When The Tease Becomes The Big Squeeze
A pair of reports provide some examples of problems with risky home loans. From Ohio. “Janice Lattimore Brown faced a mountain of bills after her son’s car crash. So when a broker told her she could reduce her monthly house payment with a specialty mortgage, she signed on without reading the fine print. For the first three years, she paid about $700 per month on a fixed rate.”
“But then an adjustable rate indexed to mortgage trends kicked in. Last year, just when she was laid off from her clerical job, her monthly payment climbed to $1,200. A non-profit agency, helped her refinance at an affordable fixed rate. ‘You live and you learn,’ she said.”
“In the past five years, millions of Americans joined the home ownership and refinancing boom by signing up for riskier mortgages with adjustable rates and low initial payments. But now the tease is becoming the big squeeze.”
The Denver Post. “In Douglas County, one of the nation’s fastest-growing and most affluent counties, the call of the needy is getting louder. Requests for energy assistance, food stamps and welfare have risen by staggering rates over the past five years. Food stamp cases alone are up 660 percent.”
“Douglas officials worry that the worst is yet to come, pointing to an unknown number of ‘almost-desperate’ residents, people living off credit cards and the equity of their homes. Already, the county anticipates about 1,400 foreclosures this year, up from 270 homes in 2001 and 912 last year.”
“‘Linda’ is one of Douglas County’s new poor. She grew up in Castle Rock. Just two years ago, her life was stable. But then Linda was laid off just as her husband’s computer business began to slip. Meanwhile, the interest-only, adjustable rate mortgage on the family’s two-bedroom duplex swelled from $750 to $1,550 a month.”
“The burst of the metro region’s high-tech bubble left many Douglas County residents paying for more house than they can afford. Families have milked the equity in their homes and maxed out credit cards.”
“‘It does no one any good for anyone to go under,’ said County Commissioner Melanie Worley. ‘It’s a drain on our economy; it’s a drain on our social-services budget.’ While struggling residents can receive money for rent, power and food through Hand-Up, most will have to sign a contract promising to participate in counseling and meet career, money-management and family goals.”
“‘We’re going to continue to help people, but we’re not going to continue to spend money just to allow people to tread water,’ said George Kennedy, director of human services for Douglas County.”
“For Linda, she’s done all that the experts would recommend: After she lost her job, she got a teaching degree, then a master’s degree. Until it closed in March, she taught at a private school. Now she is hopeful that the county school system will give her a job.”
I have been blogging on the rising Colorado defaults for over a year. I have yet to read one comment from a public official or lenders suggesting caution for the states borrowers.
After reading this piece and many other like predicaments
on this blog, I am constantly amazed how many people
don’t realize that their biggest and most valuable asset
is their name — a name in good (credit) standing.
Yet, without much thought, many squander that
very valuable asset and may never get it back.
from the trenches in colorado. no signs of kamikazee loans abating, i’m getting calls from reps constantly during the week, all offering higher loan to values and lower ficos. i thought that the changes to indy mac’s option arm would be abrupt, they’re not, just more disclosures. can’t say, amid the backdrop of all this negativity and decline, that the lenders are doing anything other than lending “balls to the wall”. last gasp, i guess, sad.
This article illustrates my biggest fear. We’re all cheering for this bubble to pop, but don’t fully realize how it will impact our communities. Foreclosures, rising unemployment, bankruptcies, etc, are going to hurt all of us. The outlook isn’t good.
Unfortunately I agree with your comment - I wish it were not true and that this was a “soft landing”.
I agree….
As much as I believe that housing needs to correct, a large correction is going to be painful to everyone. If the last large housing correction is any indication - everyone suffers. Essentially almost all real estate transactions dried up. No one could sell their house - period. People didn’t migrate to better jobs, people didn’t buy up or down, move to be closer to family - nothing. If the action required selling the house it basically stopped happening. The neighborhoods became very static - which might be veiwed as good for the kids. But being trapped in a dead end job that you pray everyday doesn’t end is no paridise - and that’s from the viewpoint of people who could afford their mortgages. If you couldn’t afford your mortgage - then the bank kicked you out and your house often sat empty for months before it finally sold at a price that drove the remaining home prices down even further. Ben if you want a blog topic how about real stories of what the last housing bust was like.
