‘Extreme Home Makeover’ sees family foreclose on ‘free’ house
Getting a ‘free’ $450,000 construction job, a paid off mortgage, and $250,000 in cash and scholarship money just wasn’t enough for one Extreme Home Makeover family who is getting foreclosed on 3 years after receiving their new home. How are they getting foreclosed on you ask? Well apparently getting a new home with no mortgage wasn’t enough. After blowing the $250k that was raised to help them, apparently the ‘Buffetts’ took out a 2nd mortgage to the tune of $450,000 dollars which they cannot pay back!! I call them the ‘Buffetts’ with a straight face and not a hint of sarcasm in my voice.
I don’t know the details, and it really doesn’t matter. I use this case to illustrate the lack of financial awareness by the average joe. This goes back to my ‘owning a house is a responsibility…and lots of people are NOT responsible enough to own a house’. I pose this question to you: how many people that are looking to get some of that $300 billion of guvment bailout money made bad decisions like the ‘Buffett’ family??
Should we feel ’sorry’ for these people? Essentially, this family has blown well over a million dollars inside of 3 years. They got a $450k construction job (I am sure the house appraised for more when done) for free, they got $250,000 in donations from generous people, and they took $450k out of the house on a refi. You know how bad I am with numbers, but I think that is $1,150,000 blown through in 3 years. Based on the comments from people in the story, it wasn’t like a freak illness or accident caused hospital bills to eat up that money, it appears to be nothing more than just terrible financial habits.
Maybe they should have been forced to watch a bit more Suze Orman, and bit less MTV Cribs. Either way, I just want you to think if there could be more people out there like them, with a ’sob story’ of losing their home. Obviously you won’t get much sympathy from me, as I am partially footing the $300 billion dollar bill with my tax dollars for people that cannot afford their homes, while I rent mine. If I had known the guvment was going to help my buy a place I couldn’t afford, I would have bought one years ago. Another black-eye (can I say that…or will I offend people) for the responsible people of America.
On to more positive housing news…well, at least for those who saved their money and are looking for a good deal. Appears that housing dropped 15.8% in May from the same time last year. I didn’t believe it until I saw this article, but I guess real estate doesn’t always go up! I thought with the way salaries were growing 15-20% a year, that would have no problem keeping real estate propped up. Guess I was wrong. Maybe I should go read ‘Economic Fundamentals for Dummies’ and watch a bit more Kudlow and Company. Ok I apologize for the dry sarcasm here.
It is just that NONE of this is hard to see or understand, IF you take emotions and feelings out of it. I knowwwww you want that house or car, but the numbers do NOT lie! I know that new guvment program is going to cost hundreds of billions of dollars we don’t have, but man, it feels so good to ‘help’ these people. This country needs fiscally responsible people with integrity to turn things around. We need people on Wall Street, on Main Street, and in government that will make the ‘right’ financial decision even though it might not be ‘popular’ by people that don’t understand the ramifications of poor financial decisions. Sure, a $300 billion housing bailout ’sounds great’ to a large portion of this country, but the precedent that sets is very dangerous, not to mention the long term effects of government policy decisions like that. Sadly, there isn’t a political party that is fiscally responsible anymore. With more and more people being raised on the ‘guvment do it all for me’ mentality, it is going to be hard to get enough responsible voters to actually make a difference.
All I can do is help you to be informed so that you and your family are less likely to fall prey to the unethical people out there, and to not make preventable financial mistakes.
Stay tuned…
SoCalMtgGuy
PS. If you haven’t been here for a while, there are 3 new posts in the past few weeks!!
July 30th, 2008 12:26
SoCal,
I read that the number of people who ‘walk away’ from their mortgage is increasing to a level of ‘tsunami of voluntary defaults’ (http://news.bbc.co.uk/2/hi/business/7529277.stm). There is no more moral obligation to pay back one’s debt, esp. if one has negative equity in the house.
Who cares about being responsible right now??
July 30th, 2008 13:40
Nobody cares because the past few years there are ZERO consequences for irresponsible actions. Our own guvment wants to take 300 billion dollars to ‘help’ people because ‘it isn’t their fault’.
