Missed a few payments on your mortgage? About to be kicked out of that house you probably couldn't have afforded in the first place?
Don't worry - ABC's "World News with Charles Gibson" has advice for you.
The April 3 "World News" featured a Staten Island family that managed to purchase a $335,000 home, but with only an annual income of $30,000.
"Karen and David Shearon, working people who made less than $30,000 a year at the time, refused to be intimidated and fought foreclosure - claiming the mortgage broker promised them a fixed-rate, low-interest loan on their $335,000 house, despite their income," ABC correspondent Jim Avila said.
As one might expect, the home ended up being more than the Shearons could afford and they were looking at foreclosure. Even though there is a notification process in New York City, where a homeowner is given warning before a process server arrives, ABC's Avila likened the event to the unexpected arrival of the grim reaper.
"It was a workday afternoon on Staten Island, when suddenly, the quiet of this blue-collar enclave was shattered by the frightening sounds of the dreaded process server," Avila said.
But rather than warning homeowners to see this story and not to get in over their heads, "World News" championed the Shearons as underdogs for managing to keep their home - through the legal system and used them as an example of how the public should handle this situation.
"[T]hey did know enough to take the first step to saving their home from foreclosure. Get outside help. Don't negotiate with the bank alone," Avila said. "Step two - the Shearons hired an attorney who looked at their loan documents and agreed that they had been victims of a bad loan."
"[T]he little guys won," Avila said. "A New York State Court judge denied immediate foreclosure."
However, the bank, LaSalle Bank, a Chicago-based subsidiary of Bank of America (NYSE:BAC), is appealing the ruling.
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Yet another example of how
April 4, 2008 - 16:56 ET by Chris NormanYet another example of how the media can take a situation that's basically a case of right vs. wrong, legal vs. illegal, and ethical vs. unethical and through emotional spin, turn it upside down and backwards. Brings to mind, oh, I don't know.... maybe illegal immigration.
the Shearons hired an
April 4, 2008 - 16:49 ET by Dan The Man 2the Shearons hired an attorney who looked at their loan documents and agreed that they had been victims of a bad loan
I gueess the attorney they hired and paid would disagree with them? Only a Leon would disagree they should not have been given teh loan in the first place.
Nuke em til they glow then shoot em in the dark.
I wonder if he got his money
April 4, 2008 - 16:55 ET by Chris NormanI wonder if he got his money up front?
Twilight Zone
April 4, 2008 - 16:57 ET by River CityEvery time I bought a house I had to be represented by an attorney. The state law required it (several different states). How can any of these people be victims when they were all represented by counsel? Why isn't anyone asking their attorneys why they allowed them to sign the contracts if the contract was a poor one?
I'm sorry, I don't buy it. These people are not victims. Anyone who claims they are needs to go after their attorneys and sue them, not the mortgage companies.
This case in particular is crazy. How someone can get a $300,000 mortgage and make ANY payments with a $30,000 income?
"We are going to take things away from you on behalf of the common good." Hillary Clinton, 6-28-04 San Francisco
Agreed, River City
April 4, 2008 - 17:04 ET by Mica the MagnificentAnd if they live in a state that didn't require an attorney, obviously they thought they were smart enough to act as their own attorney.
Another choice.
River
April 4, 2008 - 17:05 ET by BlondeThat was my question as well...how could anyone possibly qualify for that loan with an income of $30K?
It would be interesting to see what they claimed their ACTUAL income was as they applied for the mortgage. All of the "I didn't know" whining about forclosure is just plain nuts.
David Gregory, do you know which damn network you lie for? ~ Uncle Jimbo, @Blackfive
Bogus story
April 4, 2008 - 17:14 ET by Jerry MackThere are too many holes in this story. No one making 30k would ever qualify for purchase price of 335k. How much did they put down on purchase price, was there a co-signer?
30k per year equals $2500 per month. The monthly payment with taxes would be greater than $2500. Where did they get the money to hire a lawyer?
Good questions all
April 4, 2008 - 18:34 ET by Indiana JoeThis "story" is begging for a news reporter to ask these questions.
How can a true "news report" raise more questions than it answers?
Seems to be a lot of that going around lately.
