April 18, 2007

Buyer's remorse in the age of the no-down option-ARM mortgage and dot-condo downfall


What would someone suffocating on a $500,000+ no-down ARM mortgage on a depreciating condo in Phoenix, San Diego, DC, Miami, Tampa, OC, Sacramento etc. say about it these days?

Here's a few for starters:

* Self-imposed financial slavery (thanks to a HP'er for that one!)
* The worst financial mistake I could have ever made
* I got dot-condoed in DC
* House-poor and getting poorer every day
* Even Suzanne thinks I'm an idiot
* I got Swanndled in Scottsdale
* Leverage sucks on the way down
* What was I thinking?
* Where did all the buyers go?
* What doesn't anyone live here?
* Where are the wine and cheese parties and models I was promised?
* I paid $800,000 for an apartment? F*ck. I am a fool.
* Man, that government bailout can't come soon enough
* I wonder if I leave the keys

47 comments:

Anonymous said...

So this this the American dream? More like a nightmare.

Anonymous said...

Well, I'm sure many will turn to a marijuana farm in the basement for extra dough. Only with every other homedebtor doing it the price of marijuana will collapse.

Anonymous said...

So what are the boilerroom mortgage brokers doing for work now that the sub-prime game is up? Merit Financial in Seattle collapsed a while ago, and laid off a lot of 18-yr old brokers pumping piles of poo.

Anonymous said...

"I've got a lead on that b*tch Suzanne. She's fled to Uraguay."

James Dean said...

The biggest financial decision of life my life - and I paid 70% over retail! Err, well, no I didn't pay it yet, but I will be paying it for the next 30 years. So much for 401K contributions.

Anonymous said...

Is that a picture of Oedipus, after he slept with his mother, killed his father, and gouged out his eyes? Oh, it's the modern day equivalent: bought an over priced home, HELOCed the sh*t out of it to buy a Hummer and get the post op trophy wife. Oh, the humanity!

mcbrinitzer@apmortgage.com said...

That wasn't how they said it would work in my $12k flipping seminar.

Anonymous said...

With a no down mortgage - it is not the buyer who is suffering. They can just walk away and lose nothing...

Marky Mark

Anonymous said...

All that for a 3% drop in prices?

Oh prices have dropped more than 3%. Show me 5 examples of condos that were sold for less than 95% of buying price in the past month in Phoenix. And I mean sold for, not asking price.

Didn't think so.

Lisa said...

I think this will have to get a whole lot worse before we see buyer's remorse. The attitude towards debt these days is just so twisted. People don't see the point of making a downpayment, of starting off in a modest townhome, of sending in extra $ every month to build equity. Homeownership has become an exercise in extreme leverage. People want it all NOW.

I wonder if the pain is going to be silent when people finally face what they'd done. Can you imagine the humiliation of going from "financially brilliant" to "financially wrecked for life"? Not sure how many will be broadcasting that shift.

Anonymous said...

I think King Solomon, son of David, King of Israel, in the days of old, who was the smartest and the richest man who ever lived said it best.....

Vanity of vanities, saith the Preacher, vanity of vanities; all is vanity.


today we americans are about vanity.....vanity at any and all costs........and this will change.......and soon.

we have flown high and we have flown long.....so now, like Icarus, we have flown too near the sun and the wax, on our artificial wings( paper money) is melting and so now we shall decend forever more...

Anonymous said...

Your search has returned 59264 homes (stuccoboxes)

MY SEARCH RESULTS FOR PHOENIX ON ZIPREALTY.

CAN WE GET ANOTHER THREAD ON PHX???

Why didn't I do this 2 years ago? said...

Why I think there is little or no remorse coming looking at things from the eyes of the foreclosed upon:

Here are my options as far as putting a roof over my head.

1. Rent. I have no chance at appreciation. I am always subject to a potential 30 day notice to leave if landlord sells, files for BK, etc. I have to put down a hefty security deposit as well as abide by several of the landlord's rules.

