February 18, 2007
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A time capsule of the greatest financial mania in the history of mankind, told in real-time by regular folks and patriots. May future generations better understand the madness of crowds, and how power and money corrupt.
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41 comments:
The face of toxic loans..looks alot like honicajewinsky...Fugugly!
Sadly this family's situation is just a harbinger of what is to come. This is what happens when we become blind to the financial reality of the situation we are getting into just to have more "stuff". Moderation, living within one's means and realizing that Rome was not build in a day just is not w/in the modern mindset. The REIC propaganda has duped millions into this financial catastrophe (both individual and national). All just to juice people out of 6% & closing costs, regardless of the financial suicide that will befall upon them. They are a scourge that needs to be purged from the realty transaction process. They may have exploited the masses in this bubble but they were just highlighting the weaknesses & excesses in the system that must be eliminated so that the free, transparent, efficient transfer of realty can take place from this day forward.
Thanks for showing a personal side of the housing crash. We see a nice enough guy who was probably told that home prices would never go down and that his toxic loan could be refinanced when the payments started to go up and up and up. Now the family is coming up $30,000 short of what they owe (if the house actually sells) and the house has been on the market since August. Perhaps if they had started with a lower price 6 months ago, they would have done better. Maybe they were holding out false hope that things would get better -- and they never did.
Lenders don't like short sales, but they like foreclosures even less. I like that concept. Oh yeah, this home debtor will have to pay taxes on the $30,000 loan forfeiture. Plus, if there was a down payment, it is long gone, along with all of the interest, taxes and maintenance costs associated with "owning" a debt box. This is becoming a real tragedy.
I guess he didn't take the schedule of payments on the TIL seriously. Sucks for him and his family - it has to be difficult to tell your kids you're losing your home. Upside down on the sale, no cash left, damaged credit: he's going to have a difficult time even getting into an apartment. Off to grandma's paid-for-with-cash house, ouch.
How many HPers can say that they DON'T know anybody that lives paycheck to paycheck. For all those SIX figure income earners out there (half of America earns six figures, we all know this), you probably say, "that's absurb, everybody has plenty of money to shop at Macy's and eat out five nights a week and $3.00 a gallon gas has never been a problem."
Well despite all those realtors and mortgage brokers still earning the big bucks, yes, there are people that live paycheck to paycheck, even those in $300K homes and up.
When there ARMs adjust, they have just entered the twilight zone. Oh and by the way, the wife is ALWAYS pregnant when that happens, isn't that funny?
I couldn't get more than the first 18 seconds to play. That was enough. If I hear one more of these stories I'm going to hurl. "way, way, more than I can afford..." Give me a friggin' break, he knew how much that house cost, and now a short time later he can't afford it? What happened? He is a speculator like everyone else, the market turned against him, and now he wants to whine. Cry me a river, Bozo. Grandma Pelosi is coming to save your little hienie any day now, hang in there little buckaroo. Boo hoo.
Damn good article, entitled, "Nightmare Mortgages".
http://www.businessweek.com/magazine/content/06_37/b4000001.htm?chan=top+news_top+news+index_top+story
Within this article is this paragraph, "Now the signs of excess are crystal clear. Up to 80% of all option ARM borrowers make only the minimum payment each month, according to Fitch Ratings. The rest of the money gets added to the balance of the mortgage, a situation known as negative amortization. And once balances grow to a certain amount, the loans automatically reset at far higher payments. Most of these borrowers aren't paying down their loans; they're underpaying them up."
Now then, who out there disputes the fact that the average American is dumb as a rock? OF course eventually government will have to protect us from the big bad loan companies because as a whole, we are not required to think for ourselves. Only government can save us from ourselves.
Which leads to an entirely different blog altogether, the pathetic worthlessness of our educational system.
1. No mercy for him - he SHOULD have known better.
2. He's one of *millions*. As Keith says, it's getting ugly...
This is the type of individual who will be testifying before the senate sub-committee on mortgage fraud right before they pass the All-American Anti-Sedition, Foreclosure Moratorium, Save the Sheeple Act of 1908/09.
