An Ill-Timed Ticket To Some Easy Cash
Some housing bubble news from Wall Street and Washington. Bloomberg, “Wachovia Corp. ousted Kennedy Thompson as CEO of the fourth-largest U.S. bank after the board blamed him for losses that cost the lender more than half its market value in the past year. Thompson’s credibility was dented after he said this year that Wachovia’s $24 billion purchase of Golden West Financial Corp. in 2006 at the peak of the housing boom was ‘ill-timed.’”
“About half of the unit’s lending is in California and Florida, two states with some of the highest foreclosure rates.”
The Columbus Dispatch. “For thousands of credit-crunched homeowners, New Century Financial appeared to be their savior. The California-based mortgage company catered to the riskiest borrowers, even those with credit scores as low as 500.”
“The drive to sign mortgages was so fierce that New Century dubbed its loan department ‘CloseMore University.’”
“The New Century call appeared to come at the right time in 2006 for Chuck and Sheri Simpson, a Hilliard couple with slipping credit scores and mounting debt. The New Century mortgage brokers counseled the couple that refinancing the home they had owned since 1998 would ease their financial burdens.”
“Mr. Simpson, a carpet salesman whose clients include homebuilders, asked, ‘Is this the right thing to do?’ His paycheck was starting to shrink as the building boom faded. The brokers assured him that the mortgage was a blessing.”
“‘When someone comes into your house, sits at your kitchen table, has a glass of iced tea with you and calls you buddy, you trust them,’ Mr. Simpson said.”
“Relief came in the form of an adjustable-rate mortgage that started at 9.5 percent and added about $300 to their monthly payment. Mr. Simpson sensed that the New Century brokers made a handsome commission on his deal.”
“‘I bet you’re off to the Bahamas now,’ he said to them after signing his loan. The brokers chuckled.”
The Journal Sentinel. “Stephanie Williams saw the free flow of mortgage money as her ticket to some easy cash. It didn’t take long for Williams, then 23, to secure large, high-interest mortgages, usually with no money down. In all, she received $465,000 to buy six houses in Milwaukee.”
“A bank teller at the time, Williams entered the world of subprime mortgages with the help of Randez Long, a customer at the Chase Bank branch where she worked.”
“She said she didn’t realize at the time that she was buying two of the houses from Long himself. All told, Williams, now 25, received six subprime mortgages from five lenders. The most expensive loan had an adjustable rate with a cap of 18% interest.”
“She put no money down in four deals, and twice received loans that exceeded the sale price by more than $20,000, according to records in the county Register of Deeds offices. Williams said she never saw that extra cash because it was supposed to be used to fix the properties.”
“In November 2006, Williams was hit with her first foreclosure suit. By the following March, lenders had filed suit against her for all five of her rental properties. She eventually lost all but one of those houses.”
“Under pressure from the city to deal with numerous violations, Williams said she had to convince tenants at a couple of properties that she, not Long, was the owner and that rent money should be paid only to her.”
“Today, Williams lives in North Pole, Alaska, with her husband, who is stationed at a nearby Army base. Her credit rating, which she said had been a respectable 650, is now below 500, making it difficult to get even high-interest loans. Each month, she sends the City of Milwaukee $100 to $250 to pay down the $13,000 in penalties she owes for building code violations.”
“Her recent bid to land a bank teller’s job in Alaska was shot down because of her poor credit rating, Williams said.”
“‘They said if I can’t handle my own finances,’ she said, ‘I can’t handle other people’s money.’”
The Evening Standard. “The owner of a central London flat has knocked almost £1 million off the asking price in an attempt to sell. The Hyde Park mansion flat went up for sale for almost £3 million late last year when the market was still buoyant. Now, almost eight months later, the flat has failed to sell and is offered for just under £2 million.”
“A poll by the Evening Standard found that owners across the capital are being forced to reduce prices by hundreds of thousands of pounds to tempt buyers.”
“Estate agent Lloyd Coleman said: ‘I have been in the business for 13 years and have never seen it so tough.’ He believes part of the problem is agents encouraging sellers to overprice their homes to win their custom.”
“Helen Koulle has been trying to sell her four bedroom period house for almost six months. She has now reduced its price by £65,000 and it is now on the market for £515,000. She said: ‘I didn’t want to reduce it but the agent said it was the best way to sell and we have had more viewings since.’”
“One buyer did make an offer on the house - but backed out after failing to get a mortgage. Mrs Koulle, a housewife from Finchley, said: ‘It is quite worrying. We want to downsize, but it is all very difficult.’”
The Courier. “With the winter finally over and the sun breaking through between storms, Wednesday afternoon was a prime day for construction in Cedar Falls.”
“But in three southern Cedar Falls neighborhoods, where some homes sat partially completed, there was not a construction worker in sight. The wind whistled through the skeleton-like frame of one house in Huntington Ridge, trusses lying in the dirt that would be the home’s front yard.”
“That home was just one victim of the collapse of Iowa’s largest home builder, Des Moines-based Regency Homes. There are dozens of others in Cedar Falls that Regency had already sold or was building on speculation when subcontractors packed their bags and left last month.”
