[Rhodes22-list] Economics

TN Rhodey tnrhodey at hotmail.com
Wed Mar 28 09:32:00 EDT 2007


Hank,

This is a great example of the problem however I bet there is more to this 
story....I will bet that the women was told she did not qualify for a 
tradional fully documented loan however she did qualify for a "Stated Income 
Loan" or "No DOC Loan". I will also bet that on her application the income 
listed was NOT $28,000. If the income on the loan was $28K no lender would 
have underwritten this loan. Most likely loan fraud from lender and naive 
consumer.

Wally


>From: Hank <hnw555 at gmail.com>
>Reply-To: The Rhodes 22 mail list <rhodes22-list at rhodes22.org>
>To: "The Rhodes 22 mail list" <rhodes22-list at rhodes22.org>
>Subject: Re: [Rhodes22-list] Economics
>Date: Tue, 27 Mar 2007 10:01:23 -0400
>
>You'll love this story from the Wahington Post that highlights a woman who
>is in tears, but she is losing her $410,000 home that she bought with an
>income of 28,800 a year.  Obviously, she was pretty foolish to think she
>could afford it, but the realtor and the mortgage broker should both go to
>jail for fraud in my opinion for cinvincing her that she could swing it.
>
>I really believe there should be some form of civil or criminal penalties
>for brokers who act this way.  People go to them expecting sound advice,
>which many do give.  However, there are some that will say anything to
>ensure that they get their commission check and while it may be technically
>legal, it shouldn't be.
>
>Hank
>
>http://www.washingtonpost.com/wp-dyn/content/article/2007/03/25/AR2007032501323.html
>
>
>*Foreclosure Wave Bears Down on Immigrants*
>
>Economic Success Story Turns Sour as Thousands May Face Losing Homes
>
>*By Kirstin 
>Downey<http://projects.washingtonpost.com/staff/email/kirstin+downey/>
>*
>
>Washington Post Staff Writer
>Monday, March 26, 2007; Page A01
>
>Immigrants are emerging as among the first victims of a growing wave of 
>home
>foreclosures in the Washington area as mortgage lending problems multiply
>locally and across the country.
>
>Nationally, 375,000 high-interest-rate loans were made to Hispanics in 
>2005,
>and nearly 73,000 of them are likely to go into foreclosure, said Aracely
>Paname?o, director of Latino affairs for the Center for Responsible 
>Lending.
>About 1.1 million homes in the United States are expected to go into
>foreclosure in the next six years, and many native-born Americans are 
>likely
>to be stuck with burdensome loans. But immigrants are getting hit first in
>part because their incomes tend to be lower and many have lost construction
>jobs.
>
>Homeownership rates among immigrants surged in the first half of the 
>decade,
>making their prosperity an economic success story. Now it is becoming
>apparent that many people managed to buy homes in an inflated real estate
>market by turning to unusual new mortgages only now receiving scrutiny from
>regulators and legislators. Many of these loans start with attractive low
>"teaser" rates but feature payments that can suddenly increase.
>
>Unfamiliar with the U.S. mortgage market, unable to speak or read English
>well and vulnerable to the blandishments of real estate professionals who
>told them property values always rise, many immigrants are struggling to
>deal with high mortgage payments as their homes sag in value, making it
>harder to escape the loans by selling.
>
>Tysons Corner mortgage broker Jose Luis Semidey, who has a popular
>Spanish-language real estate talk show on Radio Universal, is being deluged
>with calls from desperate homeowners who are falling behind on their
>mortgages. The calls started in late 2005 and have steadily risen; he now
>receives 40 to 50 calls a day from throughout the area.
>
>"I see more coming," Semidey said.
>
>Paname?o agreed. "I'm being flooded by phone calls from throughout the
>country from people begging for help," he said. "The best I can do is refer
>people to attorneys to get assistance."
>
>Nahid Azimi, who immigrated to the United States from Afghanistan 22 years
>ago, recently stood in the upstairs hallway of her home in Loudoun County,
>silently sobbing as she removed the last of her personal items from the
>$410,000 townhouse in South Riding she bought with pride last summer. She
>said she was persuaded to buy the house by an Afghan real estate agent she
>considered a friend and by an Afghan mortgage broker who promised to get 
>her
>a good loan.