If a BK or foreclosure crippled you financially for 7-10 years, I don’t think we would see as much of it going on. If people weren’t extended credit and were forced to then SAVE and pay cash for items for several years, they might think twice about how that would impact their lifestyle.
I agree. It is a mess, but it needs to work its way through the system without any taxpayer help. If there is no ‘pain’ then history will surely repeat itself.
Stay tuned…
SoCalMtgGuy
July 31st, 2008 03:35
If their story was meant to elicit sympathy, it didn’t work. Either walk away, or hold out for a government bailout. It’s as if the responsible are being punished for not being fiscally reckless. Even the (putatively) rich don’t pay what they owe.
Thank you for your blog. I can’t believe I’ve been reading it for well over a year now, maybe closer to two.
You have been a major voice of reason from the beginning, and it’s good to see new posts from you. I hope you will be around to illuminate the darkness to come for the rest of us.
August 2nd, 2008 08:29
It starts at the top. Look at all the shady dealings and lies the current administration has been caught in, and what consequences has any one of them suffered? None, nada, zip. It sickening.
August 2nd, 2008 18:18
Ya know, we live in a country that has a retard for a president, we’re attacked by 19 guys and wind-up in a war in the wrong country against the wrong people, our bankers decide it’s time to hand out free cash without ensuring repayment, we claim to represent ‘good’ while torturing people and creating clandestine jails worldwide to take kidnapped people: what the f*ck is so SURPRISING about the situation this country is in?. At this point continuing to worry about “when will I be able to afford a home” actually seems kinda STUPID considering everything’s COLLAPSING around us.
August 3rd, 2008 09:39
Nice to see you back SCMG.
August 3rd, 2008 23:14
It’s not financial unawareness…it’s GREED. They knew exactly what they were doing…and I bet they never had any plans to repay the 2nd mortgage.
I mean why? We’ll be the one’s paying for it anyway.
August 4th, 2008 16:08
In fairness, while this family was very stupid, they did take the loan to fund a small business, not plasma TVs and hummers.
August 5th, 2008 10:06
Beth,
I agree to a point. But $450,000 to start a small business?? Not buying it.
Based on the way everything else was handled, I have my doubts on the small business ‘excuse’ for where the money went.
Even if they did spend $450k, I would assume there would be some capital equipment, that even if sold for 30-50% of what it cost (only been ‘used’ for a few months now…if it all), they could have enough money to make things work and keep making their payment.
If I were a betting man, I would ‘bet’ that quite a bit of that money was wasted. I could be wrong though. I haven’t seen a ton of those shows, but I have yet to see one where they did a ‘makeover’ for struggling entrepreneurs.
Stay tuned…
SoCalMtgGuy
August 5th, 2008 13:50
this just makes me sick and worst of all the government will bail these people out. What a joke
August 5th, 2008 21:01
Save the ignorant partisan blathering about politics.
The late 1990s DotCom bust is still a fresh memory.
FDR responded to Japan’s attack on Pearl Harbor by invading Africa.
JFK responded to activity on Cuba by threatening the complete destruction of Russia.
Note the sponsors of this 300 Billion “housing bill”:
Sponsor:
Rep. Nancy Pelosi [D-CA]
Cosponsors [as of 2008-07-28]:
Rep. Xavier Becerra [D-CA]
Rep. James Clyburn [D-SC]
Rep. Rosa DeLauro [D-CT]
Rep. John Dingell [D-MI]
Rep. Rahm Emanuel [D-IL]
Rep. Barton Gordon [D-TN]
Rep. Steny Hoyer [D-MD]
Rep. Tom Lantos [D-CA]
Rep. John Larson [D-CT]
Rep. Edward Markey [D-MA]
Rep. George Miller [D-CA]
Rep. James Oberstar [D-MN]
Rep. Collin Peterson [D-MN]
Rep. Nick Rahall [D-WV]
Rep. Charles Rangel [D-NY]
Rep. Christopher Van Hollen [D-MD]
Rep. Nydia Velázquez [D-NY]
Rep. Henry Waxman [D-CA]
http://www.govtrack.us/congress/bill.xpd?bill=h110-3221
August 7th, 2008 16:58
Save the ignorant partisan blathering about politics.
