March 23, 2006

ABC News video: Homeowners who can no longer afford their homes (thank you ARMs)


Click the link - this is an excellent, excellent report. Too bad the media didn't report this stuff when it was happening - or when Greenspan was recommending folks get an ARM and Bush was recommending everyone buy a house.

It's too late now. People are in too deep. Foreclosures will soar (and are soaring). Lives are being ruined.

Yes, nobody made these folks buy a house. Noboday made them sign a no-down, interest only teaser rate loan. Nobody made them buy a wildly overpriced bubble home. They made their beds, now they don't get to sleep in 'em.

hat-tip to bpl for the link. Oh, Sam D. doesn't do the report - I just liked the picture.

65 comments:

Anonymous said...

...what does Star Trek have to do with this???

Bake McBride said...

Poor Heidi....
"The payments started out at $1,700 a month then moved to $3,000.00...There is no way we can keep up with that."

Poor Baby....Had to have the big house now but could "only" afford a comfortable middle class home...Oh the humanity!!!

These are the exact people I do not feel sorry for. They can afford between $1,700.00 - $2,000 per month on a home...yet they are losing their home because of their own greed. Boo freaking Hoo

Anonymous said...

The constant drip drip drip of these stories is surely having an effect on the hoemowner's psychology, so when do folks get real and lower prices on their houses? When do we really start seeing meaningful declines. I don't think I can wait 5 to 7 years.


Simmssays...
http://www.americaninventorspot.com

Bake McBride said...

"I don't think I can wait 5 to 7 years...."

I don't think you'll have to wait that long. This bubble started because EVERYONE saw housing as the next gold rush. Once a few markets get slaughtered...the same herd mentality will tell them to get out while they still can. Just My Opinion.

Marvin Gardens said...

bake,
Can you not observe the consequences of loose lending practices in this bubble without being so cranky and mean? You don't have to look down on people just because you made better financial decisions in life. Don't you get tired of going around calling every person who screws up a looser?

Anonymous said...

I would tend to agree with Bake, who in their right mind would take out an adjustable rate mortgage when interest rates are at historic lows? It makes absolutely no sense, and it is really hard to feel sorry for someone who bought way more house than they could realistically afford. What are these people thinking?

Bake McBride said...

"Can you not observe the consequences of loose lending practices in this bubble without being so cranky and mean?"

I'm suppossed to blame the lose lending practises when this couple knew they could only afford a mortgage between 1,700-2K a month??
They took the risk that their home would appreciate for a hefty profit before the $3,000.00 mortgage bills started to arrive.

I don't want to see anyone losing their home....but the blame belongs on this couple not the lending policies.

Anonymous said...

You're right! What a looser! I hope they learn their lesson!

Marvin Gardens said...

bake,

I'm so fascinated by you. Also, you annoy me with your tough-talking capitalist BS. Were your parents mean to you and make you feel like a failure? Are you overcompensating for something by beating up on people who aren't "as good as you?"

Why do YOU have to blame anybody? By your own logic, the cold, harsh realities of simple economics will dictate the outcome. I just don't believe it's necessary to point out other people's weaknesses or problems to prop myself up.

buzz kill said...

These people who think that they can buy an expensive new house, live in it for two years, and sell at a huge profit crack me up. Yeah, I want to spend my time cleaning your toilets, shower, and carpet stains so you can go defile another new house. One of these days those types are going to get caught like that woman on tv. Did you see how she trashed that house? I am not buying anything until they beg me for the low-ball from hell offer. Then, I will say: "Get out of my house you losers!"

Anonymous said...

I think the reason many of us our cranky is that we anticipate having to bail these assholes out with our tax dollars.

Bake McBride said...

If by capitalist BS you mean buying things you can afford...then I'm guilty.

This market has been driven by people that purchased homes way beyond their means....I'm supposed to feel sorry for someone that has artificially inflated this market?

And yes...my parents were very mean to me....Lived in a closet until the age of 22

cereal said...

heidi likes to "sit around the fireplace and watch tv."

what heidi needs is more treadmill and less breakfast donut. typical fat lazy american pig who will soon tax our healthcare system another $250,000

Bake McBride said...

Cereal, thanks for taking the "mean" title from me (LOL)

Buzz Kill said...

Yes, Americans are fat and lazy. They will get what they deserve some day. I see the housing market like a tidal wave. Right now the rumbling under the sea that all is not well. Later, on the shore (California) the tide goes out. The speculators see the fish flopping (first wave of foreclosures) and rush out to pick up the deals. Then later still, the tidal wave comes in (job losses and more foreclosures) and drowns them also. Then, a second wave of bank failures hits, further depressing the market due to lack of lending and more job losses. By the time it is over it will be a massive catastrophe.

Marvin Gardens said...

