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The Real Estate Hall of Shame - How Not To Use Equity In Your Home
The Real Estate Hall of Shame - not sure if anyone has built one yet, but I found a property today that could qualify as a good place to house the "How Not To Use Equity In Your Home" exhibit. I think it used to be Homer Simpson's place. He lost it to foreclosure.
Lets take a peek behind the scenes and see how this property might qualify for Poster Child status on the Real Estate Hall of Shame:
Lets see...Homer bought it in 2001 for a little under $300,000. Bear Stearns got it for $465k last fall. Don't see any problems so far - probably a typical foreclosure on a note gone bad, purchased by the investment bank for pennies on the dollar.
This doesn't look so bad - what qualifies it for the Hall of Shame? Lets take a look at the loan history:
Okay...lets see: the buyer put down a little less than $15k - which works out to roughly 5% down back in 2001. No problem yet...less than 2 years later, the owners refinanced for about $20,000 more. Could have needed to pay somebody's tuition or something.
But wait - look at what happened in ... more
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