“The Des Moines Register reported earlier this month that Wells Fargo, the nation’s fifth-largest bank, demanded Regency officials pay off more than $50.5 million in corporate debt and $5.25 million in personal lines of credit.”
“Other lenders followed suit, and soon Regency did not have enough revenue from home sales to cover the demands of its lenders. This led to the layoffs, which led to the liens.”
“Caught in the middle are homeowners who paid Regency for their houses but now have to wait until the mess is sorted out before their homes can be completed.”
“‘I would expect there is a very good chance that a number of homeowners are going to have to take money out of their pockets to get occupancy permits,’ said attorney Gary Jones in Cedar Falls. ‘It’s a very difficult situation for homeowners.’”
“‘I know there are people out there who need sod and sidewalks,’ said Jake Huff, a real estate agent for Weichert Realtors who handled many sales in the Huntington Ridge neighborhood. ‘But I’m a little clueless as far as what the city’s going to do.’”
“Huff’s confusion is not unique. Greenhill Village townhome owner Cindy Lang is missing the sod and grading she paid for when she bought her home.”
“Huff says a company could finish the speculative homes and pay the subcontractor’s liens from the profit of the home sale, but he was not sure what fate would befall those homeowners who have already paid for work that may never be completed. They may have to pay out of pocket for the work and get in line with the countless subcontractors who have liens against Regency.”
“‘I would guess they will be pretty far down the line,’ Jones said of those owners. ‘I don’t know Regency’s total financial situation, but typically in corporate bankruptcy, more secured than unsecured creditors [end up getting paid].’”
The Palm Beach Post. “You have to wonder if a partnership led by a New York-based hedge fund rues the day it ever heard of West Palm Beach.”
“The Trinity Development partnership is engaged in three different battles on three different downtown properties. Their grand plans to build tall towers and fancy condos are now held hostage to legal or zoning battles, despite the millions of dollars the partnership has poured into the projects.”
“Trinity’s plans were for a luxury condo. The condo hasn’t been developed yet, but that’s not the problem. The problem is that Trinity now risks losing the property - and $139 million, including the lease purchase price, plus lost condo profits, according to a lawsuit filed against a Burt Handelsman company.”
“Burdened by the knowledge Handelsman had left “millions of dollars on the table” when he did the deal with Sisemen, Trinity claims Handelsman is trying to wrest the property away from Trinity by claiming ‘bogus’ and ‘drummed up’ reasons for eviction. Among them: A technical delay in obtaining a letter of credit, Trinity says.”
“Trinity is prepping for a June 19 hearing on a motion to foreclose on a $1.4 million mortgage on the Opera Place land. Opera Place, meanwhile, has a lawsuit going against Trinity for bailing on a $44 million contract to buy the property and turn it into a mishmash of offices, condos and a hotel.”
“Finally, there’s Trinity’s battle with the residents of West Palm Beach over a too-tall tower planned for the boarded-up, hurricane-damaged 1515 S. Flagler Drive condo. In 2007, Trinity paid $36.5 million for the property, hoping to turn it into a 391-foot-high skyscraper dubbed The Modern. But the plan was just rejected by the West Palm Beach City Commission.”
“Is Trinity ready to give up? Not a chance, says Trinity lawyer Larry Alexander. Trinity has ‘gone back to the drawing board’ on the 1515, he said. And as for the other battles, well, Trinity is optimistic it can win those wars, too. ‘If it was easy, anybody could do it,’ Alexander said.”
“It sure sounded easy back in 2006, when Stillwater was trolling for investors willing to finance the Opera Place and 1515 purchases. Here’s the rosy pitch made in an offering circular: ‘An investor who contributes $1 million to the deal would receive back more than $2 million in about 3′1/2 years.’”
That Columbus Dispatch article is full of subprime follies. And then there’s this:
‘Tired of the nagging letters from your neighborhood homeowners association, the threats of liens on your home? Before you ignore the association, consider the fate of Gregory Green.’
how about meg whitman w skype ?
carly fiorina
many of them fck up
“More than three years ago, Green’s body seemed to be falling apart. Overweight, he suffered two blood clots in his lung, then he needed surgery for a back injury, then he was diagnosed with diabetes. On his doctor’s advice, he left his job at an Alzheimer’s care center in Tampa and began collecting disability benefits, which were about half his previous salary and put a strain on his family’s finances.”
The scariest thing in this article isn’t finanical. What is doing to happen when millions and millions of Americans end up in the same situation? Look at the picture. What about the next generation?
And this wave is going to hit full force AFTER we’ve finished bankrupting the country.
First, Lose weight. If you carry signifigant extra weight, you put yourself at serious risk to debilitating illness.
Second, carry disability insurance for debilitating illness that covers at least 80% of your salary. If you can’t pair down 20% of your expenses, you’re not living within your means.
Arizona Slim is here to say that being trim is good for the health. Very good, in fact. I haven’t been sick-in-bed sick since 1999.
Lose weight, avoid the sun and get enough sleep.
Avoid the sun depends on where you are. Some of us suffer when we don’t get enough.
Between him, his wife, and daughter, they could have easily paid off the paltry $580 they owed their homeowner’s assn. by cutting back a little on the Big Macs.