>
>Instead, Azimi, a cashier at Giant who makes $2,400 a month, found herself
>strapped into a no-down-payment loan with payments of $3,800 a month. She
>knew it would be impossible to make the payments, but the mortgage broker
>promised to refinance her loan to make it more affordable. Azimi couldn't
>qualify for the refinance, however, so she got a second job to try to cover
>the costs, borrowed money from her friends and tried unsuccessfully to sell
>the house. Then one day in November, she collapsed at work, in part because
>of the stress.
>
>Today, she will call the loan servicing company and offer to give back the
>keys.
>
>"I can't do it anymore," said Azimi, 44, a U.S. citizen. "I cannot afford
>it, and I don't want them to come one day and put my stuff on the street."
>
>Some lenders allowed people to take out loans without verifying their 
>income
>or their ability to repay. Traditionally, lenders have made loans only to
>people they thought could pay them back. Banking regulations forced lenders
>to adhere to strict lending policies, not just for the protection of
>borrowers but also to protect bank depositors, who would be hurt if the
>banks collapsed. But in recent years, lenders have found alternative 
>sources
>of financing for the loans by turning to investors who bought the loans as
>packaged securities. These kinds of loans are not supervised in the same
>ways as loans made by banks and held in their portfolios.
>
>Laissez-faire regulatory policies made other government agencies reluctant
>to intervene.
>
>"The market changed so investors were setting the standards for qualifying
>people for mortgage lending," said Allen Fishbein, director of housing and
>credit policy at the Consumer Federation of America. "They had a higher
>appetite for risk, which led to the lax standards that are resulting in
>delinquencies. The regulators should have been more concerned about
>protecting consumers than about protecting financial institutions."
>
>Officials at the Mortgage Bankers Association were unavailable for comment.
>In previous interviews, they have said that loosened credit policies 
>allowed
>more families to become homeowners and that reputable lenders do not make
>loans that cannot be repaid.
>
>Many immigrants initially welcomed the lending changes as the only way they
>could afford to buy.
>
>Places where immigrants cluster have been particularly hard-hit. Semidey
>said that the most calls are coming from Manassas, Woodbridge and Dale 
>Cityin
>Virginia and Gaithersburg, Germantown, Capitol Heights and Langley Park in
>Maryland. But one recent caller was the owner of a $1.5 million home in
>McLean, a restaurateur who has seen her business slide in recent months as
>the slowdown in the construction industry pinches the pocketbooks of her
>Latino patrons. Another was an illiterate carpenter who bought a $750,000
>house in Ashburn Village, Semidey said.
>
>Francisco Santos, 31, who lays tile, makes $60,000 a year by working seven
>days a week. He became convinced that real estate was a can't-lose
>proposition after the value of the townhouse he had bought in Woodbridge in
>2002 for $95,000 climbed to $230,000. He and his wife, Linda, a homemaker,
>traded up to another house and banked part of their profits. The
>Spanish-speaking real estate agents with whom he negotiated the purchase
>persuaded him to borrow against his equity to move up again.
>
>"They called me every day; they said we can do more business, that it's a
>good time to do it," he said in a mixture of English and Spanish. "They
>talked very sweet into my ear. I believed. I believed these people, and I
>did this business."
>
>So Francisco and Linda went to visit a spacious red-brick house on Lord
>Culpeper Drive in Woodbridge, with its master bedroom suite and
>well-equipped kitchen, priced at $540,000. Linda nearly swooned with
>pleasure as she looked around the interior. She thought: Here was her dream
>house.
>
>They decided to buy the house, which was fairly easy because the Santoses
>had excellent credit, equity in the other house and money in the bank. The
>mortgage broker made things even easier by doing the settlement in their
>home, something many Hispanic families find more comfortable. That also 
>made
>Francisco's life easier because he typically works until 8 at night, making
>it hard to get places during normal business hours.
>
>He tried to rent out their former house, but the tenants didn't pay their
>rent, so the Santoses used up their savings to keep up payments on the two
>houses. They put the houses on the market but found no buyers. When they
>couldn't make payments, their credit rating deteriorated.