And it does NO good to
April 4, 2008 - 22:35 ET by Cape Conservativewrite to the network! I tried that the week before with the sad story of the couple in their 30s who lived in a mansion in Miami and then committed to buy TWO half-million$ condos. But when the time came to pay for them, they couldn't find the money to do so. Who took their down payments??? Was there no qualifying required??? And, ABC, do you really think there is any American homeowner who bought a home THEY COULD AFFORD and MAKES THEIR MORTGAGE PAYMENTS that really gives a hoot???? What a JOKE this series is!!! The msm is so far out of touch with reality that it is ridiculous!
Jerry Mack
April 4, 2008 - 23:14 ET by RESTLESS 1"Where did they get the money to hire a lawyer?"
My guess is that the lawyer is probably getting stiffed too.
As one who worked in RE for a while---
April 4, 2008 - 18:56 ET by misterbillAs one who worked in RE for a while- I will post here the rule of thumb many, many years ago(sarc)--like 2006.
Income = $30,000= $2500/mo x .28 = $700/month Principal, interest and taxes. (Rule of thumb by banks--Allowable amount)
$335,000 @ 1.5% interest= (approx) $503/month
ins 60
wild guess taxes 240
total $803
Any average intelligent person out there want to guess how many people would trust a deal like this???
Meantime 2 years out @ 6% =$2010 + taxes and interest = $2310
$2310 / .28= Income of $8250/month to qualify. $99K/year.
Gross income $2500 a month---come on folks --- I do not have an ounce of sympathy for these people and I also think the RE broker and the mortgage broker should be brought to trial for criminal activity.
Perhaps the buyers should be brought to trial for criminal stupidity.
misterbill,
April 4, 2008 - 19:01 ET by BlondeI have no idea where I got this notion...but I thought the "rule of thumb" was no more than 1/3 of one's annual after-tax income spent on the TOTAL mortgage payments (including principal, interest, taxes and escrow).
Or, conversely...that one shouldn't spend more than 2 1/2 times one's annual income on a home.
Old ficts & facts, I'm sure...that was probably before ARMs....but I'd run like a screaming maniac if I were offered an ARM. Too much uncertainty for me.
Regards, mb....great to see you back here, my friend.
David Gregory, do you know which damn network you lie for? ~ Uncle Jimbo, @Blackfive
.28 of gross for housing and
April 4, 2008 - 20:07 ET by mojo_jojo.28 of gross for housing and .42 for total debt to gross income has been used for awhile now. The attorneys for the buyers are negligent, the buyers are idiots and the lender is fscked. No win all the way around. Sucks to be them.
Mortgage Mess
April 4, 2008 - 22:08 ET by Emma GrumpBlonde - when I bought my first home over 40 years ago, the rule was 20% down for conventional mortgages, 10% down for FHA, and the monthly mortgage payment should not exceed 25% of the family income. I did the same thing 6 years later when I purchased my next home. The rule worked pretty good for most folks, and we lived quite comfortably within our means. My sons applied the same logic when they bought their homes and it's worked as well for them. Too many people today have no common sense.
Attorney
April 4, 2008 - 18:58 ET by dpc1212In Georgia, when you hire an attorney to close your loan when buying a house, that attorney does not represent you. He/She is representing the lender. I guess you would need to hire a second attorney to represent you and protect your interest.
The bottom line is,
April 4, 2008 - 19:35 ET by SlicksterWe will have to pay for this BS, let ABC pay off the lender, no one won here except in the mind of the liberal retard who believes that he/she is entitled to a house.
Good Point dpc1212
April 4, 2008 - 19:36 ET by River CitySo, if this is true in the state of Georgia and we are in the mood to require more regulation I say we require the buyer to be represented in EVERY case and in EVERY state. The attorneys will love that one. Then no one can claim to be a victim again.
But it still begs the question in the states that do require representation for the buyer now. What is the default rate in those states? As someone else said: a good reporter would ask those questions. What other regulatory differences are there in states that aren't experiencing the meltdown?
"We are going to take things away from you on behalf of the common good." Hillary Clinton, 6-28-04 San Francisco
How about....