And you can’t get or afford disability coverage greater than 80% replacement anyways…and yes they’re FAT and that causes a plethora of problems right there.
maybe they should ride a bike like you do
fatso’s suffer. period
This country is about to get a serious lesson in Darwins’ dictum of ’survival of the fittest’
“‘When someone comes into your house, sits at your kitchen table, has a glass of iced tea with you and calls you buddy, you trust them,’ Mr. Simpson said.”
Re: Darwin, it’s hard to believe in survival of the fittest when this guy’s still alive.
“Re: Darwin, it’s hard to believe in survival of the fittest when this guy’s still alive.”
That’s it - I’m stealing your line!
“The family consists of Gregory, 50, his wife, Patricia, 55, a 16-year-old daughter, Cherylin, and two adult sons, Jason and Aaron.”..Gee a 16 yr old and THREE able bodied adults, and they cannot afford their association fee’s of $300……wow pity poo, and too bad!!!!
I think they should buy back their house at 50 cents on the dollar…
Agree. Even if the four made minimum wage their combined income would turn the tide.
I’m willing to bet there is more going on there other than a few hundred bucks. It would be interesting to do a little poll in the neighborhood to find out what the consensus opinion was of the Greens.
lemme guess…they were undesirable slobby trash in their ‘hood?
Looks the the entire family ate the house.
How many hundreds of big macs must one eat to get like that?
Not the Big Macs - it’s the sodas and the fries. The Big Macs, at least, have has a 3 oz. of nutrition buried in them. (4 if you count the lettuce.)
Wanna take bets as to which warehouse store they stock their fridge with sodas from?
*sigh*
have has a 3 oz. of nutrition buried in them =
have at least 3 oz. of nutrition buried in them
I don’t think the HOA was racing the mortgage company in this situation. I think the HOA felt if they waited much longer, on Sherrif Day, the Greens would require having a wall removed ’cause they couldn’t fit thru the door…
Wow! When I saw that picture I actually thought “is this a scene out of a new horror film?”
My first thought was couch-abuse. My second thought was “When they go shopping for furniture, is strength a primary concern?”
I would think twice about renting furniture or a house to them! Think of all that extra wear and tear.
I read that article this morning. Is this an attempt to shift the HOA fees to the perceived deep pocket of the lender, instead of socking the remaining paying homeowners with a special assessment?
Thanks for the Iowa links, Ben. It seems over-leveraged morons in the building biz were a nationwide plague. It’s all unfolding as the HBBers knew it would, but of course the mental midgets use the usual excuses — “nobody could have known,” “it was a perfect storm,” etc.
OT
received a penalty of $64 on a $ 38 underpayment from IRS
5 days later I received 4 notices (count em 4) for a $ 20 refund -same year
and some want their healthcare (now approaching 50%) to come from big gov.
And while honest folks like you and I are battling the IRS…Sally Specuvestor can be forgiven for 200,000K of Mortgage Debt and not have to pay 35% income tax on it (even though she still drives the HELOC’d car!)
and some want their healthcare (now approaching 50%) to come from big gov.
Just bring a sharpie into the hospital. Draw big X’s on the places that aren’t supposed to be cut and draw big O’s and arrows on the places that are supposed to get cut.
blueprint
good sharpie comment / love it !
I have yet to hear any Congressman or current member of the Executive branch complain about the health care they are currently receiving from the government. Heck, those government doctors have kept Dick Cheney and all the Supremes alive for the past 7 years. Thats not too shabby in my book.
I bet they don’t even have to fill out any paper work.
Why can’t all of us have that same care?
Don’t bring the President into this…
“‘When someone comes into your house, sits at your kitchen table, has a glass of iced tea with you and calls you buddy, you trust them,’ Mr. Simpson said.”
“Wachovia Corp. ousted Kennedy Thompson as CEO of the fourth-largest U.S. bank after the board blamed him for losses that cost the lender more than half its market value in the past year.”
And how much was he compensated in his golden Parachute to depart ?
A lot more than you or I will ever see…..
He waltzes out the door with 9 million.
“Thompson’s credibility was dented after he said this year that Wachovia’s $24 billion purchase of Golden West Financial Corp. in 2006 at the peak of the housing boom was ‘ill-timed.’”
Wachovia wanted to buy Golden West because it was run by the smartest mortgage bankers. They were selling, and it wasn’t “ill-timed.”
I seem to recall the denizens of this blog deriding the Golden West purchase back in ‘06.
Slim - I do, too.
I had a couple of put options on Golden West then Wachovia made its offer. The next day the puts were worth 0 and Wachovia’s stock price dropped about 10%. The market proved to be much smarter than Mr. Thompson.
Actually, Ken is very smart. Now he’s getting some of the 24 billions under the table from his friends at Golden West.
How else can he get a billion as WB CEO ?
This trick was very popular during the dot com boom.
Orwells Fargo has been a busy beaver losing money, lately…
4 legs bad, 2 legs good @ the Ministry of Truth’s abattoir~
“The Des Moines Register reported earlier this month that Wells Fargo, the nation’s fifth-largest bank, demanded Regency officials pay off more than $50.5 million in corporate debt and $5.25 million in personal lines of credit.”
Wells Fargo is still a better lender than some. They held most of their own paper, and actually applied some lending standards. I had to supply tax statements and real income proof for my mortgage through WF. The reason I wanted to go through WF is because they hold the loans and god forbid if anything bad happens I can deal with them directly.
