  Mrjoshua Member Username: Mrjoshua Post Number: 1362 Registered: 03-2005 |
DAY OF RECKONING 'Subprime' Aftermath: Losing the Family Home Mortgages Bolstered Detroit's Middle Class -- Until Money Ran Out By MARK WHITEHOUSE May 30, 2007; Page A1 The Wall Street Journal DETROIT -- For decades, the 5100 block of West Outer Drive in Detroit has been a model of middle-class home ownership, part of an urban enclave of well-kept Colonial residences and manicured lawns. But on a recent spring day, locals saw something disturbing: dandelions growing wild on several properties. "When I see dandelions, I worry," says Sylvia Hollifield, an instructor at Michigan State University who has lived on the block for more than 20 years. TROUBLE ON WEST OUTER DRIVE See photos of the houses and homeowners with subprime mortgages on Detroit's West Outer Drive, in an interactive map. http://online.wsj.com/public/resources/documents/info-launch.html?project=detroitsubprime07&w=980&h=530 Ms. Hollifield's concern is well-founded. Her neighbors are losing interest in their lawns because they're losing their homes -- a result of the recent boom in "subprime" mortgage lending. Over the past several years, seven of the 26 households on the 5100 block have taken out subprime loans, typically aimed at folks with poor or patchy credit. Some used the money to buy their houses. But most already owned their homes and used the proceeds to pay off credit cards, do renovations and maintain an appearance of middle-class fortitude amid a declining local economy. Three now face eviction because they couldn't meet rising monthly payments. Two more are showing signs of distress. "This has stripped us of our whole pride," says April Williams, 47 years old, who has until August to pay off her mortgage or vacate the two-story Colonial at 5170, where she and her husband have lived for 11 years. "There's going to be no people left in Detroit if they keep doing this to them."  The fate of people on West Outer Drive offers a glimpse of a drama that is playing out in middle- to lower-income, often minority-dominated communities across the country. In addition to putting families into homes, subprime mortgages and the brokers who peddle them are helping to take families out of homes in which they've lived for years, eroding the benefits that proponents on Wall Street and in Congress have long touted. The borrowers' difficulties raise questions about how the extension of easy credit to large swaths of the U.S. population will ultimately affect people and the broader economy -- questions that have gained in urgency as a sharp rise in defaults has policy makers wondering what, if anything, they can or should do. Much of the focus in the subprime debacle has been on the demise of bubble markets in balmy locales such as California and Florida. But the subprime market has also channeled a surprising amount of money into some of America's poorer and more-troubled local economies. In 2006 alone, subprime investors from all over the world injected more than a billion dollars into 22 ZIP Codes in Detroit, where home values were falling, unemployment was rising and the foreclosure rate was already the nation's highest, according to an analysis of data from First American LoanPerformance. Fourteen ZIP Codes in Memphis, Tenn., attracted an estimated $460 million. Seventeen ZIP Codes in Newark, N.J., pulled in about $1.5 billion. In all of those ZIP Codes, subprime mortgages comprised more than half of all home loans made. The figures show the extent to which the new world of mortgage finance has made the American dream of homeownership accessible to folks in previously underserved communities. By some estimates, subprime lending has accounted for as much as half of the past decade's rise in the U.S. homeownership rate to 69% from 65%. But as the experience of West Outer Drive illustrates, the flood of cash has also encouraged people to get into financially precarious positions, often precisely at the time when they were least able to afford it. In doing so, it may have temporarily alleviated -- but ultimately worsened -- some of the nation's most acute economic problems.  "The market was feeding an addict at its neediest point," says Diane Swonk, who spent 19 years analyzing consumer credit in the Midwest and now serves as chief economist at Chicago-based financial-services firm Mesirow Financial. "Individuals will resist reductions in their standard of living with everything in their power, including mortgaging their futures." If events unfold as some predict, subprime lending could end up eliminating more homeowners than it created. One study by the Center for Responsible Lending, a nonprofit that focuses on abusive lending practices, forecasts that the subprime boom will result in a total of 2.4 million foreclosures nationwide, most of them on homes people owned before taking out the loans. That outweighs even the most optimistic estimates of the number of homeowners created, which don't exceed two million. To understand how the legacy of subprime lending looks on the ground, take a ride around the West Outer Drive area with Carlton McBurrows, who grew up in the neighborhood and now works as a community organizer for Acorn, an advocacy group that provides financial counseling to lower-income families. On one recent spring day, he counted four empty houses with big red refuse bins outside -- a sign that banks, having taken possession of the homes, were tossing out all the belongings and debris left behind by the previous inhabitants. "This is a phenomenon that I've never seen before, and I've lived here all my life," he says. "I think this is just the beginning." As opposed to other parts of urban Detroit, which tend to be plagued by burned-out homes, the area around the 5100 block of West Outer Drive has remained a place where people try hard to keep up appearances. Originally largely Jewish, the neighborhood became a bastion of home ownership for upwardly mobile blacks beginning in the late 1960s. Though the area's fortunes have slipped somewhat as people have moved out to the suburbs, it has boasted such famous residents as Aretha Franklin, Marvin Gaye and Berry Gordy, the founder of the Motown record label. "It was like when you made it to Outer Drive, you'd made it," says Deborah Herron, 52, a former administrative assistant who lived in the area for 35 years. Back in its heyday, the idea that West Outer Drive could suffer from a glut of credit would have seemed far-fetched. Many blacks moving into the neighborhood had to either depend on federal mortgage programs or buy their homes outright. That's because banks actively avoided lending to them, a practice known as "redlining" -- a reference to maps that designated certain neighborhoods as unduly risky. Various attempts to get the money to flow, such as the Community Reinvestment Act of 1977, which pushed banks to do more lending in the communities where they operated, had only a limited effect. But beginning in the mid-1990s, the evolution of subprime lending from a local niche business to a global market drastically rearranged lenders' incentives. Instead of putting their own money at risk, mortgage lenders began reselling loans at a profit to Wall Street banks. The bankers, in turn, transformed a large chunk of the subprime loans into highly rated securities, which attracted investors from all over the world by paying a better return than other securities with the same rating. The investors cared much more about the broader qualities of the securities -- things like the average credit score and overall geographic distribution -- than exactly where and to whom the loans were being made. "You have no time to look really deeply at every single borrower," says Michael Thiemann, chief investment officer at Collineo Asset Management GmbH, a Dortmund, Germany-based firm that invests on behalf of European banks and insurance companies. "You're looking at statistical distributions." Suddenly, mortgage lenders saw places like West Outer Drive as attractive targets for new business, because so many families either owned their homes outright or owed much less on their mortgages than their homes were worth. Lenders seeking to tap that equity bombarded the area with radio, television, direct-mail advertisements and armies of agents and brokers, often peddling loans that veiled high interest rates and fat fees behind low introductory payments. Unscrupulous players had little reason to worry about whether or not people could afford the loans: The more contracts they could sign, the more money they stood to make. "The pendulum has swung too far in the other direction," says Dan Immergluck, a professor of urban planning at Georgia Institute of Technology who has written a book on redlining. "We have too much credit, and too much of the wrong type of credit." Minority-dominated communities attracted more than their fair share of subprime loans, which carry higher interest rates than traditional mortgages. A 2006 study by the Center for Responsible Lending found that African-Americans were between 6% and 29% more likely to get higher-rate loans than white borrowers with the same credit quality. Subprime mortgages accounted for more than half of all loans made from 2002 though 2006 in the 48235 ZIP Code, which includes the 5100 block of West Outer Drive, according to estimates from First American LoanPerformance. Over that period, the total volume of subprime lending in the ZIP Code amounted to