2. Buy. I get a $0 down, interest only ARM witha low 2 year teaser rate. I also throw in all closing costs as part of the mortgage too, meaning I move in with lierally $0 down. Right away I'm better off than renting.

If the property appreciates, yay for me, I made money on a $0 investment. If it doesn't or if the property falls in value, oh well so be it. I live there for 2 years paying interest only at 2.9% which is lower than the cost of renting the same house. I also get a nice tax deduction that I don't get as a renter. After 2 years if I'm underwater, so be it, I walk away and foreclose. I lose no money of my own.

I lived in a great house for 2 years and walked away with $0 which is what I walked in with. So essentially I rented a house from the bank with the added bonus of a tax deduction, no security deposit and no risk of ever being evicted. I could also paint the walls purple with pink polka dots if I wanted.

Only downside I see to #2 is a hit to my FICO after foreclosure. But even so, who gives a rats ass about FICO scores anymore? In this day and age a 520 FICO will qualify for a mortgage and I can do it all over again.

So really there is no downside and hence no remorse.

Anonymous said...

Sheer brilliance. I wish I were creative enough to come up with some of these.

You should make them into T-shirts with the guy from "the scream" on it or pictures of houses getting crushed.

dot-condoed
swann-dled in scottsdale

Love it.

Why don't you do one of those "type in these letters" things if you're worried about spammers. It would be easier if you accepted all posts and then deleted every few hours when you check in rather than vice versa.

Anonymous said...

Lisa said...
I think this will have to get a whole lot worse before we see buyer's remorse. The attitude towards debt these days is just so twisted. People don't see the point of making a downpayment, of starting off in a modest townhome, of sending in extra $ every month to build equity. Homeownership has become an exercise in extreme leverage. People want it all NOW.
____
Yes, yes, yes. You're nailing it right on the head. People want instant gratification and they don't care if they have to sell their souls to get it.

Hayley said...

Hey Keith,

Everybody's a critic eh?

Anonymous said...

>>>today we americans are about vanity.<<<

I'm not vain. I just wanna be cool and have bling like P-Diddy and 50 cent.

area 51 said...

You're all wrong, there will be no remorse. B'cuz you and me and all of us and our children will be footing the bill after the gub'ment bails out the banks and foolish borrowers with 40 year loans at below-market rates. The bubble will stay inflated for some time to come.
Everyone will have massive debt, middle class and especially the poor who get to keep their hyper inflated mortgages. Bubble sitters will be priced out for a long time, but may end up richer in the long run.

Steve the Dog said...

"...I'm not worried in the least. Real estate always goes up. I'll just list it in June and make a tidy profit."

Steve the Dog

woof.

TaZ said...

Sociopaths don't feel remorse, unless they screw the pooch and botch the con ;-)

Anonymous said...

The BAILOUT is almost ready to go. Hey thanks a lot renters, your tax subsidy may just be enough to get than new 2008 BMW I'm eyeing. Again thank you renters, you guys rock!!


NEW YORK (CNNMoney.com) -- A series of speakers at a Congressional hearing of the House Financial Services Committee on Tuesday called for restructuring adjustable rate mortgage (ARM) loans to help solve the subprime mortgage crisis.

Nearly all the parties speaking before the committee agreed that one of the best ways to work out the problems is to move borrowers out of hybrid adjustable rate mortgages - the so-called exploding ARMs - and into fixed-rate loans.

Panelists at the hearing included spokesmen for Freddie Mac and Fannie Mae, the Federal Deposit Insurance Corporation, Housing and Urban Development, as well as consumer groups, lenders and real estate investors.

Ohio Congresswoman Marcy Kaptur, whose state leads the nation in foreclosure rates, was the first panelist to speak and recommended a three-pronged approach to loan modification.

Establish rescue funds for borrowers facing short-term problems caused by illness, layoffs or other one-time events.
Establish a bond fund to pay for switching borrowers out of unaffordable ARMs. Ohio has already started a bond fund to put subprime ARM borrowers into 30-year fixed-rate loans at 6.75 percent interest.
Refinance loans for victims of predatory lending. This would involve working with Fannie Mae, the quasi-governmental corporation

Anonymous said...

