Why did the shoe-shine guy think he could afford a $500,000 condo (with that no-down, no-doc, interest-only, teaser-rate loan) - and how did he ever get that loan in the first place?
July 13, 2006
HousingPanic Stupid Question of the Day
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13 comments:
maybe the fumes from his shoe polish affected the functioning of the mortgage lender's brain.
because both he and the lending officer had spent too much time reading Rich Dad Poor Dad
he had a pulse and a job. Nuff said'
anyone I mean anyone can get whatever they want in life...you just have to pay for it!
because he and his lender both are on crack cocain.
That "shoe shine Guy" is an entrpreneur and probably has more shop security than any "employee"
he probably has learned how to manage money better than most and will most likely keep his $500,000
investment..can you say that?
MTV "bling" culture.
Remember when MTV had music on it? And it was for people who didn't go along with the revolting mass consumerism and 16 year old barbie "i'm like so suure" stuff?
Keith: the best part of the blog is definitely the pictures.
"Yes Senator McSantorum, I did read HousingPanic Blog, but I swear it was only for the pictures. No Senator, I am not and have never been a member of the Libertarian party."
Word on the street "PANIC". . .
Just had a call last night from a school teacher friend (somewhat better salary than shoeshine boy). . .who bought some Las Vegas condos for spec with some friends. . .they are ALL underwater, and he is going to loose a bundle on deposits. This guy is ALWAYS at the end of the cycle - he bought internet stocks in January 2000. . .and recently took out a HELOC for get this - GRANITE COUNTERTOPS!!!! (The signature symbol of the housing bubble). . .the Fat Lady has sung.
Probably the same reason why a secretary in my office who makes $35K took out a heloc on her house to buy a new Lexus LS400.
Common sense, restraint, objective financial analysis have gone down the toilet!
HELOC for granite countertops. That stuff is dirt cheap. I was at Home Depot last week checking it out, and they were like $10-20 per square foot or something like that.
People are danged stupid. Must have been the idiot wife to want that one.
- Mortgage broker is not responsible for what happens after the loan is made. Even mortgage companies know they are going to sell the debt off, and are only taking a commission for origination.
- Historically, default rates were low, and rising prices kept them low. This caused a mis-pricing in future looking risk. Happens all the time in markets, witness junk bonds in the 1980's. The first run of junk bonds were quality companies and "fallen angeles" and ended up being good risks. This led to high returns, which causes the junk companies to get financed, until the collapse.
- "Shoe Shine Boys" have nothing to lose in their minds. Prices are going up, they believe they will sell for a profit. Worse case, they may not have a lot of assets at risk they believe.
- The 35k secretary's I knew typically had a higher earning husband, so they justify the fancy car since their working is for "toys". But this was more reasonable days...
Besides, a used LS400 (about 7-8 years old) is a *great* deal. A reliable, classy car that can be had for 30-40% of new price. Had one for a while, no problems with it.
Because he has a job? Joking. My realtor who sold me my house here in Austin was telling me yesterday about a client who is buying a house here. They are Post-Katrina evacuees with no brains and no money. They were getting a $167,000 no money out of pocket loan to buy a house with no DOCUMENTATION because they fall under those government programs to HELP HURRICANE VICTIMS....my ass! The reasoning is that all their documents were destroyed in the storm and all they needed was a credit score of 625! What joke!
Well, they screwed up the day they were to close because Countrywide ran their credit one last time and the guy's wife had applied for 77 lines of credit since they first applied to buy the house! Now they have to produce their Income tax statements and come to find out they lied about that as well and their whole house of cards to buy a house is falling apart and you know what? They think they are being VICTIMIZED because they lost everything in the storm (no, they didn't own a house in NO, just rented) and they don't know what they are going to do as HUD has stopped paying their rent on the rental they have lived in for the past 10 months and they have no money to move!
I was shocked that someone with such a low credit score could buy a house with no documentation and no money! Guess I should have owned a rental or something in NO or BIloxi and then I could have gone out and bought a house with NO MONEY DOWN and the hell with 30 years of building up my imppecable credit score and savings to buy a home.
Because the new world will be a share cropper society and not a share holder society. And as elusive as are the answers to questions about our perceived history ...we will only have our belief in Keynesian free markets to blame. And once again the real criminals get away.
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