Sunday, October 2, 2011

Wait, what? Verily, the mind doth boggle

While reading a rather interesting article about home foreclosures and deficiency judgements, I came across a quote that epitomizes why the housing market is in such dire straits.
Ms. Ingham says when she bought them, she misunderstood how much her investments put her on the hook for. Her builder, she says, promised she could invest $10,000 in four properties and then flip them for a profit. Ms. Ingham says deficiency judgments punish borrowers who were taken advantage of by lenders and builders.
(emphasis mine)

So here we have a lady, retired programmer for IBM, that was presumably rather financially successful (Big Blue paid well back in the day). She saw an opportunity to "make it big" in the real estate market, and rather than doing any sort of research or due diligence, she just trusted the builder's claim about how quickly she could flip the properties.

So, she now owns 5 properties (I'm assuming she owns her primary residence), and can't unload her 4 "flips". She quits paying the mortgages, the properties go into default and then foreclosure, and then the bank decides it wants its money back. Explain to me exactly how this situation is the fault of the lender or the builder, and not the fault of someone who thought they could turn a quick buck?

Oh, and I should have known the article would turn into a stress-test of my cardiovascular system when the lede is:
Joseph Reilly lost his vacation home here last year when he was out of work and stopped paying his mortgage. The bank took the house and sold it. Mr. Reilly thought that was the end of it. (emphasis mine)
So, we're not even complaining about primary residences, but vacation homes.

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