>Only downside I see to #2 is a hit to my FICO after foreclosure.

Doesn't the IRS come after you for the debt forgiven in excess of the house value or something? Or is that only in a "short sale"?

Phoenix Sucks said...

Any every day, I can pity myself in the hell hole city of Phoenix. "Soon I will roast my balls off," What's that excuse me it's the electric company on the phone. " No I can't pay your bill just now." Oh no they are going to turn the electric off. I will suffocate to death in this stucco shit-box.
HHAHAHAHAHAHAHAHAHAHAHHAAHAHHAAHAH From the sweet guy who flipped 3 of these houses to you LOSERS!!!!!!

Patch Tuesday said...

Said: "Why didn't I do this 2 years ago? said...
Why I think there is little or no remorse coming looking at things from the eyes of the foreclosed upon:"

Last time I looked the landlords required a credit report. So, in summary, you can no longer rent from anybody, and you can no longer buy from anybody, most likely for at least two years. Enjoy pushing around that shopping cart and sleeping in your car...

yuccatree3 said...

1. Establish rescue funds for borrowers facing short-term problems caused by illness, layoffs or other one-time events.
2. Establish a bond fund to pay for switching borrowers out of unaffordable ARMs. Ohio has already started a bond fund to put subprime ARM borrowers into 30-year fixed-rate loans at 6.75 percent interest.
3. Refinance loans for victims of predatory lending. This would involve working with Fannie Mae, the quasi-governmental corporation.
____________________

I can see the value of Nos. 1 and 3, but what are TPTB going to do about borrowers whose only chance of buying an overpriced home in the first place was to use one of those low "teaser rates." A 30-year fixed rate loan at 6.75% is not going to work for them....

Anonymous said...

Hey patch adams, you do realize that I wrote that as my opinion of how an FB looks at things right and not personal experience right? Jeez, take a fucking xanax will ya

Anonymous said...

I can see the value of Nos. 1 and 3, but what are TPTB going to do about borrowers whose only chance of buying an overpriced home in the first place was to use one of those low "teaser rates." A 30-year fixed rate loan at 6.75% is not going to work for them....

Here we go again assuming you know what everyone can or can't afford. For some you're right it won't make a difference, for others it will. Some ARMS have reset to 10% or more. Getting that back to a 6.75% won't save everyone from foreclosing but it will save some.

If you can afford a 4% teaser rate you probably can also afford a 6.75% rate if you turn in the BMW for a Honda and stop buying the $400 jeans.

Anonymous said...

"With a no down mortgage - it is not the buyer who is suffering. They can just walk away and lose nothing...

Marky Mark "

Marky Mark, you REALLY DO have your head up your ass... Homedebtors will NOT just walk away and lose nothing, the bank will report the loss of the house to the IRS and the homedebtor will be liable to pay TAXES on the LOSS.

Maybe you SHOULD keep your head up your ass like the rest of the sheep.

garyk said...

"turn in the BMW for a Honda and stop buying the $400 jeans."

Ha! These dipshits won't do that. Bailing them out in any shape or form only reinforces the notion that its ok to be financially irresponsible. They need to learn the hard way.

We're all F-'d said...

HA HA Suckers!
Bitter renters will be priced out forever. The BAILOUT has already begun. It's over, past tense, the "Bubble That Never Was" is finally over. One bubble supported by another, by another. Our Gub'ment is so predictable. Markets can stay irrational longer than you can remain solvent, as in MANY MANY YEARS.

IT'S OVER. You lost.

FREDDIE MAC BUYING $20B in MORTGAGES.
http://tinyurl.com/35mbfk

Anonymous said...

Do you think this guy has buyers remorse?

http://phoenix.craigslist.org/rfs/312060243.html

This upscale loft was purchased for $796,000 in Aug 2006!

Smugbastardo67 said...

