Real Buyers of Genius: Another $20,000 a year person takes on a $600,000 mortgage.

The mainstream media is now catching on to the unbelievable fraud that has occurred with this housing orgy. As I highlighted in a previous post about a strawberry picker who was able to purchase a $720,000 home on a $14,000 income

We now have another real estate mogul who purchased a $600,000 home with an income of $20,000. What graduate school is she going to so I can assure my children avoid going there? Not only that, take a look at a paragraph from the article:

Her 29-year-old daughter, a graduate student with an annual income of less than $20,000, qualified for a mortgage of $600,000 with no money down, split into two different loans at 8.75 percent and 12.5 percent interest rates.

With income from tenants, which didn’t come right away, Beatty’s daughter thought she could afford monthly payments of nearly $5,000.

But she hasn’t made a mortgage payment in more than three months, and she’s receiving letters threatening foreclosure.

Did you notice the interest rates on both loans? Too bad investors arenâ€™t going to get a cent of this because she is already three months behind and will be foreclosed upon. This is another example, of many to come, of the mortgage industry pimping ridiculous loans to the financially retarded wannabe real estate moguls. Now the mainstream media is painting this as a sob story of poor little graduate student who got conned by big bad lender wolf into signing not one, but two loans to get into this mess. Are you kidding me? They both need to get a financial beat down; the buyer should have ruined credit for a long time and the lender should come up with the short fall and be prosecuted for fraud. No underwriting system would approve a $600,000 mortgage with an income of $20,000. Look at the interest rate on both loans and you know this crap has stated income written all over it with a tinge of fraud.

Now that we are entering the crisis stage, and this has been argued ad nauseam in many economic books regarding bubbles we start seeing an outing of the shysters and snake oil salesmen. Like shining a flash light on roaches these people are scurrying trying to find cover from their financial sins of yesteryear. It is despicable and they should run. All of a sudden they realize that lending out $500,000 to someone making $40,000 a year wasnâ€™t so smart. Yet seeing the cracks in the system, someone making $40,000 a year is probably able to get a million in loans ala Casey Serin. How deep this crap permeates in the system is probably larger than your local county sewage plant. The stench is starting to overflow as the blistering hot summer sun starts to rise in the east and exposes the frauds across our nation. This financial violation of our nation is going to damage the economy for years to come.

But donâ€™t worry! The DOW keeps going up on par with the dollar getting kicked in the nuts. Is this a coincidence? I think not. Yes, you just made 1% on your investments while the price of gas just went up 20%. Great job America in understanding that inflation is another tax. Yet we have a core of people out there that god forbid, they hear the word tax in their vernacular and start screaming communism as if Hugo Chavez was marching on Washington. Yet they are okay to allow massive deficit spending ala the war in Iraq and tax breaks and they smile while they canâ€™t comprehend why their dollar doesnâ€™t buy as much Wal-Mart crap as it did a year ago. It is inflation and the decimation of the dollar Einstein! These policies do intertwine because the amount we are spending is so spectacular that someone has to pay for it and it sure as hell isnâ€™t going to come from higher taxes. So we get taxed via inflation, the stupid tax, and people go on with their merry lives.

I hope that we start seeing perp walks in the short-term of these real estate syndicate peddlers and their Gordon Gekko greed. And not only that, but a cultural shift from praying to the Visa and Mastercard god and move toward financial prudence but I doubt that. No excitement in maxing out your 401k when Paris Hilton is getting ready to hit the slammer. What the hell am I thinking trying to worry about global inflation when a Baywatch former star is eating a Wendy’s hamburger hammered. This culture is addicted to debt and to drama. Sometimes the drama is caused by the debt. Saving is a thing only a few in America do and getting rich quick is the way to prosperity. You either make it big fast or say screw it, and spend as if you were rich. The housing bubble is an extension of this pervasive credit liquidity but the good news is the party has ended. And now we are going to hang around this stage of the bubble for a good six months while the media pumps out cry me a river stories from multiple cities and violins are sent to each homeowner.

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8 May, 2007 mainstream-media, mortgage-fraud

18 Responses to “Real Buyers of Genius: Another $20,000 a year person takes on a $600,000 mortgage.”

Markus Arelius
May 8, 2007 at 11:36 am

Great post! And very true. Most homes where I live are around that price range,$600k to $750K. We are talking 3 to 4 bedroom single family cement shitboxes too.
I never understood how anyone making $55K or even $100K can afford a $600K home, and stay afloat month to month financially.
The borrowers should wear a scarlet letter for years due to their arrogance and stupidity. The lenders should indeed pay the difference for their negligence of proven and sound business practices. At some point people are going to ask the question: “God, what happened to us?”. Greed and financial retardation is destroying the American nation.

Anonymous
May 8, 2007 at 11:37 am

Why do you hate America?