Exactly!
I have a 30yr fixed at 6.5 with them and I’m pretty content with that.
They’re using my money to fund your loan, and I’m pretty content with that.
WF seems to be ok… last year the banker girl said they were not deep into subprime. Since then, for all I can tell, they’ve pretty much been among the most stable banks.
I’m guessing they hold a secured first position regarding collecting the 50 mill from Regency..
..Other lenders followed suit, and soon Regency did not have enough revenue from home sales to cover the demands.
I’m not worried (knock on wood).
Wells’ exposure to HELOCs is 2nd to none (marginally ahead of Bank of America). Their accounting of HELOCS technically in default is dark matter at its finest. The leverage on the underwater HELOCS is around 8X equity. Wells is in as bad a shape as any of the money centers. They should survive but their earnings will be strained for years.
I bank with them…their prospectus brags about how they made very few subprime loans.
I guess they chose the devil over the deep blue sea.
“She said she didn’t realize at the time that she was buying two of the houses from Long himself. All told, Williams, now 25, received six subprime mortgages from five lenders. The most expensive loan had an adjustable rate with a cap of 18% interest.”
So MUCH fraud…
Cry me a river. How can a dip$hit like this cry victim? 23 years old and “owns” 6 houses. They oughtta throw her ass in jail along with her loan pimp.
a Female Casey Serin?
Keep those two the H.E. double hockey sticks away from each other. I shudder at the thought of the potential offspring from those two.
–
“‘They said if I can’t handle my own finances,’ she said, ‘I can’t handle other people’s money.’”
If that were true how many bankrupters and fraudsters of NYC would have there job, or gotten the jobs in the first place?
Ooops, I forgot that the rules that apply to common folks don’t apply to the elite.
Jas
“Stephanie Williams saw the free flow of mortgage money as her ticket to some easy cash. It didn’t take long for Williams, then 23, to secure large, high-interest mortgages, usually with no money down. In all, she received $465,000 to buy six houses in Milwaukee.”
The first line says it all. Thousands of people saw it the same way, easy money! That is just one reason why their feet should be held to the fire. You have lots of debt there Stephanie, here’s an old saying for you… “A person can run into debt, but to get out you do so at a walk”.
A lot of people were working their tails off and not gaining any ground. Meanwhile, the Jones next door seemed to have tons of money to spend: vacations, new cars, etc. So they ask the Jones how they do it, and learn the “secret”. The financially literate quietly walk away, knowing what lies down the road for the Jones family. The not so literate, or perhaps the greedy, say “Hey, I can do that too……”
Some excellent points here guys. I don’t know how much 23 y.o bank tellers make in Milwaukie but my guess is… not much. Certainly not enough to sevice $400k + in mortgage debt. But as *exeter* points out, Real Estate is FOR the poor! She really wasn’t risking anything, she had nowhere to go but up. Again, rather than confront our employers about substandard pay and benefits we went down the “Rich Dad” path?
I also noted someone mentioned CEO’s? Well exactly, for all our complaining, a crook like Angelo Mo is STILL “managing” BILLIONS and yet a bank teller trying to break out of her $11 an hour existence can’t get a job at a bank? Hey whatever.
As *In Colorado* implies, it’s hard to mind your own business when everyone ELSE “seems” to be doing so well? Even the financially literate had difficulties fending off their “why fight the trend?” friends, neighbors and co-workers.
As *In Colorado* implies, it’s hard to mind your own business when everyone ELSE “seems” to be doing so well? Even the financially literate had difficulties fending off their “why fight the trend?” friends, neighbors and co-workers.
Oh so true. I had relatives who literally called me an idiot for not becoming a “house collector”.
Here is a little story that I saw today that describes the situation to a tee. A techie ditched his job/”career” as a sys admin for the easy money of a realtor. Of course things aren’t so rosy now, but apparantly kood-aid is highly addictive:
http://www.businessweek.com/lifestyle/content/may2008/bw20080530_854391.htm?chan=top+news_top+news+index_news+%2B+analysis
By my calculations, he made more than $300k in commissions and another $350k in his apartment flip in 2006 alone. Doesn’t sound like a bad career decision to me.
Of course, I doubt the writer verified any of those numbers.
Don’t forget, according to Bill Gates there is a huge shortage of technical people, so he can always go back to work as a sys admin.
Bill Gates is a big fat liar. Plus once you are out of the loop for a few years you are considered “obsolete”. By that time the next version of Windows will be out and he won’t have the right certs.
Heck, I’ve been turned down for imaging and color science jobs because I have been out of the loop too long, and I have patents in those fields.
Bill Gates is a
big fatwealthy liar.Looking at his picture, AT&T might hire him back just to keep the EEOC away.
Here’s a cute video on the bogus labor shortage:
http://www.youtube.com/watch?v=Zo7GOsXpDtQ
“Today, Williams lives in North Pole, Alaska, with her husband, who is stationed at a nearby Army base. Her credit rating, which she said had been a respectable 650, is now below 500, making it difficult to get even high-interest loans. Each month, she sends the City of Milwaukee $100 to $250 to pay down the $13,000 in penalties she owes for building code violations.”
