Monday, April 21, 2008
Quis deriget ipsos deriges?
More homeowners mailing keys to lenders instead of payments
Joan Shaffer is turning in the keys of the north Phoenix Tatum Ranch home she bought with her daughter in late 2005. They put nothing down on the home, took out a loan that let them pay less than they owed each month and now their loan is $200,000 more than the house is worth.[emphasis mine]
"We paid $585,000. It was the peak of the market, but no one told us," said Shaffer, a real-estate agent from Colorado. "We would probably have to spend the next 20 years trying to get right on the mortgage. That's crazy."
Let's try the old substitution game with a hypothetical:
"We paid $108 per share for Yahoo. It was the peak of the market, but no one told us," said Smith, a stockbroker, "They would have had to sell more ads than all the networks combined to justify the price. That's crazy. "
6 Comments:
By 
Escort81, at
Mon Apr 21, 05:31:00 PM:
Seriously.
It's like she never left high school:
"But you didn't tell us that would be on the test! It's not fair!"
And she's a real estate agent. Now, I don't want to insult an entire profession, but does anyone else think that there are a disproportionate number of realtors out there who are -- what's the phrase -- perhaps not so well intellectually gifted? I know, I must be a raging anti-realtorite to say that ("Next thing, you'll be saying they should have there own schools," "They do have their own schools!")
The larger point here is an unwillingness to be held accountable for a specific financial decision. That said, a lender providing 100% financing to someone with that attitude may not have done all of the due diligence that was required (or maybe the lender didn't care, because the loan was quickly sold and fees collected.)
We need to make consumer debt a little more like Coca-Cola Classic and a little less like crack cocaine.
By 
, at
Mon Apr 21, 05:47:00 PM:
Well, the system might be flooded now, but I do hope that the long arm of the law or banking/bankruptcy world catches up to each and every one of the people who jumped because their home value "didn't go up".
I'd like a free place to live too, but Uncle ain't providin' it. With the tightened BK rules, I sure hope these clowns don't skate free. Ms. Shaffer has other assets, disgorge the moron, take away her "real estate" license, and let her enter the exciting world of fingernail polish and manicures.
By , at
Mon Apr 21, 08:24:00 PM:
My father told me a long, long time ago.
"Treat your house like a home, and not an investment. If you want an investment, get one you can afford to loose"
It was great having him as a father.
Or, for another take on real estate agents:
Years ago my wife and I were looking a homes and were shown one with a pool. I said, "My wife is a stay at home mother and is a Red Cross Certified Water Safety Instructor. We have five children under 9 years old and we would never take the chance of one of our children drowning. A house with a pool is not for us." The next words out of the salesman's mouth, I kid-you-not, "but think of the investment value..."
We walked out.
By Jack Steiner, at
Tue Apr 22, 02:27:00 AM:
Some people make me shake my head. Oy.
By , at
Tue Apr 22, 09:13:00 AM:
The lending institution and the homeowner who is also real estate agent turning in the keys deserve each other. $585k with no money down?.. "a loan that let them pay less than they owed each month" ... What kind of idiot loans money at those terms?
Had the homeowner been required to put down 20% down, the homeowner would have been much less likely to have walked away. Perhaps lending institutions will be more likely to consider the above now when loaning mortgage money. IOW, back to the old ways.
By Nozzle, at
Wed Apr 23, 08:59:00 PM:
Flex loan terms are great for sophisticated borrowers...Where the banks went wrong is going retail with sophisticated products, as well as delving into the subprime realm. I think the WSJ featured an hispanic maid with an illegal husband who were loaned 600K. What a joke? I think a lot of this can be traced back to Wallstreet for finding a market for toxic Collateralized debt instruments. I'm sure many hedge fund players made billions on this stuff all the while driving the nation and much of the world into a financial crisis. In the end, there is plenty of chagrin to go around, for the borrowers, lenders, and investors...
