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Eric Hartley: Foreclosure tale: a $530K house on $13 an hour

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posted on Mar, 22 2009 @ 03:49 AM
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reply to post by jsobecky
 


Hmm.. absurd.. I saw on CNN a few weeks ago a bus driver for public school who had a very nice 800K house that was being foreclosed on. She couldn't understand why she was being made fun of on the radio and news.

If no money was being paid to the banks to cover losses on idiots like these, I would laugh at their idiocracy. But since we are now funding their irresponsibility (banks and individuals) I gotta say, it really pisses me off.




posted on Mar, 22 2009 @ 04:14 AM
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I don't blame anyone but the guy who got the loan.

We can't blame someone else for other peoples dumb mistakes.



posted on Mar, 22 2009 @ 04:21 AM
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reply to post by Rockpuck
 


Ever do reading on Credit Default Swaps? It's very interesting, and gives good insight into how this shell game operates. Here's how it works in a nutshell:

1. Banker loans money to (unqualified) buyer. CREDIT

2. Buyer fails to pay mortgage. CREDIT DEFAULT.

However, there is a 1(a): Banker had bought an insurance policy on the loan from AIG. If the buyer fails to pay the loan, AIG pays the banker the value of the note.

CREDIT DEFAULT SWAP.

AIG got left holding the bag on all these defaulted loans, could not afford to pay all the bankers.

US gov't continues to bail out AiG instead of letting them fail. Iow, we are paying the tab for all this.

At least, that's my limited understanding of it.

Meanwhile, the realtors and brokers are making fat commissions on these hefty loans. What do they care if you can pay?

[edit on 22-3-2009 by jsobecky]



posted on Mar, 22 2009 @ 04:51 AM
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Originally posted by blackcube
IMHO the guys were gambling with the prices and loans...

They "buy" a house with this magic loan and will try sell the house again with a premium value and make some cash. I am sure many people have done that before and it worked... but this time the bubble collapsed.



Precisely - it's all about greed and everyone was in on it - the Real Estate agent, the broker and the Bank.

He did not buy a 530k house it was a 178k house that was artificially inflated by the real estate banking mortgage industry. They created the artificial bubble and they enticed him with greed and he was more a victim of the industry rather than the bad guy everyone is pointing the finger at.

Everyone who did the deal made their cut of the profit as soon as the sale was complete except the buyer - he was counting on the next transaction. The person left holding the bag when the bubble burst was the homeowner and of course who ever bought & insured the loan - which now appears to be future taxpayers.

It is the biggest criminal scam in history and our government regulators were either incredibly incompetent or they were bribed to look the other way.

Okay maybe the buyer was gambling, but what did he have to lose when the market was going up up up and everybody was throwing money at him so he could place his bet. Seriously - If somebody offered me 500k to put down on a horse that hadn't lost a race in 5 years and I had nobody but myself to support and they weren't going to break my legs or throw me in prison for not paying them - I'd say yeah give me the money if I win I walk away with lots of money if I don't I have to start from scratch - big deal.


[edit on 22-3-2009 by verylowfrequency]



posted on Mar, 22 2009 @ 06:24 AM
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reply to post by jsobecky
 


Sadly I am very aware of the CDS and other "toxic" assets the government is continuously complaining about. All $52 trillion worth of CDS outstanding.

But seriously, making $13/hr and willingly taking a mortgage with a monthly payment over $4,000 is the definition of stupid.

The ways the loan officers got these past is fraudulent in it's self.. making up numbers such as the amount in retirement accounts, investment accounts, other assets worth money that didn't exist.. sometimes the people don't know the loan officer adds a zero here or adds a number on a line left blank. Either way, if they would have showed me the contract wit the monthly payment I would have sulked out of that office pretty quickly.

People just want the American Dream. Sadly, they want it handed to them wrapped all pretty like with a bow on top while they do nothing to earn what they have.



posted on Mar, 22 2009 @ 07:02 AM
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Originally posted by Wildbob77
One of the things that is not being pointed out is why would someone make such a silly choice.

I have a relative that lives in any area that has been hit with lots of foreclosures. He asked his Realtor how these things happen.

The answer surprised him. The Realtor said that the houses is this area rent for $2500-$3000 per month. But when all the money was flowing and you could get ridiculous teaser rates and 100% financing the initial payments on those loans were closer to $1000 per month.

So, many immigrants (legal and illegal) took those loans because they were cheaper than paying rent. So, you'd live in a nice house for a few years. The loan payments start adjusting up and you simply don't pay them or don't pay them in full. You can drag out a foreclosure for quite a while if you're smart.