“Partisan” blathering is by definition about poiltics, Einsten.
August 9th, 2008 13:41
SoCal,
I heard from the people of the know that the skyrocketing gasoline price is caused by commodity speculation, which is financed by money made in the recent housing boom. If this is true, some people in the haute finance are clearly dancing on every Joes and Janes misery.
What’s your reading, SoCal??
August 23rd, 2008 17:00
Just put another log on the idiot fire. The taxpayer bailout is illegal. I wish every congressman that voted for the bailout would not be re-elected in November. Get rid of all the bums.
September 6th, 2008 19:13
So Cal,
I would like to hear your thoughts on this whole Fannie/Freddie situation. Specifically, what do you think should be done, if anything?
We all are looking forward to your next post.
September 6th, 2008 19:48
So Cal,
Sorry man, just went back and read your post from July 16th and that pretty much sums it all up. How do you think the stock market will react to this Fannie/Freddie news on Monday morning? Huge down, huge up, somewhere in between? Scary times right now.
You are a visionary, keep up the good work!
September 8th, 2008 12:08
I will be getting a post up about this soon…so stay tuned.
SoCalMtgGuy
September 15th, 2008 07:39
And the *good news* just keeps on coming..
Lehman Bros. just declared bankruptcy today.
“Lehman files for bankruptcy protection
Wall Street titan goes under after frenzied search for buyer falls short
By MarketWatch
Last update: 11:13 a.m. EDT Sept. 15, 2008Comments: 857NEW YORK (MarketWatch) — Wall Street awoke to a dramatically changed world on Monday as Lehman Brothers’ bankruptcy filing rocked investors and pulled down financial stocks around the globe.
Lehman (LEH:Lehman Brothers Holdings Inc
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Last: 0.19-3.46-94.93%
11:37am 09/15/2008
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Financials
Sponsored by:
LEH 0.19, -3.46, -94.9%) on Monday filed for Chapter 11 bankruptcy protection, ending the 158-year-old Wall Street firm’s run and rattling the foundation of the global financial system.
Lehman said that it will continue business while it explores the sale of its broker and investment-management units and other strategic alternatives.
The news sent the firm’s shares tumbling more than 90% Monday morning and shook financial stocks. See full story.
The filing shows that Lehman is closing its doors with more than $600 billion of debt. The bank has total debts of $613 billion against total assets of $639 billion. Its filing with the Bankruptcy Court of the Southern District of New York shows that Lehman had more than 100,000 creditors.
The announcement came after a frantic weekend of negotiations in which potential acquirers backed away from a deal and federal officials balked at committing taxpayer funds to help save the Wall Street giant. ”
http://www.marketwatch.com/news/story/lehman-files-bankruptcy-protection-historic/story.aspx?guid=%7B50D06AF4%2D0AD5%2D4B38%2D8206%2DD4C8D6E62EC7%7D&tool=1&dist=bigcharts&symb=LEH&sid=12484
I don’t think that there is enough money in the world to bail “everybody” out..
September 16th, 2008 12:41
Ah… 450k in construction + 250k in donations and a loan for 450k against the 450k construction (or it’s final appraised value) cancels out. They don’t both have the equity in the home and the cash from the loan at the same time. So they really only blew 450k from the loan, 250k in donations, and whatever equtiy was left after the bank foreclosed. It’s not really like ONLY 700k + equtiy makes it any better, but some people are just not good with money.
September 17th, 2008 15:05
Here comes Santa Claus,
Here comes Santa Claus,
Right down Bailout Lane,
Fannie Mae & Freddy Mac
A-pullin’ on the reins!
Gummint Gravy Train rollin’ in,
All is happy and bright,
So dream of condos to flip flip flip
‘Cause Santa Claus comes tonight!
September 18th, 2008 08:05
SoCal, where are you?????????????????