I hear you, but just remember why we are at the position we are in right now. Those who bought a long time ago, and did not squander away their equity in Helocs, and refinancing, will have a much bigger margin to play with, and will be able to move if they need to. Pity those that bought in the last couple of years, and are really stuck. Pity those who moved to marginal neighborhoods with subpar schools as they will be unable to offload their crapco houses. Pity those flippers who were left holding the bag with 10-12 properties in Phoenix or Miami!.
Those who have made rational decisions, and above all maintained their flexibility have just gone up one rung on the ladder, as they will be the ones that can pursue that dream job, or great business oportunity.
History also shows us that the most succesfull companies are generally started in the throughs of a depression. It makes people think hard about priorities, and make tough decisions. It will allow us to go back to making goods and services for the world instead of importing our food. Otherwise we will turn into Rome, a chapter for history books and fairy tales.
“Pity those flippers who were left holding the bag with 10-12 properties in Phoenix or Miami!”
I’d likely show them about the same amount of pity they were willing to show to the greater fools who they were trying to unload their crap houses to.
You’re right Pinch a Penny….as long as your industry doesn’t suffer massive lay-offs, or your taxes don’t triple (as I’ve heard suggested in some communities) or commuting costs don’t begin to make you second guess if your job is even worth it.
I think a lot of people that think they’re safe will find out otherwise. I still remember when one firm I worked for stopped buying toilet paper for the bathrooms. Another had deep layoffs but I survived which was pretty damn lucky considering they were a commercial printing film house and weren’t even paying Kodak for their film. The delivery trucks would sit outside until the bank check was bought from the bank down the street and put in the delivery guy’s hands. Dicey!
I still remember when one firm I worked for stopped buying toilet paper for the bathrooms.
Did you each get a litter box instead?
That’s nice, but there’s large mass of people who need to settle down somewhere, ans the past 5 years have been murder on anyone who wasn’t already in the game, or unwilling to gamble it all on a I/O loan. Nobody gave a damn about us when prices were bubbling up, and that includes gov’t, liberals, conservatives, et al.
The fact is, the sky-high prices simply have to come down, the faster the better. So I say: burn baby burn.
What good is a cheap house if your savings are inflated to nothingness and no one will extend credit any longer?
My savings have already been inflated to nothingness.
I exagerate, but it sure feels that way some times.
I fully realize how the pop will impact our communities and yet I am still cheering for the bubble to pop.
Why?
Because I know that it must pop eventually and the longer it goes on the worse it will be when it does pop.
Very unfair. The financial illiterate/irresponsible are going to burn us too at this bubble goes down.
we all knew this was coming. now it is time to watch unfold.
COL is the US in 06 or 07.
not really, as i don’t think the mortgage money will be there next year like it is right now.
I explained that wrong. I mean that the problems in COL are going to be throughout the nation this year and next.
“For Linda, she’s done all that the experts would recommend: After she lost her job, she got a teaching degree, then a master’s degree. Until it closed in March, she taught at a private school. Now she is hopeful that the county school system will give her a job.”
She doesn’t have to sit there and wait for a job, move out of state. She is an example of what bugs me and that is one of the easiest degrees to get is in the teaching field. She followed the herd into housing, then followed it into teaching…I’m surprised she didn’t follow it into the RE industry.But what the hell, she needs to move into CA’s SJV and get a government job in the prison system and she can retire well off at age 55.
I was going to write the same thing, go where the jobs are!
I love that sense of entitlement even in the sentence… she is waiting to be “given” a job! Given?
Not everyone wants to be a nomad. For me this has been one of the more irksome aspects of the bubble, this notion that if conditions aren’t suitable where you are you can/should just pick up and leave. This is just not a good solution for everyone. What if someone has family, friends, or just really likes an area? Me, I’ve moved ten times in the last twenty years so I definitely have a certain amount of sympathy for someone who would rather stay put.
