[Rhodes22-list] Economics

[Hank]

Wally,

I agree, which is why I believe that should be some criminal investigation
going on.

Hank


On 3/28/07, TN Rhodey <tnrhodey at hotmail.com> wrote:
>
> 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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