Posted on 01/31/2015 6:50:08 AM PST by dynachrome
When they moved into the house in November 2005, Kofi was earning $82,740 as an IT consultant for a government contractor, and Comfort, then 43, was making $30,000 as an administrative assistant. But in the overheated mortgage market of the time, they said everyone told them that they could buy a $600,000 house.
They made a $60,000 down payment and all their mortgage payments for more than 2½ years — through September 2008. But the house was financed with subprime loans, which reset to higher rates after short time periods, creating what are known as “shock payments.” The Boatengs said they could not make their new higher payment, and, in the middle of the 2008 mortgage crisis, they could not refinance.
(Excerpt) Read more at washingtonpost.com ...
I believe that when all this happened, these types of loans were bundled into something called “credit derivatives” and sold off (under government guarantee) to investors worldwide.
Taxpayers bailed this out. We increased our national debt because of it, and we have been subjected with 1-2 trillion dollar deficits since then. Obama believes our wealth is limitless and he is trying to redistribute it constantly.
I moved because I lost my job and took essentially a lateral position 600 miles east.
In somewhat better shape now but no chance I’m overspending. Just not in my nature.
Answer: They want the rest of you to move so they can sell large acreages to “developers” and make lots of moola
here is the site I got the link to the article from. Denninger is excellent on the economics of stuff like this. He would like to see “mark to market “, i.e. true market value on houses at any given time nd thsi would be reflected on the balance sheets of banks and mortgage companies.
http://www.market-ticker.org/akcs-www?post=229795
Adjustable rate mortgages are bait-and-switch operations fishing for dimwits.
Here’s my question: if both remain citizens of Ghana, what’s to prevent them from getting a job with some UN agency back home, and simply bailing on the whole mess? I’m guessing it would be more difficult to collect an American debt in a third world country, and FICO scores might not mean as much over there.
The Boatengs are still living in the Fairwood home. They have not made a mortgage payment in more than six years.
...
Sometimes it’s cheaper to pay a lawyer to stall foreclosure indefinitely. It’s like paying rent to a lawyer, and if they are paying property taxes, they are paying rent to the government, too.
“...bought for $617,055 in 2005. The Boatengs have not made a mortgage payment in 2,322 days — more than six years...”
They put down $60,000 - assume they were foreclosed on tomorrow, and evicted, with the loss of that $60,000 in equity - they still would have had an opportunity to live in a $600,000 house for more than 6 years at well less than $1,000 / month in what would have been the equivalent of rent. I’m not sure that’s that bad of a deal (for them - not for their lenders or their underwriters).
The kicker is even that the new Nissan wasn’t that big of a deal had they stopped there. Paid on their 1st house, 2 decent cars and they could have been scot-free.
“3,292-square-foot, six-bedroom, red-brick Colonial ...”
No sympathy - Personal responsibility should included knowing/staying within the ‘formula” no more than 1/4th monthly income for mortgage.
they wanted to live like Royalty? They’ll pay the price - well ...
They will likely be allowed to declare bankruptcy and walk away -
Not to worry. Obama is starting sub-prime loans again through the FHA. Just in time for 2016, before they default : )
I believe Dave Ramsey’s rule is no more than 25% of your take home pay. And somewhere between 10 and 20% of the home’s assessed value as a downpayment. The closer you can get to 20% the better.
Must be they were getting financial advice from Al Sharpton or they would be in real trouble.
how many Freepers live in a 6 bedroom home close to a metropolis?
Yup- its everyone else's fault....
As other posters have pointed out, selling means realizing the loss - and possible insolvency for the bank if they do it to their entire distressed portfolio. The banks seem to have a gentleman's agreement to hold off on large-scale foreclosure actions, to keep all of their balance sheets propped up. In doing so, they are also keeping real estate values artificially high and severely damaging the free market, especially for younger buyers. Their game can't last forever, but no bank wants to make the first move back toward honest valuations. Better to let deadbeat borrowers live there as squatters and at least put some maintenance in the houses than to throw them out and have the houses fall quickly into disrepair.
2) Why does the bank not pay for electricity so that the sump pump will, at least, keep the basement from becoming a swamp and a mold factory for the rest of the house?
And this goes back to question 1) - why spend today's real money on tomorrow's collapsed value problem? Better from the bank's perspective to just let them sit - the places may no longer be viable residences, anyway.
Eventually, tens of thousands of these unsellable homes may have to be torn down.
Using your standard, at least 75% of the people in California could only buy mobile homes, at best.
It’s the old rule of 3’s. You can afford a house that costs no more than THREE times your yearly salary. You can only afford 30% of your take home pay for mortgage.
Of course now with the TAXES (Obamacare, etc)being levied on the middle class, might need to lower that down to the rule of 2. Two times yearly salary for dwelling. 20% of your take home pay for dwelling. Of course soon they will do away with the Home Mortgage Credit.
If I owned the bank a million dollars, the bank would have a bigger problem than me.
The FDIC has been kept busy for the past six years, dealing with thousands of similar loans. Each of the 500 banks that failed had multiple reasons for failing, and it was usually the myopic greed of management.
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