Besides, I’m seeing an awful lot of b!tching on these “bubble blogs” about the “Californication” of the more affordable parts of the country. So maybe this is one of those “be careful what you wish for” things…
CO is the most boom/bust state in the USA
but ,yes 07 will equal CO
the problem will only worsen as folks look to refinance from a older adjusted loan. the more time goes on the higher current rates go the less difference there will be between their adjusted rate and new rate (unless of course they get government relief). 1 year ARM’s are about 100 basis points higher than a year ago so if you have a 200 basis point max adjustment on your existing loan you still save by refinancing. things are only going to get worse as rates rise.
Talked with an American of Mexican decent yesterday. Against good advice from a moral agent, she was talked into an overpriced home, with a risky loan from a Hispanic agent and loan officer, whom seem to prey on their own a lot IMHO. She was told the interest rates would come down in 6 months, and she’d be able to live more comfortably. She also has a bad loan contract. Suffice to say, the very nice navie lady is screwed. She knows she bit off more than she can chew. These stories deserve some serious legal retribution. Do these R E folks have a crystal ball? What chutzpah.
Since I have many contacts in your area, I too have noticed this seemingly alarming trend of Hispanics being fleeced by Hispanics in the industry. Sad stuff indeed!
Yep….. Amazing how many of them ask to speak to an Spanish-speaking L.O. (even though their English is fine) who then starts rubbing their hands and salivating as the call gets transferred to them. They believe every word they are told and , later on, happily sign on the dotted line.
….. All because they have the same native tongue. Interesting criterion for a reaon to trust a salesman.
Oops: “A” Spanish-speaking yada, yada…..
There was a big hubub about something similar happening within the African American community, too. When will people learn that you alone are responsible for the due dilligence on all financial transactions.
When people finally realize that salespeople are just that: salespeople. Our primary funtion is to sell something. We’re not your friend, your confidant, parent or priest. Some of us have morals, many don’t know what that word means.
Hence, Mexico.
Yup - I have a relative who married an Egyptian guy. I call him ‘Mr. Green Card’, because he only married her to get residency. He spent a few years as a loan officer in a bank, then went freelance to fleece his compatriots. He also specializes in ‘helping’ people with their foreclosures, where he gets his name on the title and they pay him rent while he’s supposedly repairing their credit. And he too is into flipping homes in a big way. During these boom times he’s made a lot of money and plowed it back into more housing to flip.
This guy’s father-in-law has been very proud of his foreign-born self-made millionaire son-in-law, driving his Mercedes and living in luxury housing. But recently, he’s had to close his office and now he’s working out of his home. This guy wasn’t even in the US during the last bubble. He has no clue that this hasn’t been normal business times for real estate/mortgage lending. It came easy to him, and he patted himself on the back for being so clever that, even being a foreigner with hardly any English and (for a long time) living here illegally, he still made himself a fortune. On paper.
I expect to see his financial house of cards collapse as the bubble deflates.
You can bet Denver is gonna scream loud and hard for somebody else to save them from themselves. It’s becoming quite socialist and overrun with illegals — there’s NFW that a city that gets blizzards in August should have people selling tamales out of the back of their dubiously-tagged pickup trucks. Oh yes the entitlement, “not my fault” mentality will be strong there.
Those home made tamales are excellent, and taste just as good in the winter. I haven’t found Denver to be much different than any other City when it comes to asking for handouts.
Keep in mind Denver has been in a slow wreck since 2001. Folks here may have flaky mortgages, but they aren’t so big as on the coasts. So the climb out of debt will be a lot easier. It’s a lot easier being upside down $20k than $200k no matter where you live.
It makes me sad that a lot people who extoll personal responsibility follow it up with racist and xenophobic bull$h!t. You give libertarians a bad name, you doofus.
I wasn’t aware libertarians ever had a good name.