>
>The stress on the family mounted as collection agencies began calling, over
>and over. With two small children and another one on the way, the pressures
>grew. The couple quarreled, and Francisco Santos said he sometimes yelled 
>at
>the kids for little provocation.
>
>"I feel terrible," said Santos, a legal immigrant. "I'm trying to keep
>control because my wife is pregnant, and I don't want her to feel bad. It's
>difficult. I was thinking about my kids, and their opportunity to have a
>good life. My wife, she says, 'Why? Why?' "
>
>The loan servicing company, American Home Services, will foreclose on the
>new house Saturday. The Santoses will move back to their old house and hope
>that they will be able to leave the problems of the new house behind them.
>
>
>
>
>
>
>
>On 3/27/07, TN Rhodey <tnrhodey at hotmail.com> wrote:
> >
> > Dave,
> >
> > Although I think Bush has been a terrible President I can't begin to 
>blame
> > him for the looming housing mess.  Plus they couldn't do anything to 
>cool
> > down real estate because that was driving the economy. Most of the
> > sub-prime
> > lending was well within the law. There were a few exceptions and these
> > were
> > huge. You may remember Ameriquest running SuperBowl ads a couple of 
>years
> > ago.. At one point they actually were the "Official Lender of the 
>Rolling
> > Stones"....pretty funny when you think about it. They suffered their
> > second
> > huge loss in a class action lawsuit (over $500 million) and shut down
> > their
> > retail division over a year ago. Basically loan fraud. Although this is
> > part
> > of the problem now it is not the real problem. Dumb ass consumers are 
>the
> > problem.
> >
> > The laws that cover lending costs for the most part are HOEPA and RESPA.
> > RESPA is the good faith disclosure stuff that includes the "Good Faith
> > Estimate" and "Truth in Lending" that every mortgage lender is required 
>to
> > send within 72 hours of application. HOEPA covers predatory costs and 
>APR.
> > Many states have their own laws that go beyond the Federal standards. I
> > don't think we need new laws. People should read their closing 
>documents.
> > All loan details are disclosed. If the loan has an adjustable rate,
> > balloon
> > payment, or negative amortization it is fully disclosed. People are in
> > denial and greedy for a home they can't afford.  For the right person in
> > the
> > right market these loans make sense. For some they mean
> > foreclosure…..buyer
> > beware but we should have the choice.
> >
> > Admittedly pushy lenders "sell" these loans but it wasn't like they had 
>to
> > break any legs to get people at the closing table. Let the chips fall 
>and
> > .no bailout! For those with cash and good credit there is going to be a
> > booming real estate market in a few years.
> >
> > Wally
> >
> > >From: "Brad Haslett" <flybrad at gmail.com>
> > >Reply-To: The Rhodes 22 mail list <rhodes22-list at rhodes22.org>
> > >To: "The Rhodes 22 mail list" <rhodes22-list at rhodes22.org>
> > >Subject: Re: [Rhodes22-list] Economics
> > >Date: Mon, 26 Mar 2007 18:54:53 -0600
> > >
> > >Dave,
> > >
> > >Our rental apartment in Beijing is currently rented, but, perhaps we
> > could
> > >kick the current tenant out so you can live in a socialistic fantasy
> > land.
> > >On the other hand, we demand the rent on time and we don't care about
> > your
> > >whiney ass excuses.  The Chinese are adapting to capitalism and have 
>quit
> > >trying to control every little nit-noy detail of  life.  That's 
>probably
> > a
> > >good approach when you have 1.3 billion (billion with a B) to worry
> > about.
> > >You amaze me with your ability to discern every little persons needs in
> > >this
> > >country and what they need to protect themselves from themselves.  
>Dave,
> > I
> > >feel a need for a bowel movement.  Should I wipe tonight or will the
> > >gubment
> > >take care of that for me tomorrow? If I do need to wipe, could you give
> > me
> > >a
> > >heads up on the density level of paper to use?
> > >
> > >Brad
> > >
> > >On 3/26/07, DCLewis1 at aol.com <DCLewis1 at aol.com> wrote:
> > > >
> > > >
> > > > Wally,
> > > >
> > > > While there are times I'm tempted to agree with your assessment that
> > >both
> > > > political parties suck, I  think it's worthwhile to try  to identify
> > the
> > > > problem
> > > > - and from my perspective, that leads straight to  Bush.