NO REMORSE...for those of us who bought a home pre-bubble, 30yr fixed rate under 6% in a bubble state AND didnt cash refi or sucked the HELOC Cock..
HAHAHAHAHAAHAHAHAH!!! You people seeing everything in black in white is fucking hilarious. Renters who are bitter for procrastinating and not buying pre-bubble AND home-debtors who bought post bubble and their ARM is hurting....
SUCK IT AND SUCK IT GOOD! How's that for Schadenfreude bitches.

You're all f0d said...

Stupid HP'ers.
The Great Bailout has begun. You lost, too bad, go home. You are priced out forever. Illegals will own all the real estate and you white boys will rent from them.

Washington Mutual Offers $2BLN on Loans
http://tinyurl.com/2rx933

On top of the $20B in loans being bought by Freddie Mac.

kitchenstove said...

But that's the point anon, no one wants to give up their $400.00 jeans or their daily cup of Losebucks. You try convincing someone to turn in their BMW for a Honda. See how far you get.

stuckinthecity said...

Anonymous said...
With a no down mortgage - it is not the buyer who is suffering. They can just walk away and lose nothing...

Marky Mark

April 18, 2007 1:30 PM



...nothing but thier credit scores!

Anonymous said...

july 2006 $180,000
sept 2006 $150,000
april 2007 $135,000

condo complex in fl, same floor plan
real time drop.

Anonymous said...

kitchenstove said...

But that's the point anon, no one wants to give up their $400.00 jeans or their daily cup of Losebucks. You try convincing someone to turn in their BMW for a Honda. See how far you get.


Quite far actually. I convinced my wife to downgrade our life pretty easily. I showed her a spreadsheet of all our expenses; the two BMW/Audi car payments, the outrageous amount of money spent on things like iTunes, $5 cups of coffee, designer clothes, etc VS. how much earlier we could retire were we to drive 1/2 the car, make our own coffee and buy $50 jeans vs. $200 jeans.

stuckinthecity said...

2. Establish a bond fund to pay for switching borrowers out of unaffordable ARMs. Ohio has already started a bond fund to put subprime ARM borrowers into 30-year fixed-rate loans at 6.75 percent interest.
----

many people are freaking out because they can't afford that rate. They need to keep the teaser rate for 30 yrs.

Anonymous said...

From the sweet guy who flipped 3 of these houses to you LOSERS!!!!!!
Yeah from a sleeping bag to a tent to a camper ? Drop the WSJ and pull up your pants.

Shakster on a Honda said...

Kieth,I'm a big FOOL TOO.I bought a motorcycle used for 600.00 more than I can sell it for a year later.I fell for it MANNNNN,I'm so ashamed,BWAHAhahhahhaahhah why me? Oh well ,I do save big time on gas when I use it though.I gotta quit lauphing so hard ,it's bringing me to tears.Is that Buyers Remorse? HUH?OH WELL.

Anonymous said...

We're all F-'d said...

HA HA Suckers!
Bitter renters will be priced out forever. The BAILOUT has already begun. It's over, past tense, the "Bubble That Never Was" is finally over. One bubble supported by another, by another. Our Gub'ment is so predictable. Markets can stay irrational longer than you can remain solvent, as in MANY MANY YEARS.

IT'S OVER. You lost.

FREDDIE MAC BUYING $20B in MORTGAGES.
http://tinyurl.com/35mbfk

April 18, 2007 7:06 PM
--------
You're all f0d said...

Stupid HP'ers.
The Great Bailout has begun. You lost, too bad, go home. You are priced out forever. Illegals will own all the real estate and you white boys will rent from them.

Washington Mutual Offers $2BLN on Loans
http://tinyurl.com/2rx933

On top of the $20B in loans being bought by Freddie Mac.

April 18, 2007 7:57 PM
----------
HMMMMMMMMMM

A problem that's in the 100's of billions and 22 billion is "pledged" and all of a sudden the problem is solved.

I do agree that gub'ment created this problem & will likely perpetuate it with this bailout.