I just heard a radio ad this morning in Los Angeles for Quicken Loans. It was aimed at those worried about a pending upward adjustment in their rate. “Call now to see if you are at risk of an increase in payment…” or something like that.
The whole “pitch” on loans has changed….
Likely just a refi sales pitch
Their pitch should be, “Remember that ‘too good to be true’ loan we sold you last year? Well, you’re screwed. However, we’ve got just the thing… for just another twenty thousand dollars, we’ll put you into the fixed-rate loan that you couldn’t afford in the first place, only at a higher interest rate now. You’re still screwed but not quite as badly, and hey — we just made twenty grand!”
Tell it like it be, preacher. You get an amen” for that one.
Now, the Star-Belly Sneetches had bellies with stars. The Plain-Belly Sneetches had none upon thars…
exactly
Yes, and it makes me sick.
“Crapgar bank, technical services may I help you?”
“Yeah, my equity ATM isn’t working. everytime I try to get money out it I get an ‘Insuficient Equity” message.
“Have you tried remodeling, maybe granite countertops?”
“Yes, and a SubZero refrigerator, nothing seems to work.”
“Okay, I’ve found your problem. You’re effed. Take the box that the fridge came in and put it out on the curb. You’ll have to move into it while we repo your home and belongings. Have a nice day.”
That little sketch would make a neat SNL piece…
Thanks!
rising oil and gas prices won’t help.
http://money.cnn.com/2006/01/27/news/international/pluggedin_fortune/index.htm
AND, If ANYTHING goes upside down in Iran its turn out the lights baby….Our entire economy would come to a screaching halt with $5. gas….Consumer in the tank along with a colapsing housing market….
I couldn’t post earlier today due to technical difficulties, so I’ll post here:
A post on an earlier thread regarding the “callousness” of the renters on this blog resulted in quite a response. It is understandable that much of the derision, scorn, ridicule and yes, hate, is directed at flippers, speculators or anyone else who needed or wanted to buy a house for fear of being left out. I suspect that every one of you would have taken the opportunity to invest, speculate or buy if you had the foresight to do so in 1997. However, the blame for the impending crisis lies squarely with the Congress, the Fed, and organized real estate (NAR/NAHB/AMBA).
1. The Congress passed the laws giving the homeowner “welfare class” the benefit of the mortgage interest deduction, and the greatest tax giveaway in history with the $250,000-$500,000 TAX FREE capital gain exclusion (for all you Bush haters, it happened under Clinton’s watch under Republican controlled Congress, so blame can be distributed accross all party lines)
2. The Fed drastically cut interest rates, while at the same time increasing the money supply, after 9/11/2001. This was done to avert what surely would have been a serious economic crisis.
3. Organized real estate, the mortgage industry, the home builders, etc. - they all took the ball and ran with it, selling houses like used car salesmen, lending to anyone with a pulse, and building on any piece of dirt they could lay their hands on.
I completely understand the resentment felt by some on this blog: You’ve saved, worked hard, maintained good credit and missed out, while some fat ass sitting on his or her barcolounger (that simply had the good fortune to buy prior to the bubble) can now sell and pocket upto $500,000 tax free. Arrrrgh! Pisses me off too. But, what can you do? Be patient, buy gold and wait for the crash. It will come. In the meantime, lobby your congressman or congresswoman to repeal the mortgage income deduction, and tax free gain provisions.
I don’t wish harm to people, greedy and stupid as they may be. I suppose I feel as much concern for the well-being of specualtors as they felt for the people who engaged in bidding wars to buy from them; that is to say, not much. Indifference and a willingness to profit from the market is all I can muster, because that is as much as they ever showed anyone else.
I think that in general the callousness is directed toward those who callously abuse the current (or previously hot) RE market, people who you listed in your post as #3. Personally, I resent the excessive, if not bubblicious, prices in my local market, born of unrealistic expecations fueled by all the press coverage and zealous realtors.