Seriously, Dr. HousingBubble, you have my vote.

Anonymous
May 8, 2007 at 12:06 pm

I love America, the constitution, the bill of rights and individual freedom, even the freedom to be stupid. Let the people who made the loans lose money as they deserve to. I’ve been a real estate investor for 30 years, guess what, back then you needed 20% down, 25-35% down if it was an investment.
“If you’ve got nothing, you’ve got nothing to lose.” These buyers were gambling, and they did not use their own money.

When things get back to normal in 5-10 years, you will need 20% down and prices, or the value of the dollar, will be much , much lower. My quess would be 10 to 50% of current “value”.

Socalwatcher
May 8, 2007 at 1:16 pm

Hey, it costs alot for us to be free. Stupidity is an unfortunate by product of democracy and capitalism.

Great insight, Dr. HB!! Keep that keyboard going buddy!

carlivar
May 8, 2007 at 1:24 pm

Did you know that everything you said is what Ron Paul thinks too? He’s the only politician raising alarms about inflation (and fiat money in general).

http://www.ronpaul2008.com

Check him out in the debate:
http://www.youtube.com/watch?v=peBGJwE9NXo

He’s the only one that mentioned inflation.

He wants to get out of Iraq, adapt a non-intervention foreign policy. He also voted against the Patriot Act and refunds the unused portion of his congressional office budget every year.

Anonymous
May 8, 2007 at 2:44 pm

I’ve been watching this bubble for the last 8 years. I’ve got friends who bought the “if you don’t buy now” blather from the Reamtors. I watched others pull money from accounts to buy multiple investment properties. I warned them all. Everyone thought some sort of financial paradym change was happening. Interest only loans with no money down will become the norm…etc. Where has sanity gone? I think this place is one of the few where sanity reins. Thanks for providing some shelter during the storm.

Anonymous
May 8, 2007 at 6:56 pm

Quick question for you experts out there…

If the realestate bubble is getting ready to bust in a big way, why do most of these figures continue to go up?

Updated 4-12-2007
March 2007; Data Median; YoY
Los Angeles; $540,000; 6.3%
Orange County; $629,000; 0.6%
Southern Cal total; $505,000; 4.6%

Thanks guys,
Jessica

Make Mine A Bubble
May 8, 2007 at 7:27 pm

Oh man, I am SO WITH YOU Dr. HoBub!

I feel not one single twinge of pity for Little Miss(informed) Grad Student.

To your point: I couldn’t believe this article in the LA Times today (okay, I COULD believe it…but still!) It said that non-mortgage consumer debt went up 6.7% in the last year! The idiot MSM attributed it to the low unemployment rate in the country.

Um, hello? I attribute it to putting groceries and the car payment and doctor’s visits and gas on good ol’ Mastercard because you’re so SCREWED by your suicide mortgage you can’t come up with the cash for essentials!

That…or you’re so up a creek you just go on a mad shopping spree you can’t afford to immerse yourself more deeply in D-E-N-I-A-L. I’m sure the bling takes the edge off the creditor calls.

Carlivar…I am so with you. I just went to the Ron Paul website and donated $$$ to his campaign. (See, when you rent in today’s day and age, you actually have money in savings to do such things).

🙂

I have LOVE Ron Paul since his Libertarian Party days and will totally vote for him, if given the chance! Rock on!

MMAB

PS: People…register with an actual NAME so we can address one another. All the ANONS are getting confusing, up in this site. Thanks!

Anonymous
May 8, 2007 at 10:35 pm

Jessica – I’m seeing LA median down 6% from last year (www.housingtracker.net). Where did you get your numbers?

Bubblewatcher
May 9, 2007 at 4:35 am

http://denverrealestatebubble.blogspot.com/
checkout my blog…keep up the good work!

Anonymous
May 9, 2007 at 8:58 am

Same shit happened in the 80’s and early 90’s but it wasn’t this bad. All I kept hearing during the boom was “it’s different this time”.

NEWSFLASH: It is never different this time. It’s just another generation of morons.

carlivar
May 9, 2007 at 10:09 am

Anonymous, “median” is a very poor statistical indicator. That’s the point at which half the homes are higher and half the homes are less. It just means more higher-priced homes have been selling. These are the last to head down since the “first house” people are the ones going under right now… but don’t worry… it will get to the high-priced stuff. Just wait. Inventory and number of sales are the main indicators right now (the tip of the iceberg).