Eventually, they just walk away from the house.

But, they lived there for several years at greatly reduced rent.

So who was the real victim?


maybe they really couldn't afford the rents either!!

I know we've been in that position before.

besides, you could take the loss on all these foreclosures and add them up, and they would be overshadowed by the amount of money that our government has thrown into the problem. heck, the total value of all the homes in this country is probably overshadowed by it...

remember, this is bush's "ownership society"??
remember him spouting that idea, because I do...
he wanted us all to own homes too!!!
well, there was one little flaw in the whole thing...
the danged taxpayer is gonna end up owning everything, but having control over nothing!

the blames goes from those stupid homebuyers who should have known better all the way through the real estate, banking industry, and all the way up into the high levels of government.

but, as far as those stupid homebuyers out there, well, what can I say, when the government and society creates an environment that a portion of their members have no chance of being able to live in, well.....
all the rules change!!!

heck, blame the religions, they're probably still spouting that name it claim it philosophy, ya know, where you tell God you want something bad enough, you go and get the stupid thing, and then you have faith that god will deliver the money to ya so you can pay for it...
maybe they were all just "claiming" what God told them they could have!!

the whole economy has been arse backwards and not suitable for human living for some of the members for a long time. you all have been bailing out many of those members month after month, year after year, with just a tad bit of griping, while telling the rest of that group how lazy and dumb they are because they just can't find a way to live in your overinflated, overtaxed, overpriced economy! it's been allowed to be like this because hey, some other of it's members have been able to get filthy rich with things as they are. and some of those that have been raking in the money just had to have more and found some neat little schemes like the credit default swaps to use to trade the rake in for a bulldozer!! this was the situation while bush was in office and all those neocons were claiming how great their economy was...ya, it was great!!! position yourself in the right place in the flow of the taxpayer's dollars and start hauling the cash in!! check out out your own community, see just how many of your politicians own rental property!! didn't matter how much they rented their units for, because well, they were on the other side promoting the idea of hud to increase the taxpayers bailouts(hud vouchers) for them!

well, the whole thing seems to have collasped! would you have preferred that it kept on going, and next year, the price of the average home was $750,000...then a million, and so on, and the price of the average rent went from that $600 - $1,000 range up to the point where you wouldn't be able to put a roof over you head without a $20/hr job?
but ya, blame the little guys who are just struggling trying to find a way to survive in your overinflated little bubble, the ones who are walking away neither much poorer, or much richer than when they started....
while, others collect their billions of taxpayer chips and go home, or to aruba, or whereever....

there's a fundamental flaw deep within our economic system, one of the basic tennants that society was founded on has been stripped! the baker who was told that if he came into the city and just baked his bread he'd be paid enough to buy all those other things that he needed is now being paid one tenth of what he needs, although society still needs his bread!

either pay him what he needs to live in your society, or live without his bread! or well, continue paying bailout after bailout, scheme after scheme, as we try to find the elusive solution to the never ending problem....we need these people doing their jobs, but we don't want to share enough of what we have for them to live!!

now carry on with your blame game....have fun with it!! hey, ya know, now, I am being forced to put my medical bills onto credit cards or well, they go straight to the bill collectors....my supervisor at work must have over $100,000 on her little medkey card...drawing 5% interest...being charged $5,000/yr in just interest on her healthcare that's she's recieved. I couldn't say for sure just how much she makes, but I bet the interest rate charges are a quarter of her income! but, the little pregnant lady with the two kids....soon to be three, with three different daddies...oh ya, she's on disability, her kid's will be delivered on taxpayer money, taxpayer money will be used after the baby's born for those days that she just finds taking the kid to the doctor for whatever reason comes to mind for a note to justify her not coming to work...and all is just rosy in the world!! till my supervisor dies....and that $100,000 dollar balance on her medkey has grown by $4000 every year because, well, there's a low monthly payment, and she doesn't pay more than that!!....and that bill, and many others like it becomes unpayable!!! then well, we can play this bailout game all over again!!!

THE SMART PEOPLE ARE THE ONES GAMING THE MANY DIFFERENT SYSTEMS that have been put in place to compensate for the fact that society wants the bakers bread, but doesn't want to pay the baker crap for that bread!!



posted on Mar, 22 2009 @ 07:17 AM
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so a portion of the housing bubble was inflated by getting the rentier group to own a home by making it the smart choice......(i.e the more affordable choice) 1000 a month vs. 2000 or more a month....for a living situ.........knowing that they could either flip it and make a profit or.....stop making payments and take the credit hit (there credit was prob. already shot)..........