I felt sorry for one foreclosee that I discovered today, through an automated listing that my local realtor sent me… decent-looking, modestly priced house (150K), small community just outside of town, listed as ‘bank owned, sold as-is’. Following the county auditor link, I find that the owners had been there 9 years. Through bad finances, job loss, medical expenses, something made them leave the keys at the bank. No joy in seeing foreclosure there, or anywhere.
But, that’s not the focus of this blog anyway. It’s sharing information so that we can all avoid the same fate.
“We’re all cheering for this bubble to pop, but don’t fully realize how it will impact our communities. Foreclosures, rising unemployment, bankruptcies, etc, are going to hurt all of us. The outlook isn’t good.”
The real estate bubble is all that’s holding together the world economy. When it pops we follow in the footsteps of Japan. This isn’t good news for anybody.
My in-laws live in Japan. Nothing wrong there, unless of course you participated in that bubble too. Keep your stable good job, don’t buy on credit, don’t get greedy, don’t believe the free lunch.
For several years I have been trying to understand how most Americans are affording the lifestyles they seem to lead. I look at how much things cost, how much housing costs (the mortgage payments, taxes, insurance, etc), auto prices and payments, fuel, eating out the way everyone seems to these days….and, I JUST DON’T GET HOW PEOPLE CAN POSSIBLY BE MAKING ENDS MEET!
…then I read stories like these and see the answer…they aren’t. Eventually, and I have a feeling it is soon, we are going to see the crunch point. Linda in this story is a good case in point. The amazing thing to me is how well retail spending keeps holding up.
America has spent the last 5 years spending borrowed money. It will spend many more years trying to pay that money back.
DenverKen,
I have wondered that so many times over the last 5 or 6 years. How do they manage? Nowadays any car over 3 years old is a junker. It seems the same is now true for homes as well. Here in OR in spite of some pretty aggressive denials our “bust” is well under way. Volumes are slowing and we get the same old, list, reduce, de-list, re-list at new lower or HIGHER asking price as you see in many other markets. Our “silent spring” is in full bloom.
Our “silent spring” is in full bloom.
To be followed by “nuclear winter.”
Douglas Adams, Writer of a Hitchikers Guide, wrote about a planet that sold shoes. It only produced shoes, and there was a shoe store in every corner. After a while, the population got tired of shoes, and they stopped buying, stopping the whole economy, and leading to great economic devastation, because they knew only how to make, and sell, shoes. Now replace that with houses, and start trembling.
pinch a penny,
So true! There was a great article some time back describing us as “the United States of RE!” Very funny, but sadly all too real. How could any of us thought this could go on indefinitely? My old neighbor (lived below our rented condo while building dream house) spent like the better part of a year “moonlighting” as a contractor for his own home and given his level of dedication I’ve got to believe his day job wasn’t any where near his first priority during this period. Now multiply by about 200 million as everyone is more concerned with their slow motion flip improvements and we basically just make shoes.
DinOR, I have an acquaintence like that. Had his family of 6 in a teeny duplex which they own the last 6 years. That was the smart part…..except then they pulled out ALL the stops last year to build this incredible custom designed dreamhome. He now has a $400,000 mortgage. (That’s up there in upstate land) and the thing is he’s probably dropping $18 - $20k in taxes a year to boot. I know part of their income is based on rentals….which is dicey in our crime ridden local city. I hope his commercial construction supply industry doesn’t take a dive! Or that dream home they sacrificed for for so long for is going bye bye. And I can’t imagine putting his four girls back into that duplex.
Penny,
That’s a very valid point. After years (now and going forward) of doing without other things to pay a mortgage, taxes, maint. etc. and watching the value of your house go nowhere (or down) people will resent their homes. Who will want that second home or that oversized first home? The psychology will suck for housing.
Douglas Adams also lived in Santa Barbara, California.
I live in Denver and this article makes things sound really bad in Douglas County. I have a feeling that this economic erosion is occurring throughout the Denver metropolitan area although it is not really being reported. It is interesting that Linda is having a hard time getting a job with our state’s low unemployment rate. Maybe the rate is a little suspect….