Okay everybody, bake, in his brilliant fanancial savvy is giving the world a wake-up call. Don't buy stuff you can't afford! It's as simple as that. If you do, not only will you owe more than you can afford, but you'll also be a loser in his book. And that makes bake feel like a winner.

onlygoesup said...

marvin gardens....
you are a nut case!! why is it capitalist BS to ACTUALLY expect people to be RESPONSIBLE for their own actions?? this is one of the biggest problems in this country is people that think like you do. THESE PEOPLE ARE NOT VICTIMS!! they made very poor irresponsible decisions, now they need to deal with it.....without a gov bailout! we are all victims of our own greed at times in our lives, we just have to learn from our mistakes.

onlygoesup said...

marvin gardens...
it is that simple. if you cant afford it....DONT BUY IT!!!

Marvin Gardens said...

onlygoesup,
I totally agree with everything you just said. I hate it when people like bake simplify the situation with cliches of capitalism. Perhaps that would be a better word to use than BS. I don't know why I'm stuck on him, but he sounds like a cranky old guy that tailgates people in a big suv...

Buzz Kill said...

Tax time around the corner. The flippers who made profits on houses they didn't live in for two years will have to pay gains taxes. God, I think I'm in love with the IRS. :-)

Anonymous said...

It definitely IS NOT THAT SIMPLE. Take an economics class sometime...

Bake McBride said...

"Marvin Gardens said...
Okay everybody, bake, in his brilliant fanancial savvy is giving the world a wake-up call. Don't buy stuff you can't afford! It's as simple as that. If you do, not only will you owe more than you can afford, but you'll also be a loser in his book. And that makes bake feel like a winner. "

Do I still hold the "Mean Title"?? Sorry Ceral, I may have given it to you too quickly....my bad ;)

I can't wait for my tax dollars to go out to help poor Heidi...After all, how can anyone be expected to live in a home in Texas for "Only" $2,000 per month.

onlygoesup said...

marvin gardens...
it is that simple. this does not have to be a complicated issue.
bad decisions=bad results

foobeca said...

I'm glad people like this are losing their homes. They were totally irresponsible and not good at math. Most people can only afford a mortgage that is $1500-$2000/mo max. They get creative mortgages so that the purchase price is irrelevent and so the monthly payment fits in that range.

It's totally different when a couple can afford a mortgage, but something happens like a job loss, death, accident, or illness happens which causes them to lose their home. I feel bad for those people.

onlygoesup said...

well said.

Anonymous said...

whatever happened to 'common sense'?

has the country been hit by the stupid virus?

Bake McBride said...

"Marvin Gardens said...
I don't know why I'm stuck on him, but he sounds like a cranky old guy that tailgates people in a big suv..."

OLD???? Now you did it...I may have a little grey on the sides..but still a bit shy of 40.

Live in Manhattan so I don't own a car....

Sorry if I see things too simplistic for you...but I try not to complicate things too much.

How much do I have?
How much do I make?
What can I afford?
How long do I intend to live here?
What is the worst case scenario for my adjustable?

See...simple questions....not very complicated. It gets complicated when you try and find others to blame for an individuals bad decision.

Bake McBride said...

Foobeca
"It's totally different when a couple can afford a mortgage, but something happens like a job loss, death, accident, or illness happens which causes them to lose their home. I feel bad for those people."

Well said....This was not the case for "poor" Heidi.

Marvin Gardens said...

bake
Sorry, you annoy me so much. You're repeating yourself and not saying much of anything:

--you've got your finances in order, and you like to keep things simple (nice job)
--you are critical of people who have made bad financial decisions (aren't we all)
--you seem to feel this gives you the right to look down on them (that's not my style)

It's a combination of complex factors that's causing these problems in America (obesity, savings, debt, poverty, racism, etc.). You probably can't fix it by a by going to the highest mountain top and yelling, "Use more common sense, dummy!"

AnonyRuss said...

http://tinyurl.com/fzdvn

From Craigslist. Supposedly, he is the last man holding this Phoenix area flip. But he exaggerates the 1243 square footage. More importantly, the purchase price may have been $230, but his two purchase loans total $207K in November '05.

And as far as I can tell, no 1200 to 1300 square feet house has EVER sold in his Tolleson zip code for more than the low $230s.

Stop lying, Bill. You're stuck.

Anonymous said...

anon said "whatever happened to 'common sense'? has the country been hit by the stupid virus?"

Yes, the virus is called Absurdiali Gullibili

brokersleaveyoubroke said...