“Her recent bid to land a bank teller’s job in Alaska was shot down because of her poor credit rating, Williams said.”
Tougher in Alaska
“‘They said if I can’t handle my own finances,’ she said, ‘I can’t handle other people’s money.’
We plan to tell Laura Richardson (Long Beach congresswoman in default on three houses) the same thing tomorrow at the polls.
I can remember discussions with my daughter trying to figure out what was wrong with us. Everyone around us were living the high life - dinners, entertainment, vacations, jewelry, cars, etc. We couldn’t figure out what we weren’t getting. We have figured it out - we weren’t getting debt. We didn’t buy houses, didn’t buy cars, didn’t max out credit cards - we lived within our means. Now we have little to no debt, a little bit better income so we’re not feeling recession much. I fill my car about every 3 weeks so gas isn’t a big deal either. It sort of spoils things when once you get to the party, everyone else has left.
“The Trinity Development partnership is engaged in three different battles on three different downtown properties. Their grand plans to build tall towers and fancy condos are now held hostage to legal or zoning battles, despite the millions of dollars the partnership has poured into the projects.”
Here’s how a previous tall towered Trinity bomb turned out…
http://www.youtube.com/watch?v=FFZvCJYDme0
Ask not what you can do for your corporation, ask what your corporation is going to give you, to make you go away…
et tu Kennedy?
“Wachovia Corp. ousted Kennedy Thompson as CEO of the fourth-largest U.S. bank after the board blamed him for losses that cost the lender more than half its market value in the past year. Thompson’s credibility was dented after he said this year that Wachovia’s $24 billion purchase of Golden West Financial Corp. in 2006 at the peak of the housing boom was ‘ill-timed.’”
I recall reading somewhere that “severance” and “separation” packages are vanishing for the cube farm dwellers, who will only get unpaid wages and unused vacation time when big biz cuts them loose.
I get scared when I see “severance” and “package” in the same sentence. Oops, I just scared myself.
“‘When someone comes into your house, sits at your kitchen table, has a glass of iced tea with you and calls you buddy, you trust them,’ Mr. Simpson said.”
“‘I bet you’re off to the Bahamas now,’ he said to them after signing his loan. The brokers chuckled.”
That was nothing compared to the guffaws they had back at the office!
BTW, if anyone were to call me “buddy” I would be suspicious. That’s just me.
OMG, this quote is PRICELESS!
Translation: “I am a sheep–please shear me of my money.”
I can’t tell you how many times in my early adulthood, someone came into my home, acted like a buddy, and their business model was based on building trust and then monetizing it–e.g. taking away your money.
In most of those cases (life ins sales, crappy investments, etc), I was able to break free without being shorn.
This guy has the gall to blame the sales-critter because they called him buddy and he was stupid enough to trust them?? The level of delusion is Unreal.
1. Go in to home
2. Drink Iced Tea with homeowner
3. Calls homeowner “buddy”
4. ???
5. Profit!!!
This looks suspiciously similar to the Underpants Gnome business model…
Yes, or like in my case they try to hit you up with the latest MLM fad like Amway, NSA water filters, NuSkin, or some other crap.
Pal? Chum? Fella? Compadre? Bro?
From the Simpsons:
Great White Motors
“Where the Customer is our Chum”
When my dad was building his house, he had a basic rule of thumb for dealing with contractors and vendors: If anyone claims to be your friend or a Christian, put your hand on your wallet.
Sad thing is I know plenty of folks who will trust others simply because they have the “fish” printed on their business card or phone book ad.
My former landlady was like that. Me? If I see that fish, my suspicions go up. Why? Because I’m less interested in your faith than I am in your competence.
“When my dad was building his house, he had a basic rule of thumb for dealing with contractors and vendors: If anyone claims to be your friend or a Christian, put your hand on your wallet.”
2 great signs of a sociopath trying to con you. Like adding the nickname “Honest,” as in Honest Jim’s Used Cars.
Why? Because I’m less interested in your faith than I am in your competence.
This is one of the ideas, I think, that made the US what it is.
Another one is those annoying telemarketing phone calls where some drone says they are calling on behalf of a “certified non-profit” organization to help you refinance your debt. It’s amazing how stupid some people are. Just mutter a code word that makes them let their guard down and it’s like they have been hypnotized.
They also might be using the “non-profit” line as a way to justify calling numbers on the federal do-not-call list.
Amen Brother!
The quote should read..
“‘I bet you’re off to the Bahamas now,’ he said to them after signing his loan and releasing his ankles. The brokers chuckled as they zipped up their pants and toweled off.”
‘Nuther Washington Post online chat. You can’t make this stuff up.
Upper Marlboro, Md.: What do I do? What do I do? I own a home that I purchased for $150,000 more than I can now sell it for. I knew it was overpriced when I bought it in 2005, but as a newly divorced person, I needed a home and was trying to buy one before townhouses became $1 million dollars. I thought just like everyone else that housing prices would continue to go up and I would be priced out. Now I don’t want to pay $150,000 more than it’s worth, and I seriously am considering walking away and letting it foreclose.
