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Qualifying for a $689,000 home on less than $15,000 per year

By
Real Estate Agent with Keller Williams Realty Kingstowne/Alexandria, VA Office

I had just read an article in the Washington Postthis morning about a lady and her four kids who were sold a $689,000 townhouse in Clarksburg, MD (outer DC suburb) with an income of less than $15,000 per year. The seller was a mortgage broker who got her "qualified" for the loan and made $203,000 on the sale of the property in only 22 and a half months.

I suspect the FBI is so overwhelmed with other things but shouldn't these fraudsters be thrown into our already overcrowded prisons. Who qualifies for a $689,000 home when they make less than $15,000 per year and are, by the way, already on food stamps.

Later in the morning, I received an e-mail from an investor, whom I will be meeting for lunch on Tuesday, to discuss being his agent in Northern Virginia for his real estate investment purchases. The e-mail was about Standard & Poors statistics showing that "93% of option - ARM buyers chose the worst, most irresponsible option." The premise was the the house would go up in value. Nearly all of these 350,000 borrowers are under water and about to go down when the five year reset kicks in any time now. This will raise mortgage payments more than 100% from their entry rate and causing a wave of foreclosures likely to wipe out the recent upward trend in the housing market.

Opportunity: If you have money, investors can buy up these properties and flip them (depending on the area and market) or hold them as cash flowing rentals (Cash flowing is the key).

The article was very long and very detailed but you get the picture. One other note was that in order to turn things around, many economists agree, that it is not a matter of if, but when, the United States adds a VAT (value added Tax) which will disproportionately slam the middle and lower income classes. The government knows they will have to do it but no one is ready to tell the consumer that it is coming. I think much of the population already realizes that.

Gold is being hyped up right now. Every time you turn on the TV, there is someone either trying to buy or sell you gold. Be careful, these are the same hucksters that were trying to sell you "liars loans" in 2005.

Comments (3)

Ron Trzcinski, 410-935-5844
410-935-5844 Office - Cockeysville, MD

Tom,

Perhaps there should be a "non-value added" tax applied to the services that these hucksters provide.

Nov 27, 2009 03:56 AM
Bill Gillhespy
16 Sunview Blvd - Fort Myers Beach, FL
Fort Myers Beach Realtor, Fort Myers Beach Agent - Homes & Condos

Hi Tom,  Amazing isn't it ?  Any details on how this feat was accomplished ?  May there be a very hot place in Hell...

Nov 27, 2009 04:05 AM
Tom Robinson
Keller Williams Realty Kingstowne/Alexandria, VA Office - Fairfax, VA
Experienced Real Estate, Professional Serving No. VA and DC

A corrpupt mortage broker and a "liars loan" is all it took according to the front page article in yesterdays washington post. But that was in 2006. You cant get a loan today unless you have stellar credit, low debt , and a mega downpayment (except FHA. VA).

Nov 27, 2009 09:24 PM