more than half a billion dollars -- mostly in the form of adjustable-rate mortgages, the payments on which are fixed for an initial period then rise and fall with short-term interest rates. "A lot of people were steered into subprime loans because of the area they were in, even though they could have qualified for something better," says John Bettis, president of broker Urban Mortgage in Detroit. He says a broker's commission on a $100,000 subprime loan could easily reach $5,000, while the commission on a similar prime loan typically wouldn't exceed $3,000. The boom in subprime lending paved the way to home ownership for many people: Over the past three years, three people on the 5100 block have used subprime loans to buy homes. In at least two of those cases, though, the experience has not gone well. Raymond Dixon, a 36-year-old with his own business installing security systems, borrowed $180,000 from Fremont Investment & Loan in 2004 to buy a first home for himself, his wife and six children, across the street from Ms. Hollifield at 5151 West Outer Drive. After all the papers had been signed, he says, he realized that he had paid more than $20,000 to the broker and other go-betweens. "They took us for a ride," he says. Bishop Charles Ellis, senior pastor of the Greater Grace Temple in Detroit, says he has heard many similar complaints from people in the area who, either because they were new to the process or had good experiences in the past, had put too much trust in subprime-mortgage brokers. Still, he believes many bear responsibility for their predicaments. "If you have a contract in front of you, you have to read that contract," he says. Mr. Dixon defaulted on the loan after the monthly payment jumped to more than $1,500 from $1,142 -- a rise he says put too much strain on his income from his security business. The foreclosure process began in late November, and Mr. Dixon says he expects an eviction notice this week. A spokesman for Fremont said the company, which is in the process of exiting the residential mortgage business, has taken measures to reduce defaults but does not comment on specific customers. Up at the north end of the block, Jennifer Moore and her husband, John, bought a two-story beige-brick house in December 2004. She says her husband had excellent credit, but in the rush to buy his "dream house" he agreed to take out two subprime loans from EquiFirst Corp., one for $164,000 and the other for $41,000 -- a "piggyback" arrangement that allowed him to avoid a down payment. Ms. Moore said the real-estate agent told them they could refinance into a fixed-rate loan within two years, after which the payments on the larger loan were scheduled to reset. Mr. Moore's death in 2006 scuttled the refinancing plans. Now Ms. Moore, a 56-year-old clerical worker for Wayne County, has fallen behind on the monthly mortgage payments, which she says rose earlier this year to $2,200 from about $1,450. After more than 30 years as a homeowner, she now expects to lose the house -- including the back porch she built to take in the sun and the library she decorated with her son's baseball and basketball trophies. "I'll get an apartment," she says. "I'm not going to buy another place." An EquiFirst spokeswoman said the company doesn't comment on specific customers. For many who already owned their homes, offers of easy credit came at a time when a severe economic downturn had left them in need of money to maintain middle-class lifestyles. Since the year 2000, the decline of the auto industry has cost the Detroit metropolitan area about 20,000 jobs a year, helping turn the shopping areas near West Outer Drive into scenes of defunct businesses, payday lenders and liquor stores. According to the latest data from the Internal Revenue Service, households in the 48235 ZIP Code reported an average adjusted gross income of $32,902 in 2004, up slightly from $32,817 in 2001 but down 6% in inflation-adjusted terms. April Williams was feeling the pain of the downturn back in 2002, when she saw an ad from subprime lender World Wide Financial Services Inc. offering cash to solve her financial problems. At the time, production slowdowns at Ford Motor Co. were squeezing her husband's income from an assembly-line job, and they'd heard rumors that more cutbacks were coming. Still, after a loan officer from World Wide paid a visit, they became convinced they could afford stainless-steel appliances, custom tile, a new bay window, and central air-conditioning -- and a $195,500 loan to retire their old mortgage and pay for the improvements. The loan carried an interest rate of 9.75% for the first two years, then a "margin" of 9.125 percentage points over the benchmark short-term rate at which banks lend money to