March 23, 2009

No Sympathy

So Chris Hansen published this "special" last night, which someone did the (dis?)service of sending to me.

Here, let me just give you some snippets:

Take the case of Paula Taylor, a personal trainer, who said she grew up poor near Boston and was one of the first in her family able to buy her own home. In 2006, she said she was virtually homeless, living out of a suitcase, sleeping on the sofas of family members and friends.

She was looking to rent an apartment, but then a realtor showed her a condominium for sale in a renovated house in Roxbury, Mass.

She was put in touch with a loan officer at Countrywide Financial who took her information. She knew she might have a hard time qualifying, but said she did not really understand a lot about the mortgage process. “I knew that you give them your information. And they run the numbers, and they tell you whether or not you can afford it.”

At the time, her income was somewhat erratic and amounted to less than $20,000 a year, she said. But somehow her loan application listed her income as $7,300 a month – $87,600 a year, more than four times her real income.

Countrywide issued her two mortgages to cover the full purchase price: $259,900. The first mortgage was for $194,925 with an initial interest rate of 8.625 percent, fixed for two years, then adjustable. The second mortgage, in the amount of $64,975, had a much higher interest rate: 11 percent.

The combined monthly payment for both loans was more than $2,100, well above her average monthly income of $1,600.

Pressed as to how the loan application could include inaccurate and inflated income information, Taylor acknowledged she didn’t really look closely at the loan documents and said she never noticed the amount until NBC News pointed it out to her. She denied knowingly submitting false information and pointed the finger at Countrywide: “It had to be them in order to finagle the numbers to say that I could afford this property.”

Here's another gem:

David Carbajal was not as fortunate. A gardener in Orange County, Calif., Carbajal had taken on a $600,000 mortgage, with payments adding up to more than $60,000 a year, substantially more than the $50,000 a year he said he earns. He had no real explanation as to why he never did the math to figure out that the house was beyond his means, though he was able to afford for a time because he rented a room to a friend. Not surprisingly, Carbajal ended up in foreclosure. Recently, he and his family were forced to move out.

The article goes on to contrast these two to a woman who appears to have knowingly defrauded companies of hundreds of thousands of dollars in bad loans and a series of bankruptcies as if to say "look, these are the good guys who were just screwed by the system."

Do you know how much it costs to get a real estate attorney to read a mortgage? $300 in most states. And this is if you're not smart enough to say "Oh look, this mortgage has me making monthly payments that ARE MORE MONEY THAN I EARN." We're not talking 25% of your income, we're not even talking the 39% that the government will restructure your loan down to if you're past that. We're talking over 100% of your income.

What do I have to say that?

Foreclose the house.

Evict the occupants.

Imprison the borrower.

Honestly, I'd like to meet the person who thinks these morons were somehow wronged. Mostly, I'd like to meet this mythical person so I can point and laugh.

Posted by Vengeful Cynic at March 23, 2009 10:30 PM | TrackBack