OH and to those who are echoing rick santelli's rant about not wanting to pay for their neighbors house........guess what .........obama's bank plan focus is not lowering the principal amount.......it it reducing the intrest payment so the banks have a higher % shot at a reliable income stream (and more MBS performing loans)...really not bailing out the homeowners with the gambling mentality yet.....or writing down the debt to keep responsible people with financial issues with the incentive to keep paying ...(would require banks to take a hit....ohh NOOO!) the only way that happens is if the gov't/taxpayer picks up the tab on the losses.....(

there is too much debt in the system and it will either be allowed to be brought down thru financial defaults on debt (after the favored son's and bond holders are bailed out)....or with a one time co-ordinated devaluation against gold that wipes out (inflates away) a significant portion of debt......in my thinking.

[edit on 22-3-2009 by cpdaman]



posted on Mar, 22 2009 @ 07:26 AM
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Originally posted by CaptainCaveMan
Don't be calling the folks dumb, they just don't know what they are doing.


Excuse me? Didn't you just contradict yourself in the same sentence? I'd call "not knowing what you're doing" the definition of dumb.



posted on Mar, 22 2009 @ 07:28 AM
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reply to post by dawnstar
 


star for the commentary.


the Bush regime concept of ownership society...


[...]
remember, this is bush's "ownership society"??
remember him spouting that idea, because I do...
he wanted us all to own homes too!!!


His 'ownership' was more about individuals
getting bounced off corporation pension plans and corporate defined health plans.
Bush had millions lose pensions for a new weasel-out-program called 'DefinedBenefits' (mostly because most pension plans were hollow shells after being looted by the top execs, & in those convoluted merger
(M&A) agreements that netted monster bonuses - at the expense of the workers futures & retirements)

...he also got things so configured that the average worker
needed (was compelled) to heavily invest in their own retirement plans, mostly through the 401k, so as to supplement their SocialSecurity checks.



(yes, i do sound like a social-democrat right now...)



[edit on 22-3-2009 by St Udio]



posted on Mar, 22 2009 @ 08:11 AM
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Sure... people are ultimately responsible for their own actions of course. But in the majority of cases it was the mortgage broker. My wife has been a real estate paralegal for many years. She has done hundreds of closings and would regularly come home and comment on how the people who were buying had no real idea about the mortgage they were signing.

The responsibility for that rests with the mortgage broker. He/she is the representative for the lender and is supposed to protect the lender's interests by ensuring that any loan made will have a high probability of performance. But the system changed and there brokers were disincentivized to do this. They would falsify income statements, bury credit issues, get inflated appraisals and convince the buyers that they could afford it. This practice was widespread. The mortgage lenders KNEW they were going to sell the mortgages (so THEY wouldn't shoulder the performance risk) but would make all the money on the transaction. It was like priunting money. They got into a mindset of 'close every deal'. If they had to keep these mortgages there would be NO WAY they'd have engaged in these practices.

Here's an analogy: You decide you want to get your pilot license. Your flight instructor teaches you how to fly and has to decide when you are capable to solo. In the real world the instructor will not sign you off to solo until he/she is CERTAIN you are ready. But in the mortgage lenders' version of flight school they are incented to solo you as quickly as possible in order to get as many new students as they possibly can. As a result, people are being allowed to solo WAY before they are ready and many of them crash.

Yea, these people probably should have known they couldn't afford these houses but I can virtually guarantee you that in every case there was a broker convincing them they could.



posted on Mar, 22 2009 @ 09:04 AM
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reply to post by St Udio
 




...he also got things so configured that the average worker needed (was compelled) to heavily invest in their own retirement plans, mostly through the 401k, so as to supplement their SocialSecurity checks.


Something I have been shouting about since this all began. The older people who knew SS would never cover their life style, but are nearing retirement and just lost 40-60% of their variable savings just got the biggest proverbial boot up their arse in American history. It is highly unlikely that we will see stocks at 2007 highs for quite a while, meaning many, many Americans who believed in their retirement plans must now decide whether to put more away, or accept a lower quality of life.

But Bush had the right idea.. we cannot as a society tell someone they can retire at 60 and provide them with an extremely comfortable life style. Hell, we can hardly say you'll have a half way decent life style. The whole dang system is FUBAR and needs a complete overhaul, starting with SS, Medicare/caid and the tax system for retirement savings....



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