Linda is not “unemployed” unless she is collecting benefits, which is a major shortfall in how we measure employment utilization. According to the BLS, if we count the underemployed and those who have unwillingly removed themselves from the labor force, you get a number north of 10%.
Actually, Unemployed means that you LOOKED for work in the last 30 days. Most of the unemployed are not collecting benefits. If you are not working or have not looked for work then you are not a part of the labor force and don’t show up in the labor force numbers. And when you start talking about the underemployed and the unwillingly removed from the labor force you really should discuss the fact that that rate is no higher now then in the late 90s. People are finding jobs. The real problem is that wages have been dropping for the past 5 years or so.
The bubble hurt renters a lot more than owners, but the collapse of the bubble will hurt everyone. When it pops we will follow in the footsteps of Japan. Many years of pain.
‘Exotic’ Mortgage Bargains May Bite
New homeowners may be snuggled up to their mortgages now, but there may be trouble down the road, according to a recent federal report. The Federal Deposit Insurance Corp. said housing market conditions “warrant monitoring” in part because of the proliferation of riskier mortgages in recent years. Among causes for concern was that interest-only and negative amortization loans accounted for 55 percent of sub-prime mortgages in Arizona in the first 11 months of 2005. That figure appears to have increased compared with the full-year figure for 2004 â?? 42 percent. For the Tucson metropolitan area, these exotic loans made up 45 percent of the total in the first 11 months of 2005. In 2004, it was only 28 percent. The figures were based on an analysis of data collected by LoanPerformance from mortgage securitizations, which accept loans from all kinds of banks, thrifts, mortgage brokers and other lenders. “As far as mortgages go . . . we aren’t seeing any imminent signs of any kind of danger, but over the long term we have concerns over whether these mortgages will be affordable down the road,” said John Anderlik, acting regional manager for the FDIC. Interest-only and negative amortization mortgages are also called “exotic mortgages” because their conditions are non-standard. These types of loans allow home buyers to pay only the interest for a certain number of years or win approval of a loan with little proof of the borrower’s income. The outstanding balance of a negative-amortization loan grows because monthly payments aren’t enough to cover the interest. Charles “Chip” Ruscher, a lecturer in the Eller College of Management’s department of finance called the state figure horrendous. “When you have kind of a bubbled real estate market, you’re looking at probably inflated values. Even if the bubble doesn’t pop, if it starts to deflate, those people are going to be in a position that’s going to be impossible to repay the loan,” Ruscher said. “If the real estate market stalls, slows down or starts to decline, then they’re stuck with an asset that isn’t worth as much as what they owe on it.” And with that, if you believe the doomsday version, will come widespread loan defaults and foreclosures. Ruscher said the danger also comes when negative amortization loans “reset,” and borrowers may have to make much higher monthly payments based on market rates. Higher prices have made it harder to buy a home, said Steve Fell, regional president for Chase Bank. Arizona home prices increased by almost 35 percent in the fourth quarter of 2005. “I don’t blame some of these people who have jumped,” into the housing market, Fell said. “They’re locking in the value of their home right now, today, as opposed to three to five years down the road.” Those mortgages are best suited for people who expect their incomes to increase in coming years and only when buying a home in an area where values are expected to increase. While some Arizona homeowners should be watchful of their loans, the long-term prospects for the state’s economy are upbeat, according to the report. As home values increased, Arizona’s construction sector reported a 13.6 percent growth rate during the fourth quarter of last year and accounted for nearly one in five new jobs. Arizona also retained its rank as second-fastest-growing state in the nation, as employment gains accelerated to 5.3 percent in the fourth quarter of 2005. Those conditions should, at least in part, shield Arizonans from the dangers of real-estate depreciation feared in other markets. “Economically, Arizona’s future for the next year looks very strong,” Anderlik said.
I doubt Arizona’s future will be strong, look at the inventory!!!
Arizona is ground zero for the coming crash. 1 of every 3 dollars of the Arizona economy is Real Estate related according to an article in the Arizona Republic (2004) . “The results were startling. No other major U.S. city relies as much on the housing industry for its economic well-being.”: http://www.azcentral.com/specials/special50/articles/1121houseintro21.html
Man, if I was a homeowner there and I had read that article I would have wished I was wearing diapers. That is really chilling.