Dr Housing Bubble
May 10, 2007 at 11:46 am

markus arelius,

Again a symptom of not teaching basic financial education in high school. Most folks get their financial 101 via Visa and MasterCard. Yet we are reaching a critical tipping point where people realize this has to end and no nation can survive on continually running deficits. Many say “who cares, we’ve been doing it for years” but this short-term mentality is naive and absolutely irresponsible. A mentality that is reflected with the current administration.

anons,

We love America and it pains us so to see such idiots running horrible financial policies. The Republican party used to stand for fiscal conservatism but the way they are running the country we have never spent so much with such little productivity. Again I think the inflation tax is a subliminal way to tax the masses without an uprising. Ask 10 people to explain inflation to you and you’ll get 1 person who understands it. The rest will think inflation means getting a boob job with an air pump.

socalwatcher,

You’re right about that. In a democracy we have the right to vote and do retarded things. We’ll be facing the consequences of this financial orgy for years to come. There is no way outside of hyper-inflation or deflation to come out of this. The Fed is like a deer in head lights not changing their policy. They need to protect the dollar but they careless and feel that after 5 years inflation will eat away at this crap. Stagflation is their mantra.

Carlivar and Make Mine a Bubble,

Ron Paul rocks. He makes sense. He is fiscally responsible. Hell, he said he would abolish the IRS if he were elected! Those are some balls. He is a true libertarian. Even voted against the massively expensive war which of course has been unbelievably successful.

He has no chance because again the masses are dumbed down to the point of Zombies. We understand him because we come from the same school of thought. Fiscal responsiblity and understand some rudimentary items regarding economics. But can you imagine him educating the public about inflation? Unless he ties in Paris Hilton or American Idol most folks will not understand him and see him as extreme (which the party will paint him as such and character assassinate him).

But the good news is that he did amazing on the debate. While everyone was sucking at the teet of Reagan, Ron Paul was preaching the Gosple of Truth and educating many in the public of issues they never thought about. His ratings went through the roof. Hands down he won the debate and even the online MSNBC poll has him as the highest rated candidate on the debate in terms of folks having a positive view on him

2008 will be a critical year because the bubble will be bursting, the war is dragging out, and the bill is coming to the American tax payer. One thing the masses do understand is higher bills. Time to get educated and lead this country to a better place.

Anonymous
May 12, 2007 at 11:31 pm

Only three of the presidential candidates have the balls to free us from our wage and debt enslavement under the Bilderberg plantation lords.

For the Democrats — Mike Gravel and Dennis Kucinich are the only good choices.

But since Republican Libertarian Ron Paul would immediately abolish the Federal Reserve Act — he’ll get my vote. I can think of only one area of disagreement with Dr Paul:

Backing our monetary system with gold is probably not the wisest move. I’m sure most of you have read about the gold confiscation during the Fed-engineered Great Depression… David “Welfare Queen” Rockefeller and friends would do it to us all over again, just like his criminal father did.

No more federal income tax and no f***ing more inflation tax — I’m tired of supporting David Rockefeller’s lazy, useless ass.

Dr. Ron Paul for U.S. President in ’08.

Anonymous
May 18, 2007 at 9:47 am

This as “straw-buyer” written all over it.

soem
May 21, 2007 at 8:13 am

After tiring myself out trying to figure out what the heck this dude Casey Serin is actually up to, I finally found a place that catalogs his activities, history, associations, and purpose.

The site bills itself as “the leading semi-satirical wiki about foreclosure blogs”, and I’d say that’s accurate, given the predictably rather vertical market for “semi-satirical wikis on the topic of foreclosure blogs.” Still, it’s a good read.

Address:
http://www.caseypedia.com/

Hotlink:
Casey Serin

The North Coast
July 2, 2007 at 8:02 pm

To Jessica:

The median prices are going up in your area because lower-end buyers have been blown out of the market, and only high-income buyers remain.

Here in Chicago, moderate-priced condos and houses are languishing on the market for 180 days to 600 days, but downtown condos in the $2MM and above range are selling quickly. Those are the people who can always buy no matter what.

Fewer lower-income buyers vs high-income buyers means higher median prices.

Laura Louzader
December 15, 2007 at 3:59 pm

I am in the $55K-$100K income range and I can’t understand how anyone in my range affords more than $150K comfortably. $200K, if you have a large down payment.

For one thing, there are the escalating property taxes and inflation in food, fuel, and everything else. So, even if I have a fixed mortgage payment that is very low, I can count on taxes, heat, and maintenance costs continuing to ratchet northward in lockstep with inflation and depleting oil.

Then,there is having savings for retirement and/or continuing education, and being able to eat and dress reasonably well.

Then, of course, all life’s nasty little surprises, like a medical emergency your insurance co won’t reimburse you for, or $20K worth of dental work, or a surprise plumbing emergency.

Lastly, isn’t it nice just to be able to BREATHE and sleep at night without the sword of a monster mortgage payment hanging over your head?

Real Buyers of Genius: Another $20,000 a year person takes on a $600,000 mortgage.

18 Responses to “Real Buyers of Genius: Another $20,000 a year person takes on a $600,000 mortgage.”

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