Out of 70 houses in my neighborhood, 10 are forclosed and another 30 are being rented. Only 30 of us actually own our homes, and we are angry that we paid too much. What do we do? Those of us who have great credit and make a good living but know we are paying too much for our homes, do we walk away, take the credit hit and purchase when we rebuild our credit? I never can recoup $150,000 — it will take at least 10 years, if not longer. Do you have any suggestions?
Kathleen Day: When a tidal wave of financial distress hits like this everyone gets hurt and, like in your case, there’s not a good answer. Tens of millions of homeowners around the country who will not face foreclosure will nonethless seeing property values fall by more than $350 billion because of foreclosure in neighboring houses. that’s on top of declines from the bubble bursting in the first place. It’s a mess.
Entire chat at:
http://www.washingtonpost.com/wp-dyn/content/discussion/2008/05/30/DI2008053002357.html
Out of 70 houses in my neighborhood, 10 are forclosed and another 30 are being rented. Only 30 of us actually own our homes, and we are angry that we paid too much.
Sorry, wrong there Kathleen you don’t actually ‘own’ your home. If you did I doubt you’d be writing in.
Another interesting exchange:
McLean, Va.: A major aspect of the housing bubble that you did not address in your article was the lack of attention given to it by mainstream media, including The Washington Post, during the bubble inflation of 2003-late 2005. During that time a number of intelligent, well-informed bloggers seemed to be the only voices identifying the housing bubble as a major problem of the near future. I see the lack of attention given to the buildup of the housing bubble to result at least partially from the conflict of interest between the revenue stream from real estate advertising and the responsibility to point out dangerous trends in real state pricing and financing. Major print media, including The Post, apparently did not want to look at the potential hit to their advertising revenue if their reporters wrote about the real estate bubble.
Kathleen Day: It wasn’t just the post, but all the major newspapers just about, and I don’t think it was overlooked because of advertising revenue. And by the way there were plenty of smart people at every major paper I can think of sounding the alarm, but it’s hard to see a problem when everything seems on the surface to be going along rippingly. That said, you are right. Once again the media was slow off the mark.
Yeah, I wondered if an HBB’er was joining the conversation.
Also check out the last exchange where Kathleen gets cut off. No wonder conspiracy theorists have so much to work with!
Actually, they do about 10 chats a day at WaPo and they all end pretty much like that. Nothing unusual about it.
Stephanie is just one more example of who was buying houses from 2003 to mid 2007 . No underwriting of these loans ,no proof of ability to pay the loans ,no underwriting and checking if they borrower was taking out other loans on other properties ,no concerns for what the borrowers total debts were .
Your so right wmbz ,easy money was the name of the game . This mess goes beyond easy money to fraudulent money and numerous fraudulent schemes for the mob types and commissioned sales people to use dumb dumbs to take the money and run.
I can just see it now . Low income and credit score people sitting around and all of a sudden a knock on their door or a telephone call by the real estate crooks promising a way to improve their lot in life through real estate investing . These people were marks ,used as straw buyers ,given some up front money for their John Hancocks .If the crooks didn’t get to the people ,the real estate sales people were hitting them up to join in on the sure bet real estate investment scheme of the Century ,while the media and advertisers were rah rah cheerleading in the background .
Before housing bubble: “The credit industry is discriminating against minority buyers.”
After housing bubble: “The credit industry is preying against minority buyers.”
Both statements are true. First you starve them, then you tease their hunger.
“‘When someone comes into your house, sits at your kitchen table, has a glass of iced tea with you and calls you buddy, you trust them,’ Mr. Simpson said.”
AHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA
oh, but he goes on:
“Relief came in the form of an adjustable-rate mortgage that started at 9.5 percent and added about $300 to their monthly payment. Mr. Simpson sensed that the New Century brokers made a handsome commission on his deal.”
“‘I bet you’re off to the Bahamas now,’ he said to them after signing his loan. The brokers chuckled.”
AHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA
Even as his very slow brain was realizing he was had, he didn’t care! Boy are stupid people funny.
Just noticed this — NY Times on soaring defaults of prime mortgages, with a nice little map.
http://www.nytimes.com/2008/06/01/business/01town.html?em&ex=1212552000&en=c0e645a620c576be&ei=5087%0A
“To make matters worse, these outlying suburbs were built on the premise of cheap gasoline, says Keith G. Debbage, a geography professor at the University of North Carolina at Greensboro who tracks the local economy. With gas at $4 a gallon, he says, ‘travel costs are now a serious consideration.’ Oak Ridge and Summerfield are bedroom communities, he notes, and many commuters drive 30 to 45 minutes each way to jobs in Greensboro and Winston-Salem. ‘People are doing a serious rethinking of where they live,’ he adds.”
THe Greensborough family featured in this story purchased 5 new houses in 10 years, trading rapidly up the ladder. And even after a year on the market, their asking price is only down to the break even point. Greedy pigs!
Sorry, but you made money on four transactions but put all your winnings back on the table… and lost. Now why don’t you try living on your income.
But, but, but all my friends drive Beamers and Escalades and vacation every year in Hawaii or Disneyworld. I can’t drive a used Chevy and go camping on my vacation. I would be a loser!
Oh, for pity’s sake. Some of my family’s best vacations were when we drove our tiny, fuel-sipping Opel station wagon for hundreds of miles, tent camping all the way.
