU or the big brokers. Even though the majority on this blog are bearish (and rightly so) on property and many are bearish on the economy (and rightly so), just remember this. The Financial Gangsters never EVER lose. They have NEVER lost. They always come back from the brink because they are a club looking after each others interests.
Under the column “Financial Gangsters”, you can put banks, S&L’s, Wall Street brokers, etc. The welfare of the average Joe Sixpack is of no interest to them whatsoever (despite the b.s “We care” crap) outside of being cash cows to milk and they have very big guns in their corner including the Fed, the SEC and politicians if things get financially nasty.
Take this as gospel. They will NOT lose. One way or another, if things get bad, they will increasingly bring into play bigger and bigger weapons. They will change laws by paying off the politicians. They will bring in legislation to help even the most irresponsible FB’s. They will lower interest rates again. They might enact a law which states the low interest rates cannot be used for buying property, etc. They will print more money. They will bring in laws that restrict ownership of commodities like gold. Above and beyond that, The Financial Gangsters Of Wall Street will manipulate the stock market, skimming money off the 401k’s, plundering other funds, etc, until their balance sheets are looking healthy again - even if your isn’t.
Had Bush got his “Social Security Privatization” passed, the Financial Gangsters of Wall Street would now be sucking that fund dry - with Bush’s blessing.
Andrew Jackson beat them. He beat them with a big ol’ hickory stick. But of course the Bank eventually resurrected, and stronger than ever. We are all just schmucks for the easy way I guess.
Row row row your boat
Gently down the stream
Merrily merrily merrily
Life is but a dream.
Your post are enigmatic Mike.
This link is a bit of a tinfoil hatish…input/commentary appreciated.
~Curtsey~
Leigh
http://www.schillerinstitute.org/economy/nbw/nbw.html
The current trustees of our social security system - the federal government - is quite the gansta themselves. Why you continue to post about the wall street boyz skimming off the cream while ignoring that the DC gang has already given your SS contributions to someone else is simply beyond my comprehension.
When it comes to my personal retirement contribution, I’d really like to take my chances with Wall Street, not Washington, thank you very much. But I haven’t that choice, do I?
Unfortunately I couldn’t agree more Mike.
The “Financial Gangsters” all hate Ron Paul.
Dalton agrees with Doss and Johnson that the county likely will avoid the 30-40 percent drop that Eschker predicts. “Humboldt County is very insulated,” he said.
Isn’t this another variation of, “It’s different here”?
“Also going through the roof is the number of short sales occurring. ‘We’ve been very busy,” said Eli Tene, president and CEO of Woodland Hills-based iShortSale Inc.
iShortSale Inc . ? What a catchy and timely name !
How about iRobTheBank for the cash back fraudsters, iStayFree for the foreclosed and won’t move till dragged out ones ! Or they’ll going to do the iShotTheSheriff when the sheriff shows up to throw them out.
Anatomy of a F*^ked system. Assume for a second, banks start tightening their standards of making loans after making money practically freee for the past five years. Assume, Fannie and Freddie start slowing their purchases of delinquint loans. Assume that the commercial paper market dries up and business slow capital spending and start laying off workers causing the economy to slow further. In this scenario, assume tax revenues to the states also starts to slow and states must start cutting back.
For fun assume all houses in America, regardless of size drop in value to one dollar resulting from the severe recession. Due to the resulting economic slowdown, the banks forclose on almost every house with a mortgage, save protologists homes due to a substantial increase in business from GI related issues.
Due to the massive writedowns the banks take from delinquint loans, the Fed channels huge amounts of newly printed cash their way maintaining the banks’ solvency. In addition to being solvent, the banks now own legal title to most of the homes in America.
As title is being transferred to the banks, the public is berating its own behavior for being such idiots to not have paid cash and have mortages on their homes
After this process has run its course, there are not many homes left to foreclose upon, the banks start liquifying the economy and reselling homes back to the public at an enormous profit.
For the next thirty years, parents tell their children to only purchase what they can afford to pay with cash. What a crazy thought.
Actually, the banks would be selling at an enormous loss in your senario. If the basis of foreclosure was home prices dropping to one dollar per house, then regardless of what you owed on the property before foreclosure, you could buy it back from the bank for a dollar afterward. The bank would have to keep the houses off the market to defer the losses it would take in selling so cheaply. But that means the banks would have no money to lend, having lost it all in property it has now taken back that is almost worthless. If they went bankrupt, the court would order all those houses sold, and such a huge number of homes going for sale at one time would push the value of each to even less than a buck.
