No, NPR. Not Everyone Deserves To Keep Their House!

By
Real Estate Agent with Home Grown Real Estate - Buy Sell Remodel Build

Mortgage Crisis

No, NPR.  Not Everyone Deserves To Keep Their House!

This morning driving into the office, I found myself literally yelling at my radio at one of the worst spun stories against our housing market I've ever heard.  

Let's preface this by saying that I'm a firm believer in taking responsibility for your actions.  One of my dad's favorite sayings is, "If you're gonna be dumb, you gotta be tough!"  The fact is, if you buy a house and don't make your payments, you don't have any right to stay.  The whole story is spun with the aim of convincing the public that legislation is needed to require a lender to go through some sort of mediation or loan modification first with the homeowner before resorting to foreclosure.  Sounds warm and fuzzy enough, but does everyone deserve to keep their house?

You can read the details and listen to the story of this sad family here: 

http://www.npr.org/2010/12/20/132146568/housing-nightmare-upends-family-enriches-investor

What you'll find here is a sob story of how low-income families are taken advantage of and manipulated into buying houses at terms they couldn't afford, then once they get behind on the loan, the bank is unwilling to re-finance the loan with this family. Sure, it's sad, but when you do dumb things, you've got to be the one to take responsibility for your actions.  

Here are the facts of the story:

 

  • An immigrant family bought a house in Boston in 2006 for $584,000, made no down payment, and got a monthly payment that was almost $5,000 more than their monthly income.  
  • The couple got behind over $150,000 on their payments.  Wells Fargo actually offered to perform a loan modification, but since this would up their principal balance to over $600,000, they declined.  
Their monthly payment was almost $5,000 MORE THAN THEIR MONTHLY INCOME???  Why would any normal thinking person agree to this?  To me, $584,000 is a HUGE amount of money...especially when you don't have any in the bank to put down.  No one who is considered a low-income earner should EVER be buying a house for $584,000.  Folks, if Boston is too expensive to live in, then there are plenty of other places in the country that you can live and work in for MUCH less than that.   

 

Eventually, the house was foreclosed and sold to an investor for $115,000.  Two weeks later, the investor sold the home to someone else for $270,000.  The story claims that the broker made money, the investor made money, but somehow the homeowner misses out.  Well, DUH the homeowner misses out!  They were $150,000 BEHIND ON THEIR PAYMENTS!!!!  They SHOULD miss out!  According to the mortgage you sign at closing, when you don't pay, then you don't get to stay!  It's not rocket science.  

Also, why should we demonize the wise investor who has been smart with his money, saw a good bargain, and took advantage of a money making opportunity?  Since when was someone wise making money a terrible thing?  Maybe NPR should read the Parable of the Talents.  Maybe this family should go read Dave Ramsey

The big complaint in the story was that Wells Fargo didn't try to work with the couple to refinance, and should have... but THEY DID!!!  They were offered a deal, but refused it.  What more can the bank do?!  Did they expect them to let them have it for free?  The fact of the matter is that houses aren't free in the United States. 

She claims they worked 20 years in the U.S. to be able to buy this home... but you'd think that since homeownership was such a big dream, then part of those twenty years would have been spent saving up for a down payment on a home.  

"I prefer to go back [to] my country," she says.  "At least [you can say] your house is yours."  Sure you can, lady. 

The thing that kills me is that there are a lot of us making wise financial choices, but still have a hard time making ends meet.  There are many who could legitimately need some assistance to make it through a rough patch, but PLEASE let's not bail out idiocy.  I am all for charity when someone finds themselves in the tough moments of their lives, but rewarding bad decisions can only lead to more bad decisions.  Unfortunately, some people who do dumb things need to lose their home.  Sad, but it's the reality.  

Joshua Pettus

Home Grown Real Estate

600 Ford Road 

Muscle Shoals, AL 35661

256.272.1050

jbpettus@homegrownrealestate.net

http://www.homegrownrealestate.net

 

Comments (6)

Robert Rauf
HomeBridge Financial Services (NJ) - Toms River, NJ

Joshua, I call it Financial Darwinisim.. .Some people are not smart enough to own a home and will lose it because of it.  They signed the bottom line, knowing what their payments were, but it is EVERYONE's Fault BUT theirs??

Bad things happen to good people yes... But so often people just do dumb things and they should learn from their mistakes, not be rewarded for them.

Dec 20, 2010 03:59 AM
Joshua Pettus
Home Grown Real Estate - Buy Sell Remodel Build - Florence, AL
Realtor, Florence, Alabama Real Estate

Exactly, Robert.  I just don't understand why these people think they were entitled to stay.  Financial Darwinism is a great term.  Some people will always be wealthy and some people will always stay poor.  Money doesn't come to someone by luck.  

Dec 20, 2010 04:02 AM
Garth Jones
Prudential Tropical - Valrico, FL

VERY FEW people that have lost their homes did anything at all to try to save it.  There was a lot of mortgage fraud taking place, but there were a lot of people that beleived something that was too good to be true.

 

Dec 20, 2010 07:08 AM
Joshua Pettus
Home Grown Real Estate - Buy Sell Remodel Build - Florence, AL
Realtor, Florence, Alabama Real Estate

Garth, from what I've seen, most mortgage companies will call and call and call to be able to work something out with you.  The last thing they want is for you to be foreclosed on.  They'll literally hound you to death to get you to work with them.  They can't help you if you ignore all their phone calls and letters. 

I'm pretty sure there was a lot of mortgage fraud taking place, too, but probably not as much as the media would like for us to believe.  Some people who were dumb enough to sign on the bottom line are now screaming fraud because they can't make the payments.  Not all of it is fraud... a lot of it is just dumb consumers.  

Having said all that, I have some pretty high ethics for myself in that I'm very protective over my clients and really work hard to make sure they don't get in over their heads.  The last thing I want is to find out one of my clients bought a house they couldn't afford.  I rely on those clients for referrals, so I want them to have a positive experience so they'll send me more business. 

Dec 20, 2010 07:28 AM
Anonymous
tom shoe

Thanks for speaking up.

I am tired of the NPR sickness.  I don't understand what motivates them to lie.

Any one can do the math and any one should know better.  They are trying to invent the news.

Too bad, because they have good science reporting and poltical reporting.  Just every few days they try to invent another race issue or class-issue.  They are sick.

Dec 20, 2010 03:08 PM
#5
Robert Rauf
HomeBridge Financial Services (NJ) - Toms River, NJ

Even our founding fathers were smart enough to write: "the Pursuit of Happiness" not the promise of it... we have to work hard to get what we have and to keep what we have, that is the foundation of our country, somehow every one seems to have forgotten about that!

Dec 21, 2010 04:48 AM