each other -- known as the London interbank offered rate, or Libor. The average subprime loan charges a margin of about 6.5% over six-month Libor, which as of Tuesday stood at 5.38%. "I knew better than to be stupid like that," she says. "But they caught me at a time when I was down." She wasn't alone. Locals say West Outer Drive became a beehive of renovation activity in the first half of the decade, even as the economy sagged. Up the block from Ms. Williams, Ordell Walker, who says he left a job at DaimlerChrysler several years ago, put in a new driveway, glass-brick windows on the basement and stairwell, and much more. To get the cash, he jacked up his mortgage to $205,000 from $108,000 in 2002, partly with the help of World Wide. "A lot of people took the cash," he says. "I wish I'd never done it myself." Last year, the Michigan Office of Financial and Insurance Services revoked World Wide's license amid allegations of fraud. Jeff Arnstein, who was a team leader at World Wide in 2002 and who Ms. Williams says processed her loan, said he didn't remember the specific case but he believed the loan was properly underwritten. "My heart goes out to them," he said. "But it's not the fault of the mortgage company that put them in their loan." Mr. Arnstein now works for First Mortgage Corp. near Phoenix. Both Ms. Williams and Mr. Walker have found themselves in a predicament now common among homeowners in Detroit: They've tried to sell their houses, but can't find buyers willing to pay what they owe on their mortgages. After two years on the market, Ms. Williams says her house has attracted a high bid of $140,000, nowhere near the $211,000 debt she must settle to avoid eviction. That leaves her with no option but to abandon the house -- the worst possible outcome for the neighborhood, because it means the property could end up gutted with a big red debris bin out front. Kevin Lightsey, a local agent at Keller Williams Realty, says he doubts such foreclosed homes are likely to find new owners willing to live there. "Nobody's going to want to buy into a neighborhood with 20% foreclosures," he says. "You end up with no neighborhood." First American LoanPerformance estimates that, as of March, about one in three subprime loans made from 2002 through 2006 in the 48235 ZIP Code were more than 60 days in arrears, meaning they were either already in foreclosure or well on their way there. Even loans made in 2006 had a delinquency rate of about 17%. Some subprime borrowers on the 5100 block of West Outer Drive say they are doing fine and planning to stay put. Kevin Ransom, a 42-year-old investment banker who grew up in the area, moved into the red-brick Colonial across from Ms. Hollifield in 1999, leaving behind a job in New York. He bumped up his mortgage debt to $208,250 from $170,100 back in 1999, and put the money into a new roof, marble floors, custom ceilings and a finished basement. He says his income has grown enough to make the monthly payment, which has risen to about $1,700, from $1,200 when he took out the most recent loan in 2002. "I always had a desire to come back home and try to be in a community," says Mr. Ransom. Still, he's worried about the way some of his neighbors are losing interest in their homes. Consider Jacqueline McNeal, a school principal who has lived in the house two doors north of Mr. Ransom since 1995. In 2002, she says, she took out a $112,700 loan from Full Spectrum Lending, a subprime arm of Countrywide Financial Corp., to pay off department-store bills, provide financial help to some out-of-work relatives and retire her old fixed-rate mortgage. But last year, as the interest rate on her loan rose to 12% from an initial 8.75%, she fell behind amid a litany of difficulties, including a teachers' strike and problems with the payment of her back property taxes. A Countrywide spokesman said there was nothing inappropriate in the origination or the servicing of the loan. Now in foreclosure, Ms. McNeal has until early July to come up with the money or be evicted. She doubts she can sell the house, and the missed payments have dented her credit to the point where she can't get another loan. So she's letting the dandelions grow. "You have two options -- to sell it or to refinance it," she says. "But if you can't do either, what can you do?" Write to Mark Whitehouse at mark.whitehouse@wsj.com | ||
Danny Member Username: Danny Post Number: 5939 Registered: 02-2004 |
It's all part of ghettohood blockbusting. Most Folks don't care about their property just worrying about taking care of NUMBER ONE, ME, ME, ME!!! | ||
Gannon Member Username: Gannon Post Number: 9307 Registered: 12-2003 |
