Posted by BrendaTx on 4/30/10 6:09pm
Msg #334389
"House of Cards" - a quasi-documentary
I saw it on CNBC last night. (Maybe they'll show it again this weekend. Check your tv guides.)
It is about the mortgage crisis and how things went south from the borrower up to the folks who graded mortgages for the purpose of being used as investments.
Very insightful.
Point of notice, though. They interviewed a handful of borrowers who purchased houses in Califorinia and who are barely hanging onto them or have lost them. In one case the borrowers kept taking every cent of equity out of their home repeatedly in order to use the cash for improvements and "stuff". In two cases people who made decent, but regular blue collar incomes were purchasing houses that sold for $775K. I'm looking at those houses purchased for nearly 10 times my little condo and t's value and thinking, "Why on earth would they believe they could afford homes like that??" The answer was that their mortgage broker told them that in two-five years they could sell or refinance and the homes would be worth twice that. The brokers also arranged mortgages for the down payment on top of the mortgage "without their knowledge". I did not find these people to be so unsophisticated that they could not understand that if they made $900 a week that they still could afford a $3000-$5000 house payment.
Yes, bad things happen to good people but these situations were just so starkly amazingly bad decisions. I can definitely understand losing a job and losing one's home but the process of buying something that's worth more than 10 times one's annual income just doesn't compute to me. I'm so thankful that Texas kept a tighter rein on brokers and home finance.
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Reply by MikeC/NY on 4/30/10 6:25pm
Msg #334394
I saw it last year - very sobering.... n/m
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Reply by BrendaTx on 4/30/10 7:04pm
Msg #334404
I knew it had been around awhile but this was the first
time I had seen it. Also, I know some of my syntax is difficult or saying the opposite of what I meant. I wrote in haste. Hopefully it will make enough sense to get the message across.
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Reply by Blueink_TN on 4/30/10 8:52pm
Msg #334423
Re: I knew it had been around awhile but this was the first
Yes Brenda, I lived it (in CA). In the hey day I was signing the same borrowers two or three times a year! Values were increasing 20K per month. People were using their homes as piggy banks. Crazy adjustable loans... 'yeah we're just going to refi when the rate goes up...' well by then, the homes had depreciated down lower than ever...not appraising, result: foreclosures....
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Reply by MikeC/NY on 4/30/10 11:05pm
Msg #334438
Re: I knew it had been around awhile but this was the first
I think you got the point across just fine. Anyone who has done any work in loan signings should make a real effort to see this if possible, because it explains a lot about what went wrong.
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Reply by Moneyman/TX on 5/1/10 6:52am
Msg #334469
How did they do that "without their knowledge"?
Wouldn't they have to make 2 payments each month? Or were they hoping that the values would increase enough within a few months that they would be able to refinance and the new value would absorb the 2nd? Just not sure how they wouldn't know.
I did realize that people were able to get into houses "they couldn't afford", for lack of a better term at the moment. I didn't realize the differences between what might seem to be a reasonable house value to income ratio was so great in some areas of the country.
I'm going to have to see if I can find that show on line. You don't happen to remember the title of it do you?
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Reply by BrendaTx on 5/1/10 7:20am
Msg #334470
Re: How did they do that "without their knowledge"? - Chris
"You don't happen to remember the title of it do you?"
Yep...House of Cards. 
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Reply by Moneyman/TX on 5/3/10 5:51am
Msg #334639
Thanks Brenda n/m
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