Before FHA/VA and other gub'ment home ownership programs that "loosened" underwriting standards a home buyer needed to pony up 40% & the time for repayment was b/t 5-15 years. The innovation then? 20% down and 20 years fixed interest repayment!! The result of this radical "sub-prime" loan of the times? for the first time in history housing returns exceeded inflation!!

So all that sub-prime & loose lending did then as now is create demand. We never tightened then, now we are tightening & shaving off a few percent of the billions of bad loans will do nothing to reverse the Tsunami of foreclosures that is already underway!!

Anonymous said...

I have to wait longer at Starbucks for my latte, than at a mortgage lender for my loan!!

Anonymous said...

D.C. won't be so bad of the places listed it has the most robust economy and the metro has some of the highest incomes. Sooo, in D.C. you will be significanly less hosed that in say anywhere in Floriduh. Phoenix drop not hideous but will get there. Far and Away the most severe problems are in Tampa and Miami. Again, who cares if Floridians get hosed--ever me a floridian who is not a moron or a scamster?

Anonymous said...

A bailout for those who borrowed money from the bank to bid up the banks housing stock prices, while the bank paid out less than the rate of inflation to those who put money in the bank after having the inflation calculation method changed so it did not include the housing price, sounds like a conspiracy.

Anonymous said...

All a bailout will do, for example a 40 year ARM that resets in 10 years, is re-inflate the bubble.

These guys just don't get that easy money = INFLATION. People borrow to speculate which drives up the prices.

If you try to bail out these delinquent homeowners by offering salvation loans, this will allow people in general to BORROW MORE and pay for MORE EXPENSIVE HOUSES i.e. DRIVE UP THE PRICES and the bubble will inflate again.

We are already freaking doomed. It's now just a matter of sooner or later. I hate to say it but this Bush/Republican Congress combination has mismanaged this country so badly we are sunk financially. At some point the cost to service the U.S. debut (pay the interest) will be larger than all other budget items combined.

Doomed.

kitchenstove said...

Anon, I do have to commend you for being able to do that. That said, I doubt it was as easy as you claim it was to convince your wife to give up her wheels. I know because if anyone asked me to give up my small luxuries they'd get knocked out (I'm kidding, but they would have a fight on their hands lol). I live frugally for the most part, but I do treat myself to luxury items now and then. Even the thriftiest among us have those material things that we couldn't stand to part with. So while you probably did convince her, I doubt it was as easy as printing out a few colorful charts.

And in the end you and your wife are still exceptions to the rule. A lot of the posters here live frugal lives and are sensible spenders but we're a minority. Just like all who knew something was wrong with housing prices during the boom were a minority.
People used to those kinds of luxuries won't give those things up until they are forced to.

Anonymous said...

Anonymous said...

D.C. won't be so bad of the places listed it has the most robust economy and the metro has some of the highest incomes. Sooo, in D.C. you will be significanly less hosed that in say anywhere in Floriduh. Phoenix drop not hideous but will get there. Far and Away the most severe problems are in Tampa and Miami. Again, who cares if Floridians get hosed--ever me a floridian who is not a moron or a scamster?

April 19, 2007 4:25 AM
-------------
I would not be so sure. Metro DC was hit with the 90's housing slide. Then it was very gov't job rich, but the Hiring freeze & reduction in force (RIF) and gov't out-sourcing in a post cold-war & post conflict environment all contributed to the slide.

Now, we have gov't jobs w/ lots of mature out-sourcing that can be immediately reeled back in. Plus gov't will have another hiring freeze & RIF once the conflict is over again and when they realize the gov't can't spend at the level they are spending. The exburbs are already suffering, we do have significant amounts of toxic waste loans (sub-prime & Alt-A) and with BRAC moving thousands of jobs around I cannot be as optimistic as you. Many condo plans have converted to apartments, other that have/can not are going to flood that market sector. Finally psychology knows no bounds/borders. Mind you I am not being pessimistic, just more cautious. So I'm going to rent and wait & see for a few years.