I've said it for years, documented here luckily, that the ONLY reason the real estate market boomed was because they allowed it to grow falsely, INCLUDING home renovations and improvement, done by the homeowner through Home Depot and Lowe's and/or through hired professional help. Due to loose lending practises, all of these markets increased greatly over the last four or so years. All of you static-minds defended the economy because these markets were still booming, I said they were only growing due to increased lending to many folks who shouldn't, and that we would all regret it. EVERYTHING is geared towards increasing real estate values, from agent commission to insurance costs to taxation...so the momentum of resistance to a market correction is quite strong, when it really does hit it'll be quite the cliff on the graph, the slope could very well approach negative infinity in some areas!! Many folks now regret taking out these additional and/or risky mortgages and loans, but NOW the economy has NO place for those left with money to invest it 'safely'. (as if there EVER was a truly safe place to keep your wealth) People will be forced to consider hedge funds, since their risk numbers seem reasonable now compared to, say, the savings and loan industry...Wall Street and what is left of NASDAQ...and NOW what was seemingly the LAST best investment garage to park your retirement. Of course, nobody should play with hedge funds unless they have money to burn...and more money to light it up with. Hedge funds might be slightly more regulated since before the exquisite failure of Long Term Capital Management, but this 'market' remains the shadiest and most volatile of 'em all...no matter how good the numbers look in comparison to previously more stable and 'safe' markets. If the stock market is the handle of the whip, and options are the body, hedges are the very end of the whip...y'all remember playing crack the whip in kindergarten, doncha?! It sucks trying to ride out the volatility at the end, and when the earlier parts wiggle more fiercely things absolutely CRACK there!! Yanno, common wisdom always said, put a bunch into land, since they aren't making any more of it. Obviously people are still playing the stock market, albeit with less vigor after the dotcom explosion...although the institutional investors continue to drive up values. I'd bet this dime here that there are NO brokers leveraging 90% of their individual client's portfolios any longer! IF we survive the riots from all of these folks who got taxed into the Alternative Minimum Tax this past year due to taking out a second mortgage or a home equity loan...who subsequently are losing said dreamhouse due to increasing interest rates or worse...THEN we might be able to see how this'll shake out. Survival is not a guarantee, but likely. It is going to get really ugly, though. I even suspect that renting will be WAY down, the overall housing demand will seriously decrease, as more and more disbursed families will once again condense under one roof to save expenses and cover those unemployed. Overall for society, I think that could and should be a good thing...as there should be more adults around to supervise the children. Although, if mom and dad have grandma and/or auntie closer, daycare companies will tank, too. My industry, Home Theater, will suffer more than Home Depot and Lowe's, but any industry that relied upon the well of cashola will suffer greatly. These second and much looser mortgages are ALL based upon an inflated appraisal that no city could refuse, since their assessments track neighborhood appraisals filling the city and state coffers...as long as people could pay their tax bills. Wonder how long it'll be before cities start racing mortgage lenders to court on delinquents...who knows which has the upper hand? Will savvy cities quickly hold the paper on this land under the over-mortgaged houses?! The state?! Most important, though, are those with broken hearts, thinking they'd finally achieved the American dream that had been dangled in front of their noses throughout their lives like the motivational carrot that land ownership truly is. People are more important than land, than things. We need to increase help for them, at the expense of the predator lenders who 'helped' put them into the streets. (don't yell at me for being liberal here, I'm being socially pragmatic, heh) Go on with your bad self and justify the hardness in your hearts against these folk...just remember that in your textbook explanations there is NO economic value placed on the MOST important part of the equation...the mere humans...unless they consume or produce. All, oddly, just in time (meaning TOO LATE) for the new bankruptcy protection laws that horribly favor the lending institutions and make indentured servants out of regular folk. Thank you again, Mrjoshua, for posting the entire WSJ article...another really, really good one. | ||