What a pathetic video! If Heidi had stood there and said "Well, we blew it but it was nice while it lasted, oh well, live and learn" I would have liked her. But that "poor me, I'm such a victim, don't you feel sorry for me" attitude made me want to puke. Did you see that monster house? How could anybody possibly think they could live there for 1700 a month? I feel sorry for people who have McJobs and overextend themselvs to get a 3 bedroom ranch and then get into trouble but someone like Heidi who thinks they're entitled to live in luxury gets no sympathy from me.

moman said...

bake mcbride is CORRECT.

Don't feel sorry for people who don't understand two concepts: (ahhh---new one here)

1. DELAYED GRATIFICATION

2. SIMPLE ECONOMICS

Heidi wouldn't be in the mess she's in if she had understood both of them.

Both those concepts are learned in childhood. If you have 50 cents you can either get a candy bar or a soda, but not both. If you choose the candy bar instead of the soda you have practiced delayed gratification for a soda.

Around here it's a must to use elementary concepts because the average IQ seems to be fairly low or we're just surrounded by 'bleeding hearts' feeling sorry for the poor person who couldn't live within his/her means.

Anonymous said...

SD's hairpiece is a thing of beauty;)

Bake McBride said...

"It's a combination of complex factors that's causing these problems in America (obesity, savings, debt, poverty, racism, etc.). You probably can't fix it by a by going to the highest mountain top and yelling, "Use more common sense, dummy!"

Maybe poor Heidi and her husband have an inferiority complex and have a strong urge to keep up with the Joneses....You can dig & dig into a problem to try and find the root cause....but it does not change the fact that this couple could "only" afford 2k for a house. They decided to play the game of Russian Roulette and lost.

Marvin Gardens said...

Moman,
I never said I felt sorry for her or that she was a victim, but I didn't strut around shooting my mouth off about how stupid she was.

I share the opinion of many if not all on this site that this woman's story is disgraceful and shocking.

On a certain level you could say that personal finance is like managing your pocket change at the candy store, but the "how much house can I afford" (along with taxes, appreciation, risk, liquidity, etc.) scenario is a bit more complex. People take on more risk than they should all the time and get burned. Some don't.

Anonymous said...

No, it's not good to revel in the misfortune of others.

That said, my sympathy level is very low, because I took a deep breath, accepted defeat, and let the ARM buyer have the house. I've been in a position to bid for a year, and I'd really like to own a house. But last year, I refused to use an ARM to win a bidding war.

If it turns out I made the wrong decision - ie., housing keeps booming (or even goes into the "soft landing" we keep hearing about), well then I lose - and I have to accept those consequences. Just like the people who used ARMS to outbid me need to accept possibility of losing their house if the arms adjust in a declining market.

Roll the dice, pay your price.

Bake McBride said...

"brokersleaveyoubroke"

Love the screen name (LOL)

Bake McBride said...

"That said, my sympathy level is very low, because I took a deep breath, accepted defeat, and let the ARM buyer have the house. I've been in a position to bid for a year, and I'd really like to own a house. But last year, I refused to use an ARM to win a bidding war"

Your patience will be rewarded....
The cracks have started...soon you will be the only one bidding and have more choices then ever before.

Marvin Gardens said...

...or maybe not.

moman said...

marvin,

"How much house can I afford?" is a question that needs to be answered SOLELY by the person who is paying the bill. Asking a banker how much house you can afford is akin to going to the Chevrolet dealer and asking them which car you can afford.....of course they are going to try and get you the most expensive car on the lot or the most expensive house. Planning to buy a Aveo? Nah...might as well get the Tahoe that costs 6x as much since YOU can afford it.....never mind that the planned payment is now $650 instead of $150 a month.

I personally think Heidi's an idiot and as such have NO sympathy for people in that situation. I have some credit card debt from a couple years of stupid decisions in the past. I guess I should expect everyone else to feel sorry for me and give me money to pay it back while I continue to spend like it's going out of style.

Anyone that is gambling should study the odds and determine if the potential reward is worth the cost. Buying a house in today's market is a gamble. Some will win but many will lose.

Bake McBride said...

"Marvin Gardens said...
...or maybe not. "

Maybe not is right...but at least he won't have to worry about living in a place he can't afford.

Marvin Gardens said...

moman said,
"How much house can I afford?" is a question that needs to be answered SOLELY by the person who is paying the bill."

It IS answered solely by the person who is paying the bill by virtue of the fact that she must pay the bill, and now she's going backrupt.

But as you say, salesmen are good at selling. It's currently VERY easy to buy a McMansion for way more than you can afford. That should not be possible. Sometimes we need to put regulations in place to protect people from themselves and to prevent unethical business practices. That's not some bleeding-heart idea. That's how we keep the economy from going nuts like this.

Marvin Gardens said...

bake,
some people with ARMs are getting equity just fine right now. I remember when we bought our first house. I couldn't believe the numbers. Never used an ARM. I'm very conservative and and always always went with a 30-year fixed (which looking back was kind of financially naive because I'd have significantly more in our nest egg today if I had).