I noticed that, too. 5 places in 10 years.
I also noticed they pay $2,500 in rent in Madison, Wisconsin - the place is probably a palace. Thankfully for them, they decided to rent upon first arriving there.
They listed their place at $1.2 million in a neighborhood described as “middle class.”
Are there plentiful jobs in Greensboro that provide enough income for a $1 million mortgage? (Given a nearly 20% downpayment…)
Let me guess - probably not!?
Change the numbers a little and this is the same story which is occurring in countless locales all over this nation.
And coming soon to the UK!
The article pointed out that there is a lot of old money in Greensboro. The problem is that the flippers think that people in that income bracket are the only ones who buy houses.
I see Ponzi schemes everywhere. I can’t even stand to watch HGTV or the flipper shows anymore.
I think “what is my house worth” is the funniest show on TV.
I love that show. I think the host is actually much more clever than the average script-reader. You can see her cringe every once in awhile.
Quick, find out which logistics company this douchebag works for, and never do business with them! “We can’t figure out why it didn’t sell for 50% more than the original price plus “upgrades” in 3 years!”
GMAFB.
“‘When someone comes into your house, sits at your kitchen table, has a glass of iced tea with you and calls you buddy, you trust them,’”
Forgive me, but if you think this about someone, especially when hundreds of thousands of dollars are on the line, you are an idiot. Period. And I’m not trying to be mean or snarky.
slipping credit scores and mounting debt.. carpet salesman catering to builders as that industry crumbles.. paycheck shrinking.
imo, he wasn’t a fool, and it aint like he got ripped off.. he wanted something he should not have qualified for and they provided it. The crap about trusting someone who shares tea in the kitchen qualifies him as a victim for the newspaper article.
I hope you are joking! I can’t imagine that there are that many honest carpet salesmen out there.
But it could be a good way to market iced tea. “Don’t have any friends? Drink Lipton!”
Of course, you’re right: unfortunately, the victim was an idiot.
However, he is also right: the lender broke the ancient laws of hospitality. He sat in the home as a friend and partook of refreshment. That produced a sacred bond, upon which the host relied. The guest violated that bond.
I don’t know who the god of hospitality is, or the patron saint either, but I’m sure they have names, and they will claim their due when the time comes.
OK, I looked it up.
Hermes/Mercury was the god of hospitality.
There are two patron saints of hospitality: Julian the Hospitaler and Meinrad.
None of them liked ice tea.
And, according to Homer’s Odyssey, Zeus is the avenger of wronged guests.
Do your thing, lord of all gods.
Can you work in some righteously violent thunderstorms over Wall Street one of these days?
If you’re sitting at my kitchen table and you’re not doing whisky shots, you’re not my buddy.
Wow,
Is Chuck a long lost cousin of Homer? Nah, that’s an insult to Homer Simpson.
“The drive to sign mortgages was so fierce that New Century dubbed its loan department ‘CloseMore University.’”
which became “LoseMore University”?
losemore? seems apropos..
Today the stock dropped a whole penny, and is now selling for 6 cents a share..
http://www.marketwatch.com/tools/quotes/intchart.asp?symb=NEWCQ&sid=1835542&dist=TQP_chart_date&freq=1&time=9
New Century was the parent to Home 123, which closed after new Century declared BK a year ago, if you’ll recall.
From wikipedia:
“On June 8, 2007, New Century Financial warned that its effort to liquidate assets could be stymied if GE Capital is allowed to proceed with plans to seize computers and other equipment it leased to the bankrupt housing lender. GE Capital, arguing that New Century owes it $8.7 million on leased equipment and can’t stay current on payments, has asked a judge to lift the protection normally granted to companies in Chapter 11. That would enable the firm, a unit of General Electric, to repossess the equipment, which includes computer servers, and chairs. New Century said that would disrupt its effort to wind down operations and repay creditors. New Century said “much of the data and information” involving its assets and business operations, including accounting information, is stored on the computers, or generated by them. New Century also said “it is critical for the debtors to use the equipment” so that the loan-servicing business it recently sold to Carrington Capital Management can be kept “operating as a going concern.”
I suspect Carrington Capital Mgmt is who my LL sends her mortgage check to (BWHAHAHA - when/if she sends it) - her loan was with Home 123. But I’m wondering if GE got the computers and her paperwork has vanished…what a mess. When she gives the house back to the bank, who the heck is the bank?
In the meantime, she emailed me and told me to let the lawn and big beautiful trees die, as she could care less, “It’s the bank’s problem.” I like trees, so am watering them anyway. I really really want to ask her what she did with 100k. I have a pretty good command of the English language, having learned it as a baby and all, but I can’t come up with the words to describe how I feel about this…
Whoops, sorry, got caught up there for a minute creating some new cusswords, anyway, she’s coming to get her stuff this weekend, then no more LL. And they act like the squatters are the bad guys…
Hey Lost, maybe this might not work out too bad - isn’t this EXACTLY the theoretical situation that justifies adverse possession: owners uncertain or gone, tenant in possession pays the taxes and maintenance, ends up owning the place?
Now there’s a thought! Thanks, I need some encouragement, this is taking away from my nap time on my squatter’s cot.