Take a couple of these econ 101 flunk outs, plus a few sweet little old ladies sobbing "I just don't understand how this happened", put them all on the stand, and presto, that bail-out bill will sail thru!
Don't get me wrong; it’s a tragic loss to watch your home go bye-byes, whether it's the result of outright mortgage fraud or your own ignorance, arrogance, or stupidity. Unfortunately I feel that any government attempts to interfere, prolong, mediate, or reverse the coming storm will just make it worse in the long run, and hasten the inevitable total destruction of the middle class, as they will be expected to pay the cost of the bail out.
I am thinking more and more lately about the movie Gremlins II, where the little hell-raisers have taken control of the brokerage floor of that high rise
industrial complex and are manning the phones screaming buy, sell, buy, sell, while up on the board the market goes to hell! . Remember the brainy one on the phone telling some clueless guy on the other end: "It's pretty brutal here. We're advising all of our customers to invest in canned goods and shotguns!"
That’s starting to sound like good advice!
Desperate people do desperate things.
There are now hundreds of thousands of people upside down on their mortgages. The sad part is most AREN'T getting any offers at ANY price. Take a look at Cape Coral Florida, I think that will eclipse Phoenix for the epicenter of speculator carnage.
I know several newbie speculators that purchased homes in Cape Coral. They're now upside down over 40%, to the tune of $200k on each house. No buyers anywhere in sight.
I wonder if the outstanding offer would be purchased with an ARM of sorts.
Chasing the market down for six months and being a father/husband, must be very stressful.
Hahaha. I have no sympathy. Did you see the new car in the driveway?
Ooops.
still unedited and anonymous for the real story?
http://www.iht.com/articles/2007/02/18/yourmoney/morgenson.php
Keith,
FYI, the damage from toxic loans does not only touch individuals who got suckered into taking that loan out. The MBS market is poised for a very choppy year as highlighted by the above article. You might want to explore this topic more for a comprehensive post on the issue.
Joe
"Hahaha. I have no sympathy. Did you see the new car in the driveway?"
And a Honda Odyssey no less. Not exactly a cheap-o minivan... I wonder what we he drives.
I'll bet he thought he was a financial genius when he bought the house.
http://www.bloomberg.com/apps/news?pid=20601103&sid=a1dIFzMHZoV4&refer=news
But then there is this. Either overseas investors are unaware of the reality of the US MBS market or Freddie Mac bonds are considered safer than non-gov't MBS.
Poor guy- what's he gonna do now?
What you all don't realize is that this is very bad for the economy and everybody. Less wealth factor means less spending which brings consolidation (mergers making for less competition) and higher prices for everyone.
Never estimate the law of unintended consequences. I've got money in the bank to hunt for a good deal. But that might never come to pass either!
-BC
This is a sad story. You can see this is a soft-spoken simple person with kids. I once read that a fair estimate of people with highly developed critical-thinking skills (like most who read this blog) is under 20% of the general population. It is for this other vast middle of people who are basically honest, decent people that government and industry-based regulation is supposed to exist to protect citizens from unscrupulous greedy predators. The complete lack of oversight on these toxic loans, brokers, and lenders is going to be the story of the decade if the mainstream media does the right thing and shows where the blame lies.
Here is a semi-decent home in Flint, Michigan on ebay. If this isn't a sign of the times, I don't know what is. 1 day 13 hours left on the auction and its still at $5100. (Although it might double the last day)
http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&ih=001&sspagename=STRK%3AMEWA%3AIT&viewitem=&item=110090839499&rd=1&rd=1
1. Nobody wants to move to Flint because the economy is dead there.
2. Americans are spoiled. If they aren't in hock up to there eyeballs on a $500K loan, its not worth having.
3. EVEN AUCTIONS on ebay aren't doing well because the supply greatly outstrips the demand.
What else can we extrapolate from this picture?
people will be tossed out of thier homes. Hate to say I told you so.
I just read the BusinessWeek article recommended above by Guy Daley. Most amazing revelation: lenders have been paying higher commissions to originators for I/O loans than for conventional loans. I guess somebody higher up the chain just wants to book the phoney income from the I/O loan to boost the stock price of the company, a la Enron. Insane. Cash will be king again someday. I'm just not sure it will be in the form of U.S. dollars.
