You read so much about "predatory lending" and "lack of oversight" that are the root causes of this housing/credit crisis.
I respectfully dissagree.
While these were cetainly role players in the great game of B.S. that caused the horrible state we as a nation now find ourselves, they were not the main star of this show.
Nope, it was the folks who now claim ignorance or cry about how they are the vitctims of this whole downfall in housing. 2 case-studies that I think demonstrate my point....
AZ
“One of the market casualties is Daryl Fox, a recently unemployed cosmetics salesman. After his divorce several years back, Fox and his ex-wife sold their home in Chandler. It took a while to sell the house, and they had to reduce the price to find a buyer in the already-slumping Valley real-estate market, he said.”
“In April 2006, Fox took his half of the equity from the Chandler home and whatever other savings he had scraped up through the years and used them to pay 15 percent down on a three-bedroom home in Rancho El Dorado. The $212,000 purchase price was down from the home’s highest value.”
“He thought he was hitting the market at the right time, getting the most bang for his buck. ‘I thought the market had bottomed out when I bought it,’ Fox said. That’s why he was willing to take out a 2/28 adjustable rate mortgage from Chase Bank.”
“He did refinance right after closing, drawing the equity of that 15 percent down out of the house to finance a few renovations, he said. He owed the full $212,000 now. ‘My intention was to live in that house as my primary residence, that’s why I remodeled it,’ Fox said.”
“In June 2006, Fox met Teri Parks, his future wife, at the Native New Yorker. Parks soon moved from Minnesota to Maricopa, buying a home in Acacia Crossings. Parks’ house was the larger of the two, so it made sense for Fox to move in there and sell his place.”
“But the short market downturn Fox had expected turned into a free fall. ‘The median housing price in Pinal County ‘has steadily eroded from $220,000 in fourth quarter 2005 to $193,000 in third quarter 2007 and $156,160 for the current quarter,’ stated a report released by Jay Butler, director of Realty Studies t Arizona State University.”
“After spending thousands trying to hang on, Fox was staring down the barrel at foreclosure. A lawyer advised him just to walk away from the home, but he decided that he would try to sell the property in a short sale. Fox has a buyer willing to pay $90,000 as of early May…if the bank accepts that offer.”
why does the bank have to accept the offer? you either accept your end of the responsibility or not.
Secondly, why, when you could only scrape together 15% to put down on the house, AND you signed up for a very sketchy 2/28 loan, did you immediately refinance and take out that 15% to max out your obligation (that you obviously could not afford)?
FL
“Thomas Wilson strolls through his Stoneybrook at Heritage Harbour neighborhood, pointing out the subtle signs of financial fallout. Windows with views of empty rooms. Weeds sprouting through once well-manicured lawns. Small, bright orange stickers on front doors, the tell-tale sign that the houses have been abandoned.”
“Just on Wilson’s street, Stone Harbour Loop, 16 foreclosure actions were filed last year. In the first three months of 2008, seven more were filed.”
“He’s angered by the aggressive lending and poor oversight that have landed thousands of families in the same predicament. ‘It’s just terrible what they’re doing to people here,’ Wilson says. ‘They’re killing America and they don’t even know what they’re doing.’”
“He and his wife closed on their $522,500 home in December 2005. Five months later, they were sued for foreclosure and are still fighting to save their home. Wilson, who is not currently making payments on the loan, acknowledges that the couple should have looked at the loan documents more carefully.”
“‘I didn’t read the papers,’ Wilson said.”
“‘I’m not trying to weasel out of anything. If I owe you $530,000 I’m going to pay it,’ says Wilson. ‘Make this loan work with $2,500 (payments) like you initially said. And everyone walks away a winner. If you can’t do that, let us out.’”
Let us out? LET US OUT? You, my friend, got yourself into this. You admit you signed up for a loan of over 500k that you did not fully understand? and now you blame the lender? I'll tell you what, I'll buy your house....don't ask how much or what the terms are, just sign here.....
What do these have in common? these people are idiots! they signed on the dotted line knowing they either A) did not know what they were signing or B) could simply not afford the loan they were signing up for!!!!!
it all comes down to oridnary people doing dumb things. I submit that the overwhelming cause of this entire problem are the hundreds of thousands of people who signed on the dotted line and now can't pay.
the REAL victims? Honest people who bought a house knowing they would make the payments. These people had to pay more to buy their house because the idiots (who had no intention of paying the real price of their house) artificially drove up the prices. And these same honest people are now still making good on their commitment and paying every month even though the idiots are fleeing the scene, causing a horrible downfall in prices.