If the gov’t printed money to keep the banks solvent, in your senario, inflation would guarantee most homes would not ever be only one dollar.
Now, here’s an interesting senario - what if banks lent money to peolple who they knew would eventually foreclose on, because the loan went to purchase an asset that was growing in value at multiples of income growth, inflation, etc? What if they got a lot of money up front when the mortgage was taken and then planned to further profit when taking the asset back? What if they reasoned that since these assets were becoming less affordable each time they changed hands, they would soon stop selling altogether, so make as much money up front as possible?
I think it is more likely that the lenders thought they had built in refinances that would make money on new fees every time the borrower needed to get out of a toxic loan based on real estate will continue to go up . Additional money was to be made on the pre-pay penalties ,and the turn -over with flipper and investor purchases would create constant turnover of funds with new fees to be made . The banks would collect higher interest rates in the form of negative amortizing and collect interest on interest and than collect that money once the FB sold or refinanced . With the myth that real estate always goes up ,the funds to be able to pay for all this money making would come from appreciation . If the borrower did default ,real estate going up would ensure that the lender would get their money back and in some cases more .
The whole money making cycle worked out really well for the lenders and their agents until the market changed and real estate went down . Now the borrower couldn’t refinance ,the investors pulled the never-ending supply of easy money and the lenders starting having great losses with foreclosures . Giving low down easy loans with negative amortizing potentials increased the loss with foreclosures (as well as prices declining )and lack of prudent qualifying insured that foreclosures would take place if the market declined .
Usually hard -money lenders who usually give low loan to value loans are hoping that the borrower defaults so they can take the property and make a profit on it . Regular lenders who give lower down loans don’t want foreclosures because they always lose money .
So the investors from the secondary market were making a lot of
money on all the turnover in real estate ,including the money made by constant refinancing and flipping and all that jazz you get in a market where the lenders doesn’t hold the paper for very long .
Also , apparently the Lenders were taking the value of the loan bundles and using them as leverage to make more investments .
The SIV’s and CDO’s where set up to spread out the risk by breaking up the investments into different trenches of investments where by different trenches would get different yields on the loan bundles .Also in the event of foreclosure the AAA trenches would get the most principal investment dollars back ,but the lower trenches would get higher yields if the property didn’t go into foreclosure .So, the different trenches have a conflict of interest on what kind of bail outs they want .
The new investment instrument (that was backed by real estate and borrowers making payments ),was a real money maker for Wall Street in commission generation as well as fee generation for the lenders that sold the loans to the Secondary Market loan investors .
The Rating agencies rated these loans at a lot lower risk than they really were ,especially if real estate going down wasn’t considered a risk ,and low down loans and fraud wasn’t considered a risk . Real estate prices being pushed up by fraudulent lending apparently wasn’t considered a risk and appraisal fraud wasn’t in their model either apparently when these were all the risk factors that took place . Maybe they should of had a mania model of risk to add to their risk factors .
So,my point is that Wall Street ,the lenders ,the loan agents and realtors ,and any industry involved with real estate was making a ton of money off this baby for about 6 or 7 years until the market turned and all the risk factors for loss showed up . No, the industry expected real estate to continue to go up ,maybe slow down ,but a decline in values was not in their thinking .
” They bought their two-story home for $97,000 in 1977 and have since extracted all the equity gain in it. They’ve cashed out $600,000 in home equity with the help of several lenders.”
““‘How did it happen? I can’t tell you,’ Grayce Coffman said. ”
Yes you can tell us how it happened, Grayce–but you won’t, because
you extracted all that equity to buy a bunch of freakin’ BLING and other lame purchases that you’re too embarrassed to come clean on…Stuff that won’t be worth a booger and a cup of coffee in a matter of a few years.
Your “adopted Grandkids” would have a place to stay if you hadn’t been so stupid. But hey, “everyone else was doin’ it, right?”
Rant off.