Time for a "DO OVER".
They didn't show the guy's wife. She's probably a cow, hence the name Vacaville, and he's a wimp for listening to her simpering whining to buy the house.
I like the real estate agent. He's like Vic Mackey (The Shield). You know this is pretty serious if a real estate vigilante gets interviewed.
Ok, ok, so I'm stretching it a bit here for a laugh. Give me a break.
That's the root of the problem.
The government should not be protecting people from their own stupidity. Without examples of failure littering the streets, all the stupid people think that bad decisions have no consequences.
If the government bails out the stupid people, it drags everyone down and still doesn't teach the stupid people to stop making stupid decisions.
½ a million dollars for that ???
anyone paying more than $180k (on the high-end) is a moron.
The value of this house in 2001 was most probably $165K.
Can someone explain why the owner thinks its worth over $500K?
Is it because he paid a lot for it?
And here is another observation.
Did you all notice that FBers also drive brand-new cars?
This guy cant pay for a roof over his family’s head and he’s got a brand new Honda van in the driveway.. any idea what the monthly payments may be?
Did you hear that, Colombo is working on a dozen short sales….
I’ll bet he tells buyers if they don’t make a decision today they may never have another opportunity.
>> ...there are people that live paycheck to paycheck, even those in $300K homes and up.
I've got a friend who's in HR at a major corp. here in town. He's got execs with multi-million dollar salaries who live in multi-million dollar homes - and THEY'RE living paycheck to paycheck! It all adds up: prop taxes, his/her Ferraris, a boat, the country club, kid(s) in college, wife who spends like there's no tomorrow...
There's (one of many) homes for sale near me, listed for $1.9m. Prop taxes are $111k/yr!!!
One thing you can be sure of, nobody with any real money will be hurt by this. They are quick and slippery. They book profits from non-payment, take bonuses based on same. They pump and dump stocks. They take all the profits and losses are always hidden forever by shenanigans. I don't think they even keep track of the money they loan out because they just made it up out of nothing. The guy in the video is just a lumpen putz that the shysters use to stroke the system.
The fact is that, relative to what's going to transpire in the next few months, this is a story with a happy ending. This guy should thank his stars for getting 499K for a home in soon to be Vacantville.
Wait a minute, didn't Greenspan tell us to get adjustable loans and Bernanke suggest that he would drop money from helecopters to keep the economy moving?
Hahahaha, Trust me, that dude looks nothing like me.
I don't feel sorry for anyone stupid enough to get caught on the wrong side of an ARM, the borrower has to sign so many different ARM disclosures at closing, if he does'nt get it when you as the originator explain it to him, he would have to get it at closing. This dude is just some idiot that either did'nt read what he was signing, or did'nt care. Either way, he's a stupid SOB.
Don Korpi, real estate broker, looks like he might be packin' some heat under that leather sportscoat. That guy looks like his previous job was night club bouncer. Too much!
Ditto Anon 5:03 - $500,000 for that house? Even if you have above avg. income and made a hefty downpayment, that sure seems like a big outlay for any house. And it doesn't look like my notion of 1/2 million unless it's a lot nicer place than Vacaville, CA.
so we got a guy that can't afford 30k to make up the difference buying a 500k home.
redonkulous.
Wait a minute, didn't Greenspan tell us to get adjustable loans and Bernanke suggest that he would drop money from helecopters to keep the economy moving?
Ha Ha ... Bernanke is dropping money from helicopters. Money expansion is running double digits. However, that liquidity goes to the Fed's primary contituancy .. the Banks. Repeat after me THE FED IS NOT A GOVERNMENT INSTITUTION. Look for the Fed in the phone book. Is it in the Gov section...no, it's not. It's a private corporation with a cartel of major banks as the share holders. Everytime a new Fed chair is selected, the names are taken from a list made by a "panel of experts". Who are the expects...why the major shareholders of course. There's plenty of money...Joe Average just doesn't get most of it.
You know it is hard to feel sympathy for people with such a poor grasp of simple math. Hopefully his kids will learn from Daddies stupidity and this won't happen to them.
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