Qdaddy77 Member Username: Qdaddy77 Post Number: 41 Registered: 05-2007 |
did anybody notice on the WSJ map that Zip code 48207 (Belle Isle) has 10-20% of subprime loans that are currently deliquent. What would these loans be? Boat loans at the DYC? I know you can claim a boat as a 2nd home on your taxes, but didnt think you could get a home loan for one. Perhaps the city took out some subprime loans out on the golf course and the boat club? we know the city's credit is poor.... | ||
Larryinflorida Member Username: Larryinflorida Post Number: 417 Registered: 02-2007 |
Good post, Gannon. The Subprimes are doing this everywhere, but Detroit's equilibrium was fragile. It's easy to say "Well just don't make dumb loans" But they sold it like kid's ice cream there. That's kinda wrong. | ||
Wazootyman Member Username: Wazootyman Post Number: 211 Registered: 02-2006 |
Companies like Quicken Loans thrived on selling loans like this. But, wait, aren't they Detroit's downtown savior? Make up your minds. Let's all get ourselves Secure Advantage loans. There's no reason you can't buy that $500,000 house AND have a $400/mo payment! It couldn't be easier! | ||
Gannon Member Username: Gannon Post Number: 9316 Registered: 12-2003 |
Qdaddy77, 48207 includes AT LEAST up to my loft in Eastern Market. Pretty funny attempt grasping the puzzle, though! Cheers! | ||
Qdaddy77 Member Username: Qdaddy77 Post Number: 42 Registered: 05-2007 |
gannon, didnt notice that part of the map...my bad! oh well, I was really hoping the city had taken out a loan 5 years ago on the Boat Club and was about to foreclosed...we could all buy it and turn it into a "clubhouse" . anyone remember LoanGiant.com? They had a big building in southfield with there name in lights...also the stupid commercials with "yelling Andy" and the monkey...I wonder what happened to all of those subprime loans they gave out at the start of the boom? | ||
Karl Member Username: Karl Post Number: 7780 Registered: 09-2005 |
April Williams said: ""There's going to be no people left in Detroit if they keep doing this to them." Not quite. Sure as day follows night, if you sign a contract that says it's going to do something, it will happen. A more accurate statement would be: "If folks keep borrowing to support an unaffordable lifestyle, they will suffer the legal consequences of the contract they signed with eyes wide open." While Gannon has a plausible theory, he neglects to consider that it is the folks who came to the lenders, it is the folks who either didn't read their contracts, or read them and signed anyway. In any event, a simple meeting of heads of household would have averted this problem: Can I (we) afford these payments without strain if we have to own this home for another 15 years? How about on 1, or reduced, income? If not, don't. Regarding Gannon's Home Theatre, there may be a blip, but if Home Theatre continues to market bling they will come, and they (along with Home Theatre, just like car dealers and real estate agents) will figure out ways to finance it. Gannon, have you ever told a customer "I don't think you can afford this house and car - why in the world are you buying a Home Theatre?" No - because you, too, are part of the problem. Overspending - not collection of monies owed (then happily spent) is the problem here. Just like drugs, booze, porn & others: money is a legal drug. Don't whine at the subprimes if they legally sat folks down and loaned 'em money. | ||
Iheartthed Member Username: Iheartthed Post Number: 849 Registered: 04-2006 |
Beneath all of that morality nonsense I think Karl may have a point somewhere in there: "Can I (we) afford these payments without strain if we have to own this home for another 15 years? How about on 1, or reduced, income?" But that's exactly what caused the metropolitan's current woes. Nobody thought to think ahead. Big business didn't think ahead. Big government didn't think ahead. Nobody thought that the gravy train was ever gonna end... Now they're left with a city shot to hell and suburbs that are eroding almost as fast. They'll have to do nothing short of giving land away in order to attract new business. Do you really think these other older metropolises reinvested in their city core 20 years ago because urban living was "cool" or because urbanity is efficient? On another note, it still doesn't change the fact that they are victim's of predatory lending, which more often than not is directed towards minority communities. | ||
Gannon Member Username: Gannon Post Number: 9322 Registered: 12-2003 |