Ben,
I have a good friend (originally from Indiana) that is a mort. broker in CO. He explained to me that CO is a state where you can basically get out of prison on Friday and start a mort. firm on Monday. So I guess we shouldn’t look for any “self regulation” from them anytime soon.
Fred Hooper,
Just another case in point where everyone is becoming increasingly reliant on RE for their bread and butter! What frustrates and at the same time utterly bores me is the fact that this whole sector of the economy should be mature. We want a leadership role in the global economy and should be producing cutting edge pollution control and safety equip. but we can’t let go of the easy money of 20% mark-ups for the builders, 6% commissions for the realtors and 2% loan mark-ups for the brokers! We need a new growth vehicle.
County Commissioner Melanie Worley says: “It does no one any good for anyone to go under. It’s a drain on our economy, a drain on our social services.”
This is precisely what I never “got” about this whole bubble. Who in their right mind would think it’s a sterling idea to run the cost of shelter up so high that no one can afford to live?
What’s next? Flipping food for outrageous profit?
The sooner this thing crashes, the better off we’ll all be. It needs to be washed clean.
“Who in their right mind would think it’s a sterling idea to run the cost of shelter up so high that no one can afford to live?”
There are rich folks with hundreds of millions, even billions, who really have to have more. Hell, imagine life being confined as a member of the seven or eight digit wealth bracket — truly embarrassing! The poor have no idea just how difficult it can be getting to that ninth digit in a country that no longer produces durable goods. Who cares if the Sixpack family has any shelter? Certainly not the Congress or Greenspan, they’re worried about those struggling seven and eight digit folks who really need to get to that ninth or tenth digit bracket.
Though sad…how true your comments are. Look at the numerous CEO’s going to trial over the last few years. Earning several hundred thousand or even a few million a year isn’t enough…they had to cross the line and cook the books to make even more. If you live your life with any ethics or morality it is sickening. I’ve also wondered about those older folks who already have millions that keep working their asses off until they croak just to make more money.
I can tell you from my lonely perch as a dog and cat rescuer that I am seeing many many more in need of help. We’re talking expensive purebreds, too. Now you want an innocent victim of this mania? Try the ones on four legs.
Yup, first you eat the dog’s food, then the dog. My wife thinks that having two kids in a 1800 square foot house is a hardship. I keep trying to point out that it could be a lot worse.
Whoever said that buying one of the smaller houses in the neighborhood was a good idea was lying. The envy will eat you alive regardless of the “appreciation”. I’m convinced it’s better to appreciate your house than to have your house appreciate.
-Slab of lab or Stack of squirrels, all delicious - See famous Korean cook book - 50 ways to wok (walk)your dog
climber, you need to take your wife on vacation to a place like Vietnam. She will come back appreciating have 600 square feet for a family of 8 or 10 people, running clean water, electricity, phone lines, etc….
Especially if you have to clean and maintain it!
Good for you and interesting observation. As these plastic people get more desperate, and as many bail from their “homes” and have to find rental living, those pets will become a burden that is shed as easily as a sandbag from a hot air baloon. I have 3 rescue dawgs myself. We live on my almost paid for 20AC in the country that I am afraid to build a nice house on because of the bubble.
I do dog rescue too. Maybe adjustable mortgages should include spaying and neutering of all the pets (and perhaps the owners).
Well, I’ll probably get banned for this comment but it’s my belief that if you ended up in the Superdome during Katrina, you need to be sterilized.
I recently recued a GS…Bueatiful dog….
We volunteer at a rescue on weekends. Animals are so much more genuine than most people.
Personally, my charitable efforts are all directed towards animals & children. People make their own choices, but animals & children are subject to the world people make for them.
p.s.: A good adopted GS such as mine may come in handy in future periods of civil unrest.
Ouch!!!
Ewww, that was pretty nasty.