> > > >
> > > > I think there are at least 2 offices in the Dept of Treasury that 
>have
> > > > cognizance over mortgage lending practices: the Office of Thrift
> > > > Supervision
> > > > (OTS), and the Office of the Comptroller of the Currency (OCC).
> > > > Additionally,
> > > > there may be offices in HUD and the Federal Reserve that are  
>supposed
> > >to
> > > > regulate/oversee banks, lending,  and especially mortgage  lending ( 
>I
> > > > think the Fed
> > > > has an Office of Bank Regulation).  I believe OTS  and OCC issue 
>bank
> > >and
> > > > credit union  lending guidelines, renew charters,  request
> > legislation,
> > > > inspect as
> > > > needed, and act as a bully pulpit to be sure the  financial
> > institutions
> > > > don'
> > > > t get too far out of line as they try to make a  buck.  Either 
>office
> > > > could
> > > > have called a conference with lending  institutions and made it 
>clear
> > >that
> > > > if
> > > > lending practices weren't tightened  bank/credit union renewal
> > charters
> > > > were at
> > > > risk - it's that simple.    The public (you and I), and hence I 
>assume
> > >OTS
> > > > and
> > > > OCC,  have known of  NoDoc, NINA, negative amortization, etc  loans
> > for
> > >a
> > > > long time.  The  OTS and OCC choose to do nothing about the 
>sub-prime
> > > > lending
> > > > abuses - this is  not why they get paid.  I think Dept of Treasury
> > >screwed
> > > > up -
> > > > surely they  saw the problem evolving, to my knowledge they did
> > nothing
> > >to
> > > > stop
> > > > it.  The  Directors of the OTS and OCC, and the Sec of the Treasury
> > are
> > > > political  appointees.
> > > >
> > > > Also, if the current sub-prime/ARM mortgage issue came out of 
>nowhere,
> > >you
> > > > might excuse the current administration and it's appointees for 
>being
> > > > blind-sided by it, but that's not the case.  The NoDoc/NINA issue
> > > > has  developed in an
> > > > industry that is prone to problems.  You may recall the  S&L 
>mortgage
> > >mess
> > > > (I
> > > > think in the 80s?) - that cost the taxpayer many  billions of
> > > > dollars.  Given
> > > > the history of problems in the mortgage  industry, I'd expect a
> > >competent
> > > > administration to be alert and actively  monitoring the mortgage
> > >industry
> > > > to be
> > > > sure it was following sound lending  practices - but clearly that is
> > not
> > > > the
> > > > case. The current mortgage mess is  different from the S&L mess, but
> > it
> > >is
> > > > about
> > > > mortgages, mortgage companies  that are chasing profits as hard as
> > they
> > > > can
> > > > with "innovative" products, and  oversight agencies that are asleep 
>at
> > >the
> > > > wheel.  There's really no excuse  for the Bush administration not to
> > >have
> > > > been
> > > > aware of the developing problem,  the issues were well publicized 
>and
> > >the
> > > > industry has a history of  problems.
> > > >
> > > > I think the Bush administration should have been aware of the 
>evolving
> > > > problem and taken clear positive action to prevent excesses - that's
> > >part
> > > > of  what
> > > > the OTS and OCC directors get paid to do and it's what Sec Treas 
>gets
> > > > paid  to
> > > > do.  I think this is just another example highlighting the lack of
> > core
> > > > competency in the Bush administration.
> > > >
> > > > As I recall, the S&L bail out cost we taxpayers many 10's of 
>billions
> > >of
> > > > dollars.  Let's see what the sub-prime/ARM fiasco is going to cost 
>us
> > > > -  it may
> > > > cost us nothing from the Treasury, it may just tank our net worth
> > > > and  trigger
> > > > a recession.
> > > >
> > > > JMO
> > > >
> > > > Dave
> > > >
> > > >
> > > >
> > > >
> > > >
> > > >
> > > > ************************************** AOL now offers free email to
> > > > everyone.
> > > > Find out more about what's free from AOL at http://www.aol.com.
> > > > __________________________________________________
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