Consumers liquidate future to pay for today
http://tinyurl.com/3esayc
Hmmmm…. it’s really beginning to show on Main Street-
Wife informed me La-Z-boy in Poughkeepsie shutting down. This is a 2 year old store in the middle of bubbleland Dutchess County NY. Next? Disney retail store in mall shutting down, same location.
Disney peaked at something like 400 stores. It then closed a bunch before selling off 313 to Childrens Place about 4 years ago. Childrens Place closed a BUNCH more stores over the years.
Few months ago they were down to about 220 when Childrens Place said they just wanted out, so they sold back to Disney for much less than they paid ($50 million charge off now, after several other charge-offs in the last 4 years). Disney is now shutting about 100 of the remaining stores.
Good. Not that I’m happy that people are losing their jobs, but all of the over-marketing of over-priced, low-quality Disney crap makes me want to vomit.
Did Childrens Place actually own those Disney Stores? I thought it was more of a long term license and operating agreement. I could be wrong. I don’t follow (or trade) retail all that closely.
Yes, they actually owned it for a bit.
“Relief came in the form of an adjustable-rate mortgage that started at 9.5 percent and added about $300 to their monthly payment. Mr. Simpson sensed that the New Century brokers made a handsome commission on his deal.”
“‘I bet you’re off to the Bahamas now,’ he said to them after signing his loan. The brokers chuckled.”
And I bet this nimrod has no clue he actually paid for it.
Wife was watching “My first place” over the weekend, and I couldn’t look away….. like a train wreck or gory car crash.
Artsy, “bohemian” eclectic type 20-something lady that makes $40K a year gets approved for an Alt-A liar loan for something like $250K and goes shopping for houses. All small and cookie cutter. Then she finds this larger, very unique house with lots of custom wood work, stained glass, and such.
Old house in bad shape. The basement is a disaster. Plaster walls are coming down. One of the bathrooms is in the basement and just has a moldy old shower that is crumbling and a sink that literally has a drain pipe that just runs along the wall and dumps into the shower. Like the shower got installed over the old basement drain and they didn’t want to bust the slab to do any more drain work…
The realtor’s are very negative on the house. It should be listed as 3/1 not 4/2 and they are asking top dollar for 3/2.
But, the idiot buyer is in love. They offer like $10K under ask. Seller counters at $5K under ask but with no inspection. Realtors will have no part of no inspection. Eventually they haggle to like $3K under ask with inspection.
So, it is inspection time. Inspector freaks out. The electric is horrid. Company that made the fuse panel went out of business because breakers didn’t, and all the wiring is sub standard. $5K at least for electrical works it needs. Doubts she could even get insurance on the house with that fuse box.
Then he goes to the basement and looks at the stack (main drain out of the house). Old, cast iron, rusted out, with active seepage. Minimum $20K to replace just the stack because they’ll have to bust the foundation and replace all the way to the main. More if other lines are in bad shape also.
Seller is adamant he isn’t doing any work. So, they ask for $20K off the sell price. Seller counters with $1K off. They show her go out to dinner with family and friends that all tell her how dumb it would be to buy… So she walks.
3 weeks go by and she can’t find any other houses she likes. Realtors are getting sick of showing her every house…
Guess what. The seller of the crap shack comes back with an counter-offer $5K off the agreed sale price, and the Realtors, that at this point just want to get a deal and move on, talk her into it.
So, the appraiser comes out and I’m screaming “Don’t be a number hitter, don’t be a number hitter……” F’n A… Guy is a number hitter and comed in $7K over the agreed on sales price.
It ends just after the closing with this FB talking about how this validates her as a successful human being since she was able to buy a house with no help from family or…
Made me sick. SICK I tell you!!!! Copyright, 2005.
“Artsy, “bohemian” eclectic type…”
Actually, I could have predicted the ending just from this description. My experience with folks who want to look like they’re slumming it is that they wind up spending more in the search to authenicate and legimatize their existence.
Train wreck is how I described being compelled to watch platinum weddings. 22 (I have DVR) jaw dropping minutes of watching people spend $625K on a wedding that was 200 people. Speechless.
Just in case I get tired of being a squatter, am exploring backup plans:
Called on a rental in Ridgway, Colorado, a town popular with Telluride workers, usually hard to find rentals. Still overpriced, but this house isn’t too bad, sounds like a nice place, and the owner will take all my dogs and cats and even ME - no problem. The current renters are way behind and she’s having to evict them, they’re broke.
Where do they work? I ask.
Home Depot and a plumbing contractor.
Colorado’s invincible, remember? Must be a fluke.
Lost, it’s always good to have a Plan B & C, but I for one would miss the vicarious joy of living through you as a squatter!
When I realized how this was going to play out, I thought it would be fun to squat–but unfortunately, I have some “stuff” that I couldn’t easily store, and wasn’t quite ready to let go of. Plus it is taking longer to get rolling where I live, so there’s not really enough foreclosed carnage out there to make it easy to go un-noticed.
Thanks, sometimes I think I’m just lucky.
Actually, squatting isn’t for those who worry. And now I’m trying to figure out how to keep my LL from “stealing” the stove and frige and other necessities. I think I have it covered, will report back…hint - it involves a fictitious attorney…