Bonfire of the homebuilders

[RedEarth]

Source: msnbc.

Elizabeth and Armando Motto are living a real estate nightmare with a new breed of monster: the big homebuilder as lender. In November, 2005, the couple, who have four children, agreed to pay $540,000 for a newly built three-bedroom house in suburban Clarksburg, Md., near Washington, D.C. Rather than send them to a bank, the builder, Beazer Homes USA Inc., offered to provide a mortgage itself in an arrangement of the sort that helped fuel the long housing boom across the country.

But when it appeared that the Mottos might not qualify financially for the loan, things took a troubling turn. Beazer, according to the couple, inflated the pair's earnings in loan-application documents by incorrectly stating they were collecting rental income from the house they were leaving. "I don't want to misrepresent myself," Elizabeth said in e-mail correspondence with Beazer's outside mortgage service, dated July 14, 2006. But in the end, the couple signed the documents, and soon after they closed on the Clarksburg house.

They now regret it. The Mottos moved to Clarksburg, but they haven't succeeded in unloading their previous home in Rockville, Md. They have nearly $1 million in mortgage debt on the two dwellings. With $145,000 in family income, Elizabeth says, they are "on the brink of foreclosure" on both houses. "We are so broke."



Read more: http://www.msnbc.msn.com/id/20145724

[CoffeeCat]

1. What a couple of chucklenuts...

These people are idiots.

Who buys a $540,000 home when you're making $145,000--and you haven't sold the
previous property? An idiot that's who.

I understand these people are in pain and I wouldn't wish this suffering on
anyone, but for Pete's sake people--don't act like foolish imps and expect
to be lying in a bed of roses.

"We are so broke." Well of course you are! You bought a home that you
couldn't afford, before you sold your other home.

Why do banks and other lenders allow people to financially hang themselves like this?
Loans like this should be illegal.

Most people would love to live in a $540,000 home, that doesn't mean most people are
financially capable of buying that much house.

Where is the responsibility with lenders and homeowners?

[redqueen]

2. Cause the builder lied on the app. n/t

[CoffeeCat]

4. The homeowners knew that the info...

...on the ap was false. They signed anyway.

They're still a couple of chucklenuts.

[redqueen]

5. I'd be willing to wager they didn't read the documents closely.

Most people seem too willing to believe in the good faith of others.

[Kingshakabobo]

19. According to the article, they knew what the lender was doing.

Now they are in trouble and grasping at straws. Both are to blame but the lender will take more heat as they are licensed.

[zehnkatzen]

8. Hell's bells, I'd just settle for the $145K yearly salary!

Just how greedy are people today? Egads.

[Lorien]

14. I'd hardly call them "greedy". $145k for a family of six in the DC area

doesn't go very far. Hell, in my neighborhood a half million dollar home is about 1,700 sq. ft-kinda tight for six people. In Boston or Glendale, CA you MIGHT swing a two bedroom for that. In Dayton, OH you would have a fair sized McMansion for the same amount. I'm sure you could live quite well in Portland for $145,000 a year...but if you had a spouse and four kids-even with your great public transportation and low food costs- you would hardly be living large as a family.

[wicket]

17. You could get a 2 bedroom condo for that price in Boston, maybe

But certainly not a house.

[teenagebambam]

11. With all due respect....

....yeah, thay ARE idiots for buying without selling the first house.

But in suburban DC, it's hard to find a house for less than $500,000, especially with three bedrooms.

[leveymg]

13. A $540K house in the DC burbs is no palace

In fact, that's pretty much average around here.

And, a $145K combined income (that's gross), ain't a lot to live on here, either.

These people might have overextended themselves, but they didn't live like royalty. A couple years ago the real estate market was HOT, and a decent house would be snapped up within a month of being listed. No more, but at the time it probably seemed like a safe bet.

A lot of people made a lot of money flipping property. It was PONZI scheme, and those who stayed in the game too long are now the losers.

[Bluebear]

15. A 540K house is not that excessive for a family with 145K income.

[ORDagnabbit]

3. ha-ha (my best nelson voice)

[The_Casual_Observer]

6. Motto: "Home Sweet Home"

[Mind_your_head]

7. I know of a couple who were in a similar situation

They put BOTH properties on the market at "bail" prices (as in "I'm bailing outta this mess) and figured they'd sell the one that got the first best offer. As lady-luck and 'fortune' would have it (what a sense of humor that lady-luck has), they got offers on BOTH houses the same day! This actually worked out okay b/c they worked both potential buyers until they got an offer that was "within the realm of reason" on one of the homes - and then they sold it. Thus ending the stupid nightmare situation that they had gotten themselves into.

on edit: P.S. I guess I should say/add that it was the "old" home that they ended up selling and they got to stay in the new/preferred home....but, *damn* they were really lucky it worked out that way, imo.

[beberocks]

9. There's plenty of blame to go around

The lenders were so anxious to make home loans they really
didn't care if the borrower could afford it or not. Way too
many borrowers didn't have the means to make the mortgage, let
alone pay the taxes or have any sort of safety net. They just
got greedy and thought that home values would continue to go
up 20% a year. I live in Sonoma County and the home values
went through the roof--tripled from the late '90s. But now
there is so much inventory because people are losing their
houses or desperate to sell, and home values are falling
rapidly. I've seen many houses that were bought recently (in
the past two years) and the owners can't find buyers. 

[enid602]

10. bleak

Didn't realize that things were so bleak already in DC. What's going to happen once the defense contracts stop, or if America's creditors pull the plug on us? Uh-oh.

[Warpy]

18. That's the main reason the pubbies might throw the 2008 election

Some of them really, really need to get out from under overpriced DC real estate, mortgaged to the hilt. Democrats desperate for housing might just be persuaded to give them the 2005 prices they think they're entitled to.

Well, that and having the Democrats to blame for all the misery Stupid's administration caused.

[pink-o]

12. Those sub-prime lenders are vile vultures!

I live in San Francisco, and actually have a good FICO score--I'm innundated daily by lenders dying to give me money so I can quit renting. (but since my people have been moneylenders from the middle-ages, I know better!:sarcasm: And real estate here is pretty un-real)

Anyway, they dog you, they hound you, they dangle the carrot in front of you to sign your life away for a poorly built box just so you can have the "pride of ownership". I don't even have kids, I can't imagine how hard it is to resist the American Dream when you're raising a family and lenders are telling you what you want to hear. Young people these days are used to living on plastic, debt has no reality to them until they're faced with foreclosure--which is what's going on now.

I don't think it's fair to blame the victims, when they're basically being seduced left and right. Yeah, they should've been smarter--and they will be now--but that pressure is pretty hard to resist.

[Zynx]

16. These people knowingly signed a false document. Sympathy??

They conspired with the lender to engage in mortgage fraud.

[Bluebear]

20. "OK look it's either this or rent forever, take it or leave it..."

"Don't worry, Mr. and Mrs. _____ this is common practice, it's done all the time, believe me. You want the house or not?"


With some of these vultures, excuse me, yes I can muster sympathy because who knows WHAT they were told.