Bake McBride said...

Marvin, I never said ARMS were bad...or 0 down loans. It depends on the situation. For some they make perfect sense.

For the people in the Heidi example...they make no sense. Their family can afford only the intro rate....Did they think there was no chance of their payment going up??

Maybe they gambled on the house appreciating 50%...If so, they lost the bet.

onlygoesup said...

marvin gardens...
are you a lawyer? if you are, it makes perfect sense. just answer questions with a "yes" or a "no". You make things way too complicated. I think you (maybe) agree that this woman is an idiot, but you also want to place blame on others and let her be a victim. SEE IS NOT A VICTIM OF SOMEONE ELSES DOING!!

Marvin Gardens said...

She took a calculated risk that was clouded by many factors ranging from "keeping up with the Jones's" to vulnerability to buy into a salesman's pitch.

Getting back to the original post, what strikes me the most is the fact that it made it into the soundbite world at all. Pretty soon it will be common to hear people talk about how they "lost their house in the bubble" as if some force of nature swept through and washed it away. There will be some creative solution for these pathetic folks--not unlike gastric bypass surgery for obese people.

Marvin Gardens said...

onlygoesup,
Ask me a question.

onlygoesup said...

Marvin Gardens said..."She took a calculated risk that was clouded by many factors ranging from "keeping up with the Jones's" to vulnerability to buy into a salesman's pitch".

Come on...this takes the cake!! Now it is because she was trying to keep up with the Jones? If she was trying to keep up with the Jones and couldnt afford to do so, this is HER FAULT!!
SHE IS NOT A VICTIM!!!!!!!!!!

onlygoesup said...

marvin gardens...
are you a lawyer?

Marvin Gardens said...

no.

onlygoesup said...

marvin gardens....
I am very impressed with the answer. You did it.
now tell the truth, you do some type of job working with "victims", right?

Bake McBride said...

"Pretty soon it will be common to hear people talk about how they "lost their house in the bubble" as if some force of nature swept through and washed it away"

We can agree on that....

Most people I know in this situation knew the risks and chose to ignore it. Some are going to be in HUGE financial holes soon.

I'm not happy about it...but I don't feel bad for them either. It's the risk they took. Just like the people that bet their retirment savings on Pets.com.

Marvin Gardens said...

compare what you're saying with obesity in American...

She ate too many twinkies. She ate too much popcorn. It's endless.

Stop. Step back. X% of Americans are obese. It's no longer a story about a fat person. It's a story about fat people, which goes way beyond twinkies and popcorn.

Bake McBride said...

I'm too obtuse to get it....

I break things down on an individual level.

Marvin Gardens said...

There's a difference between attacking one person for their bad financial planning and trying to figure out how the overstretched ARMs crowd will affect the overall economy. Just like there's a difference between a connection between bad nutrition and one fat person and figuring out how a large population of obese people will affect overall health.

Once and for all, I don't view her as a victim. Economics doesn't really have anything to do with victims or a battle between good and evil.

Marvin Gardens said...

onlygoesup,
I work in marketing/advertising.

Anonymous said...

Why didn't these idiots refi when rates were at historic lows?

Why did two people and two dogs need a 3500-sqft house? They could have easily bought a new 1600-sqft house in the same area for $130K and had payments under $1000/mo on a 30-yr note. My sister, her husband and son live in a similar house in the Dallas surburbs.

People are stupid and greedy pigs.

Anonymous said...

I agree with Bake and he or she probably worked for a family member who was a depression era baby.

Additionally, I subscribe to those capitalist BS ideas of saving for rainy days and that you've got to have money to save money. It can be that simple and I never taken an economics class. Cash is always King.

For those of you who chose exotic mortgages and are now losing your house, take a good long look in a mirror. You'll get to the root of your problems.

We renters now have a new title. Instead of being called Bitter Renters, we are now Arbitragers. Makes us sound important for just paying attention to what's going on.

Marvin Gardens said...

"take a good long look in the mirror."

that's another good cliché like "caveat emptor" and "A fool and his money are soon parted." If you can't think for yourself, you'll never get anywhere--and especially don't think like your depression-era parents.

Today you have the balls to criticize people going bankrupt. A year ago many of the same people you refer to made a lot of money. Not everyboby is going bankrupt.

Here's a tip. Cash isn't king. Compound interest is king. Avoiding taxes and staying ahead of inflation is good too.

Anonymous said...

It's sometimes hard for me to view people such as Heidi as victims. I have a tendency, being honest here, to view them as perpetrators.

They blew this bubble up. If people had stayed within their means, I might have my own house right now.

So yeah, I hate them a little.

Marvin Gardens said...

talk about victims...

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