Posted on 03/07/2009 12:05:36 PM PST by Chet 99
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The Binfets had no trouble paying their mortgage for the first three years. As long as the housing market remained strong, so did the family’s income. The house was steadily gaining value. In the family’s first year of ownership, between January 2005 and January 2006, it appreciated by about $40,000, or about 15 percent. By the end of 2006, it was worth $376,000, about $116,000 more than when it was purchased.
In the fall of 2005, riding the wave of appreciation, the Binfets took out a home equity loan for $16,000 from EMC Mortgage, a mortgage operation that’s a subsidiary of JPMorgan Chase, the new owner of Washington Mutual. In early 2006, they refinanced for the first time through Countrywide, combining both the loans and dropping their interest rate by a quarter of a percentage point.
Late that year, they refinanced again, taking out a second mortgage for $50,000. They used the money to replace their deck and landscape a yard that Charlene compared to “a war zone.”
This time, their new loan was originated by New Century Home Mortgage, one of the largest originators of subprime loans across the country. In 2004, the company saw loan volume of $60 billion. The new loan was a 30-year fixed-rate mortgage with a 7.25 percent interest rate and a monthly payment of $2,400 a month. The second mortgage had an 11.25 percent interest rate and a monthly payment of $725.
But by early 2007, the Binfets were receiving their mortgage bill from Litton Loan Servicing, a massive Texas-based company that takes care of mortgage payments for lenders. They paid their second mortgage to HomeEq, a different loan servicer in California. Unbeknownst to the Binfets, their loan had been turned into a security and would soon be offered up to investors.
(Excerpt) Read more at bizjournals.com ...
As I read more and more stories about these foreclosure “victims”, I become angrier and angrier that the responsible among us (as well as our children and grandchildren) will be forced to pay for these idiots’ greed, stupidity and excess.
Yep I know what you mean we paid off our mortgage in the 1990’s. Never wanted to get a refinance or take out a home equity loan! These idiots have ruined for us! They also caused this mortgage mess with the home flippers!
$66,000 in equity and second loans. They consumed their way into trouble.
Many of these bankrupts pulled out a ton of money from a rising asset. Their home was an ATM machine. And responsible people are supposed to help them stay in their homes? Not be foreclosed on?
Ping!
I think I know where this house might be. It looks very familiar.
How the Toxic Mortgage Scam works:
1. After the Dot.com Bubble burst, investors, not satisfied with slow stock market gains and not satisfied with low interest rates wanted higher returns on their investments.
2. Mortgage Backed Securities looked like a good investment vehicle and they became a hot seller on Wall Street. Mutual funds, pension funds, foreign investors .... they were all eager to buy Mortgage Backed Securities. The more Mortgage Backed Securities loan brokers sold, the more money loan brokers made.
3. One small problem, however. THE SUPPLY OF CREDIT-WORTHY BORROWERS WAS RUNNING OUT. Few credit-worthy borrowers = Few good quality mortgages = Few Mortgage Backed Securities to sell = Fewer profits to be made.
4. What to do?
Easy:
"Forget about 'credit-worthy'. Those pigeons on Wall Street will buy ANY Mortgage Backed Securities we sell. If we put up rotting meat labelled 'Mortgage Backed Securities' for sale, those pigeons will buy the rotted meat from us! If the pigeons die from our rotted meat, we don't care. All we care about is making as much money as we can regardless of the legality of our actions!"
The new business model was: Find an unlimited supply of borrowers with a pulse regardless of ability to repay = Write out an unlimited supply of mortgages to these deadbeats = Bundle up this financial equivalent of tainted meat into an unlimited supply of Mortgage Backed Securities to sell to the pigeons on Wall Street = Rake in an unlimited supply of profits even in we poison the lifeblood of America's economy.
In the Toxic Mortgage Scam, the Wall Street investors (America's mutual funds, America's pension funds, America's individual investors, America's banks) were the "pigeons", the "marks", the "suckers" that were sold that poisonous tainted meat. The so-called "house buyers" were nothing more than the rotted meat used in the scam.
The new twist is that Obama wants our tax dollars to rescue the rotted meat.
I’m supposed to feel sorry for people who took out $66,000 in loans on a house that wasn’t paid for?
“The Binfets had no trouble paying their mortgage for the first three years. As long as the housing market remained strong, so did the family’s income. “
What in the heck does a strong housing market have to do with a family’s income? As long as I have my job my income will remain strong also. My house has nothing to do with my income.
I don’t refinance my house to cash out and buy toys. What a bunch of idiots. I have sacrificed and tried to be wise and I will end up paying for these irresponsible slobs. They get the toys and I get the bill.
Thanks a lot.
This is only the begining of 0bama's "spreading the wealth around" plan
(You ain't seen nothin' yet!)
Market appreciation = income??? HELLO. McFly??? And they harvested their new-found paper equity.
Me too! I am so sick of these f***ing IDIOTS and their pitiful sob stories about how “they didn’t know” they were signing for adjustable rate mortgages. They can all go pound sand. I feel no obligation to help their sorry, no-contract readin’, bailout grubbin’ asses.
Me too! I am so sick of these f***ing IDIOTS and their pitiful sob stories about how “they didn’t know” they were signing for adjustable rate mortgages. They can all go pound sand. I feel no obligation to help their sorry, no-contract readin’, bailout grubbin’ asses.
50K for a deck and some landscaping? You’ve got to be kidding me. Even the guys on This Old House couldn’t run up the bill that high and believe me, they’re experts.
In other words; They get the mine we get the shaft.
“50K for a deck and some landscaping?”
How about the morons who refi’d thier home to buy a car, or take a trip???
You have NO IDEA how many of these people I know!!
Yet, you don’t take in to account the MASSIVE inner-city mortgage fraud schemes that set this off in the first place.
In some cases, single schemes involved 500+ homes, OR MORE...
Last summer, it was stated that 40% (FORTY PERCENT!!!) of Repos in some (Democrat-run) cities involved mortgage fraud.
When the basic asset is exposed to be so weak, Democrats are scooping money out BY THE BUCKETS from perpetuating, condoning, and financing the frauds, and Republicans were too afraid of the media reaction to stop it, YOU HAVE A RECIPE FOR DISASTER....
My guess was that the author was alluding to the husband's job as a lumber salesman. Strong housing market = strong lumber demand = good commissions = good family income.
But one wonders what the stay-at-home Mom was doing while they paid someone big money to work on their backyard. Why didn't they save the cash and have Mom push the dirt and mulch around? Would have taken longer but cost a lot less.
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