DOC
“John and Grayce Coffman could lose the Fullerton home they bought in 1977 because they can’t keep up with their mortgage’s rising costs. The Coffmans, who are unemployed and in their 60s, borrowed $552,300 from Countrywide Financial, the largest U.S. home lender, in the summer of 2005. Despite making about $50,000 in payments since then, they now owe more than $590,000 to Countrywide.”
” They bought their two-story home for $97,000 in 1977 and have since extracted all the equity gain in it. They’ve cashed out $600,000 in home equity with the help of several lenders.”
There wasn’t a lot of new homebuilding that went on in, within the greater el lay/orange curtain confines this bubble, as there really wasn’t a lot of space to build anything…
San Diego will be a disaster because of all of the new building of homes there, but the citizens of the City of Angels and environs are more likely to have succumbed to devilish pressures from their green felt jungles, cleverly disguised as their homes.
L.A. is/was the capital of the see me-dig me culture, and upkeep costs cash.
L.A.T.M.
I guess I just dont get it.
Everyone is ready to tar & feather the FB’s and Countrywide-like crap packagers.
It seems to me that the BANKS are responsible for all of this. They have been purchasing these loans like heroin addicts. This is their primary business, making money and managing risk. If they did not buy the mortgages, Countrywide could not sell them, and the FB could not purchase them.
I say F the banks - WaMu deserves to go out of business as will others who heavily purchased the crapola and to me, provided the real driving force behind the bubble. Why is our anger not directed at them? (I am not claiming that FB’s and CFC are blameless, I just think the punishment should be most severe at the bank level.
My fear is that these idiots are exactly who the govt intends to rescue.
jb
Funny, I was at a wamu about 5 months ago. Knew the crap was going to hit the fan so I paid off my small loan with them. Might as well invest in yourself for once.
I asked the guy what his typical customers where like. He said they usually had at least six loans. Smiled and said a laundry list of loans.
Time for bk.
You’re close!
But it’s not quite “the Banks” vs “these poor FBs”
Its
- (the Banks, the FBs, and the loan packagers)
vs
-(the 5% of Americans who have savings accounts and pay taxes)
The people in the first group can all go to Heck! And nobody cares about the second group–the TiNY FRACTION of Americans who try to save money. And they’re the ONLY TRUE VICTIMS
Th
Today, I was talking about vacations with my colleague at work and she told me that one of her friend takes family vacations funded through HELOC. She seemed to justify her friend’s actions by saying that somethings in life are priceless (must have bought into that MasterCard commercial). My colleague went on and said that if you have children it is very difficult to save these days. Anyway, I was flabbergasted to know that there are families who buy into that “priceless” motto.
You come onto this blog and are surprised to find out people are stupid? This website is almost like a wall of shame of the american consumer. I dont understand how we were once such a great country and now its turned into this. I am probably too young to be so upset about it, but it makes me sad to think that people have fought so hard to get us to this???
To all those that relentlessly attacked Dodd for months…
Christopher J. Dodd, the chairman of the Senate Banking Committee, will introduce a bill today that would impose new regulations on mortgage brokers and investment banks and restrict certain aggressive lending practices, Congressional aides said yesterday.
While similar in some respects to a measure passed by the House last month, the Dodd bill would take a harder line against mortgage brokers and Wall Street firms. The measure is expected to face significant opposition from mortgage companies and banks.
Like the House measure, which is sponsored by Representative Barney Frank, Democrat of Massachusetts, Mr. Dodd’s bill requires lenders to make only those loans that benefit borrowers and that they can repay. But Mr. Dodd’s proposal would also require brokers to act in the interest of borrowers, and that Wall Street firms could be sued.
Doesn’t sound so bad to me.
Keith Higginbotham and his wife saw their first, and then second, mortgage payments literally go through the roof
Now THAT I would like to see!
“Johnson, like Doss, feels that there is not enough room for local housing prices to drop as much as they have in the rest of the nation. If they do, he said, his company will start losing money.”
“‘Costs can’t drop 40 percent in the next year. We can’t drop the prices on these things and continue to sell them. You can’t give it away; you’ve got to make a living,’ said Johnson.”
Anybody want to lend this guy some working capital?
Prices don’t care if you are losing money, just as they soared way above your cost of production during the boom.
All commodities occasionally trade below their cost of production, sometimes for extended periods after a crash. If houses lose their social glamour and become commodities, we’ll all be better off.
