Auburn family’s path to foreclosure began with mortgage after 2 bankruptcies

Business Journal ^

[Chet 99]

-snip-

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.

[NonValueAdded]

Your excerpt actually dampens the fury I have at the staff writers, Jeanne Lang Jones and Kirsten Grind. Read the first bolded and italicized part of their story and it was all the fault of the mysterious growing mortgage that took on a life of its own, and no one knew why.

So what if the servicing company changed hands several times over. That didn't change the payment although it would make the monthly mailing a bit confusing. Did they not get all those HUD forms at the closing? Was this a compound-vig loan or something?

If someone stops that far into the story, it is all the fault of the bank and the Binfet's were attacked by their mortgage. BUT .. read on and see how they refinanced and spent their way to ruin and it is clear that while the banks could be considered enablers, the Binfet's enjoyed the high life milking their cash cow home.

[Krankor]

Obama should bail out these poor souls. Then they should put the family on a chain gang type of thing- husband, wife and kids should be forced to work 12 hours a day, 7 days a week until the loan is paid off. Then they can do whatever they want.
Click

[BillM]

His income was DIRECTLY related to the housing market!

[codercpc]

But according to the liberals, the only reason they fell behind in payments was because of rising “medical costs”. In other words, out of the $66,000 they borrowed, they may of had to buy a box of bandaids out of it.

[MamaB]

Don’t know what state this is in, but landscaping is very expensive here. We did not do it for that reason. Don’t know what kind of material they used for the deck but that can be very expensive, too, unless they did the labor themselves.

[MamaB]

It is very different in this area. Someone bought a house up the street, have gutted it and rebuilding and adding on. Don't know what they paid but the asking price was over 100,000 more than this house and the others on this street. People who have been in it said it desperately needed updating. Houses in this neighborhood sell very fast. My house is on a 3/4 acre lot and everyone has told me that I have the best lot on the street plus the view is fantastic. When my daughter was a teenager, she and her friends would climb on the roof to see the view better. I am having some remodeling done and the contractor said my lot was worth more than the house so have already told my daughter, grandkids, that they are not to ever sell this house after I am gone. The new ones are built so close together that people can see in their neighbor's rooms. Not for me.

[NonValueAdded]

Washington State and he was a lumber dealer so I’m sure they didn’t pay retail. No tears shed for their champagne tastes.

[sionnsar]

Thanks to SandyInSeattle for the ping.

Say WA? Evergreen State ping

Quick link: WA State Board

FReepmail sionnsar if you want on or off this ping list.

Ping sionnsar if you see a Washington state related thread.

[MamaB]

I did not notice their age. If they are like most young adults, then they want what their parents worked 30 years for right now. They are all so impatient for material goods. Trying to keep up with the Jones, Smiths or whoever. When we were thinking of adding on 900 sq feet, it would have cost over $100,000 just for that room. Crazy. I am talking to a contractor to have some remodeling done and a glass enclosed sun room. My daughter wants me to tear down the house and just build a new one. The contractor is looking into the cost of doing that. I will also have to have all the wiring, plumbing updated which is going to cost a lost. He told me the lot is worth more than the house.

[org.whodat]

Just damn!!

[devane617]

it’s called, “redistribution”.

[Old Badger]

"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.

Unless I'm missing something here, this does not compute out as stated. It works out to $341.09 a month not $2,400.00.

[Grunthor]

I have always rented because I had not the income to feel comfortable enough to be responsible for purchasing a home. Now I feel like an idiot. Responsibility has nothing to do with it, I should have bought a home years ago and if I got into trouble expected the tax payers of this nation to bail me out!

Personal responsibility? What’s that?

[noobamamama]

How about the morons who refi’d thier home to buy a car, or take a trip???

If we had an honest news media somewhere in the country...this would be first on their plates...I am a Realtor and when we pull tax records on these foreclosures or short sales...90% have pulled equity out before they live in the house 2 years...This is the scam...take the $$$, maybe give the mortgage broker his taste and leave the country in many cases, never to be found again...And if you are going to be foreclosed upon, hell damage the house because the media and Obama says it wasn’t your fault that you took out more of a loan than you could afford. The suckers will make it up with their tax dollars.

[chris_bdba]

Yep all of those people who used their homesto finance their lifestyles are now having to pay the pieper. $50,000 for landscaping YIKES! A shovel and a few trips to Lowe’s over several years is a much cheaper!

[nufsed]

Well not all.

We had two friends who refied almost every year in Orange Co, CA. In 2005, we tried to get them to take a 30 year fixed. They were always doing 80/20 or whatever they could get their hands on. Always had 2, 1-2 year old cars and vacations whenever and wherever.

In early 2007, they sold at top of the market, retired, and took 40,000 and two CA peace officer retirements to rural Georgia. Bought a four bedroom on 2.5 acres for $179,000.

I'm still shaking my head about them.

[Lexinom]

For some of us, it was the only option. For example, if one is a contractor or a small business, it is difficult to get financing. It is still more economically feasible than renting, which is basically throwing money down a rathole.

In our case, we were "good" for two years, made the payments on time (except once or twice during a crunch) and were able to refinance into a nice fixed and cut our payment by about $600/mo. Huge relief.

This family was foolish for taking out the extra loans. While I cannot condemn the property improvements and landscaping as this adds value to the real property, it was foolish on their part fo finance it.

[WL-law]

“What in the heck does a strong housing market have to do with a family’s income?”

I wondered the same thing. Maybe they were real estate agents? :)