‘Linda’ is one of Douglas County’s new poor. She grew up in Castle Rock. Just two years ago, her life was stable. But then Linda was laid off just as her husband’s computer business began to slip. Meanwhile, the interest-only, adjustable rate mortgage on the family’s two-bedroom duplex swelled from $750 to $1,550 a month.”
If you have an I/O ARM your life is not stable by definition. These guys crack me up. What did Professor Rich T call them - “The landed poor”?
“The burst of the metro region’s high-tech bubble left many Douglas County residents paying for more house than they can afford. Families have milked the equity in their homes and maxed out credit cards.”
Let’s see: new 4,000-sqft house, new honda mini van and new dodge ram 4×4 turbo diesel pickup truck in the driveway, a plasma home entertainment system and tv(s) in every bedroom, two or three computers, and at best a couple of liberal arts degrees w/ stafford student loans; would you expect any other outcome?
While some of these stories are tragic they are finding people in such dire straits that the ARM aspect is becoming irrevelent.
“Poor Joe Smith desperately needed open heart surgery for all seven of his children and so need to cash out some of the equity in his home. He tried repeatedly to find a fixed rate mortgate, going to one mortgage broker after another, but none of them would offer anything but ARMs. He finally chose one who promised the rate wouldn’t go up much but couldn’t read the fine print because of his impaired vision…
He has now lost his job, his savings were stolen by his financial advisor, all his personal posessions were destroyed in a fire…
and now that his ARM mortgage has moved from 2,200 per month to 2,350 per month, Joe doesn’t know how he will be able to make the payments.”
Yes, the poor guy can barely afford cigaretts and booze now, and the liver transplant will definately have to wait.
It’s true. I have relatives in Ohio like this, so I’ve seen it. While in the hospital for open heart surgery they gripe about not being able to smoke. You should see how they eat too. They ridicule those who waste their time in college and quit for a new job if the pay is $.25 an hour higher, only to be laid off a few months later. And, they spend every single dime the moment it hits their fingers.
Often the financing terms are just a reflection of their life management skills. I don’t like to see it happen, but it’s not like they are open to any alternative life styles.
Responding to the post about leaving prison in Colorado and moving out to a mortgage company, I have a client who fits that perfectly. He has been in and out of prison over the past 10 years and about one month ago he called me up to tell me he was now a mortgage broker. Gosh, I now know who to go to in order to get that creative loan.
Reminds me of a story in the paper years ago about a paroled accountant looking for work. His resume included his past efforts of maintaining several sets of books for his drug dealer employer who was moving millions monthly. Apparently his previous experience was desired by his new employer.
“I look at how much things cost, how much housing costs (the mortgage payments, taxes, insurance, etc), auto prices and payments, fuel, eating out the way everyone seems to these days.”
Bingo, and let’s not forget all the other “crap” shoved down our throats by the media. (some need these for “business” purposes, but I’d wager they’re the minority here).
Do we really NEED this stuff???
New car every 3 years
HDTV’s
Constant computer upgrades, flat screens, wireless, etc.
Disposable cell phones
Digital cameras
Mp3 players
beepers
PDA’s
on, and on, and on,….
We didn’t have a lot of this stuff in the 70’s and earlier and did just fine. Even now, I just have a cell phone in my van (de-activated) for 911 emergencies only–and still have my old 97′ computer with dial-up modem.
DOC
“Constant computer upgrades, flat screens, wireless, etc”
ya got me here! i get a new mac every 3 years or so. and wireless is a must
Flat screen is a must for renters. Rent just large enough for your family, but that means economizing on space.
But a flat screen 19″ costs less than a 15″ CRT did 6 years ago.
the computer and wireless are needed. Everything else, not. 12 yr old car runs fine. Not worried about keeping up with the Jones’s. They can go HELOC themselves up the creek if they want. As for the wife that thinks 1800 sq ft is tough, go to India and see a family of six living in what amounts to a dog house with blankets over it. And this in a field with hundreds of others just like it, no facilities and running water, etc.