They can drop all the way to zero. I’ve driven through many an area in New York where once-nice houses stand boarded up. Some Michigan cities are bulldozing houses that the owners have decided were worth less than the property taxes owed, to prevent them from housing criminal activity.
in fact, they can become worth less than zero. I suppose an empty lot would go for more than one with a house that needs to be torn down on it! Some long-term investor may want to buy and hold an empty lot, but wouldn’t want to deal with an empty house in bad condition.
It’ll only take a few years for a house to become very run down! A couple of years of leaky roof will do it. I can show you entire neighborhoods in Lake County FL where significant numbers of homes bought by investors sit empty. One good hurricane to cause water damage, and the out-of-town owner doesn’t fix it, and the new house becomes a tear-down
What I can’t figure out is why so many people that you hear about in the press (the pro-real estate and anti-crash crowd) think that a huge run-up in prices, with no economic fundamental reason to support such run-up, won’t be followed by a huge run-DOWN in prices? What comes up, without any fundamental reason, must come down! Why is that such a difficult concept?
Even though alot of these idiots are now very deservedly losing their homes, it’s a REAL REAL shame that they were in homes in the first place. There are so many deserving people out there that would like to be in a home (sensible people, hard working people, people who would like a home for what it is meant for…a place to live and grow old) but cannot because of all these self-serving frakkers.
Let’s hope for a 2008 crash….a big one at that. The sensible folk with weather it just fine…frak the rest.
Holy crap I just spent some time looking at the listings in Costa Mesa via Zip. Prices are in free-fall. Almost all the listings are reduced, from 1-15 price reductions. There’s even a listing that started at 1,999,000 and is now at 900k+, adjustments made over 1 year. There are single family homes with 6000 sqft lots that are priced below condos with no lot or with 1500-3000 sqft lots.
One SFR is asking 799k and it was bought 2 years ago for ~930k. It didn’t mention a short sale, but it could be. Lots of REOs choking the market and there are more trustee auctions coming, some this week.
Down the street there is a townhome that went REO and then was purchased for 400k - it now has a for-rent sign out front. They could only hope to get 1500-2000/mo for it, tops. Some strange kind of investor that likes to lose money?
It’s safe to say the shizzle is hitting the fizzle in Costa Mizzle.
“When it comes right down to it, he added, nobody knows for sure. ‘None of the experts saw this (drop) coming,’ he said. ‘“So why should we listen to them now?’”
I do. I did. I don’t.
“Countrywide has offered to lower the Coffmans’ interest rate and cap it at 5 percent from about 8 percent currently. They could also skip payments until February, with all missed payments added to the principal balance.”
If my business accept some items at below market rate from another corporation, I can actually be liable for income tax on the discount!
This 5% interest rate simply constitutes more untaxed income for these folks. They should at least have to pay the income taxes on the amount benefited from the discount.
The Enron execs paid themselves in all sorts of ways, including forgiving loan debt, to beat taxes. Laws were passed to help prevent this.
This new era of forgiven debt and discounted rates will just open the door for companies to find new legal ways to beat taxes and create an even bigger mess. (Personally, I have a soft spot for *productive* folks who run real businesses that make things or add value who find crafty–but legal–ways of beating the IRS.)
Take a look at the photo of the Coffmans.
http://www.ocregister.com/newsimages/money/2007/12/07_seniors1_large.jpg
See the fridge?
Nope, a white Frigidaire wasn’t good enough. Had to be the stainless steel LG model.
That kind of decision is what caused the $600k to go POOF.
Stove looks stainless too. You can’t expect them to cook on an old stove now can you?? Think of the children!!!!
Mayve they’re looking for a tv deal…The Real White-Trash of OC County. Scumbags.
The article on the Coffmans comes across to me as playing fiddle to everyone. Age is no excuse to burn up money; simply because they are in their 60s doesn’t give them carte blanche to run up debt and expect the rest of the country to pay for it. They aren’t entitled to that bailout whatsoever. Most of the sob stories and fiddle playing nowadays are because most people don’t manage their money well. As a country we never have managed money very well. Personally, I don’t care if someone bought their home 30 or 40 years ago and they ran up a bunch of debt on God knows what, they refuse to work or can’t work, and then they go to the media and cry and whine and dramatize. I’d tell them to be prepared to live on the street in a couple of months.