April 4, 2008 - 19:43 ET by BlondeWe require every borrower to sign a notarized affidavit that states...."I understand I, and I alone, am responsible for paying my monthly payment each and every month. Furthermore, I affirm that I have not lied to anyone in order to have the bank loan me the money to afford this home. If I cannot pay my monthly mortgage, I promise not to whine and demand that other people pay for my stupidity".
That works for me...What say you all?
David Gregory, do you know which damn network you lie for? ~ Uncle Jimbo, @Blackfive
I can see it now . . . .
April 4, 2008 - 20:04 ET by River CityThe buyer says the mortgage company said they would cut half a point off the interest rate if I signed the affidavit instead of bringing in a lawyer so I didn't know what I was signing. They signed away their rights for $25 a month less in monthly payments.
Blonde, I think the nanny staters can dance circles around us. We will never be able to out-think all of the hoops they will jump through to avoid responsibility. But just like with a company attendance policy we have to keep trying to close the loopholes.
"We are going to take things away from you on behalf of the common good." Hillary Clinton, 6-28-04 San Francisco
I like it!!
April 4, 2008 - 20:54 ET by FastEdBut then they'd get a John Edwards to plead that they were under duress when they signed it, so - not a legal signature and they don't have to repay.
I've got 4 years to go on a refinanced 30 year. Not presently working, BUT, I will borrow against some annunity, to cover my next years' payments, until paychecks start coming in. (other things are happening that will help, but that's future) Anyway, if there are going to be any "handouts" for bad behavior, I want one for what I think is good - it's time the government learns that the good guys are the ones getting beat up by their bad legislation.
There is no sense in being stupid, if you can't prove it! - my dad V
FastEd
April 4, 2008 - 23:21 ET by RESTLESS 1"it's time the government learns that the good guys are the ones getting beat up by their bad legislation."
They know it. They just don't care.
Gotta love the media (or not)
April 4, 2008 - 21:14 ET by TheAngryConservativeThis gets reported this way because it fits the script. The media (for the most part) is in the tank for Obama (or Hillary if he ends up losing) and they will pound the "if it bleeds it leads" mantra so long as it serves their interests.
I do agree that there is a lot of missing information. If I accept the facts they provided (I know...I know), then my first question is "is that lender nuts??". Of course, you also have to look at the buyer who either is really, really awful at math or he/she doesn't allow the facts to get in the way of what he/she wants.
Of course, liberals are bound by emotion and their perverse predilections and they can't bring themselves to actually say "stupid" when they see it. Either the lender was stupid, the buyer was stupid, or a combination of the two. No amount of nanny state-ism or regulation will save stupid people from themselves.
The lengths to which some people will go to portray themselves as offended or victims is exquisitely pathetic and I have almost completely lost my faith in the American culture in general for precisely this reason. I try to tell myself it's just the media cherry-picking...but I'm not so sure any more.
Liberalism: The aversion to the idea that able-bodied and able-minded people can (and should) take responsibility for their own life rather than being dependent on the government and/or others.
The Answer is simple
April 5, 2008 - 01:28 ET by opedMSM and ABC= DUMB
anything is a story as long as they have a Victim and a Perpitrator
The risk of speculation
April 5, 2008 - 02:38 ET by Parker1227Property values were going up like mad for quite a while in my area, and a lot of AM radio stations were hawking (to good to be true) sub-prime loans. I remember walking around my neighborhood looking at the houses for sale at double their price from 4 years ago and thinking: If only I had known - and gotten in early.
Then I thought about the tech-stock bubble correction a few years ago, and remembered how much it can hurt if you gamble beyond your means.
→ Parker
April 5, 2008 - 03:18 ET by Cool ArrowIt was a no brainer.
Here's another one waiting to explode.
For some reason, my insurance company decided to insure my house and belongings at twice what they're worth.
I have enough scruples to disregard the obvious opportunity this overvaluation presents, but I wonder how many people don't.
I wonder if the next "bubble" might be arson.
♣ a seal
It's Possible
April 5, 2008 - 16:18 ET by NorthCoasterI have a friend who with her husband makes $80,000. They were told that they could afford an $800,000 house by taking out a 20 year interest only loan. They were not gullible enough to follow through with the loan. They realized that the monthly expenses and property taxes would eat up their income and they would build up no equity in the house unless they sold it for a greatly appreciated value later.