Heh, THOSE were probably the solid ones, before they realized that Fanny Mae and Freddie Mac were as dirty as most of the paper writers are...and I say 'dirty' lovingly, as those in the mortgage business will chime in and defend how innocent and pure they are in their greedy desire to enslave the population to land they can never really possess. Good catch, since I don't watch TV very often, I'd forgotten about my old boss's golf and dinner buddy. Same mold as that son of the DOC founder who put HIS face all over the TeeVee at the same time...they were like the three musketeers, Rick Howard, Andy Jacob, and Richard Golden. I'd bet they got their hair cut at the same joint! | ||
Shark Member Username: Shark Post Number: 269 Registered: 12-2003 |
quote: Sorry, but I refuse to feel bad for stupid people. No one "did this" to them. No one forced them to take out insane loans that they didn't understand. | ||
Larryinflorida Member Username: Larryinflorida Post Number: 418 Registered: 02-2007 |
"They bought their tickets, they knew what they were getting into, I say let 'em crash!" ~"Airplane" Nice, Karl. Back to my original point that they sold it like kid's ice cream. Do you have any thoughts of unfair advertising practices that exploit gullible people? Or is that just the market taking care of itself, in your world? | ||
Livernoisyard Member Username: Livernoisyard Post Number: 3225 Registered: 10-2004 |
quote:In defense of Quicken Loans, I haven't been led to believe that QL is/was a major player (if, at all) in the subprime lending racket. And QL is rated by its employees as being one of the top-ten places to work nationwide. But QL will definitely not benefit as a result of the expected further downturn of the housing and construction industries for the next four years. Pulte, just today, fired another 16% of its workforce, bringing its firing total so far to about 25%. Freep: Pulte Homes will cut jobs 16% workforce reduction announced May 30, 2007 BY BRIAN LOUIS Also, why doesn't Quicken Loans BUY its own headquarters instead of still renting--if it is so powerful in the mortgage industry? Is ownership the fuel that drives its industry??? Seems funny to me... | ||
Lilpup Member Username: Lilpup Post Number: 2237 Registered: 06-2004 |
Karl would like to see everyone living on the street I brought this point up ages ago but no one believed me - despite the 'affordable' housing in Detroit many *still* can't afford a decent house on one income or two lower incomes even without discretionary spending (Karl's moralizing is typical of the haves toward the have-nots) It's the growing wealth gap, folks, and many Detroiters are on the bottom end - the lending is predatory, but it's the *only* funding available to low income households. And most apartments now have rents equal to a mortgage payment, without the benefit of building equity. | ||
56packman Member Username: 56packman Post Number: 1367 Registered: 12-2005 |
"...they were like the three musketeers, Rick Howard, Andy Jacob, and Richard Golden" The Mr. Belvedere's of a new generation | ||
Qdaddy77 Member Username: Qdaddy77 Post Number: 43 Registered: 05-2007 |
who was rick howard? i thought Gordy at ABC was the third....and a better dancer | ||
Ray1936 Member Username: Ray1936 Post Number: 1509 Registered: 01-2005 |
"Sorry, but I refuse to feel bad for stupid people. No one "did this" to them. No one forced them to take out insane loans that they didn't understand." Have to agree with this thought, and it simply accentuates the need for a decent education right from the git-go. A 'well-rounded' education.....high school economics courses don't scratch the surface for real-life personal economics. | ||
Qdaddy77 Member Username: Qdaddy77 Post Number: 44 Registered: 05-2007 |
just a little history repeating..... http://www.metrotimes.com/edit orial/story.asp?id=4848 4 years ago....if we only would have known.... | ||
Dougw Member Username: Dougw Post Number: 1706 Registered: 11-2003 |
quote: Lyard, you appear to be correct on this. I've been going through some data at the Wayne County Register of Deeds, and Quicken/Rock's name only shows up on 3 foreclosures (sheriff's deeds) in the last year. Contrast that with some of the out of state subprime lenders such as Long Beach Mortgage, who had over 600 foreclosures in Detroit in the last year. The average default amount is around $100K, so that's over $60 million in bad loans. Figure they're probably not even going to get 50% of their money back when they try to sell these foreclosed homes, so they're out at least $30 million in Detroit alone. (I know of individual fraud cases where they probably won't even get 20% back.) Apparently Long Beach is now part of Washington Mutual... either way, I can't believe those idiots are still in business. | ||
Swingline Member Username: Swingline Post Number: 829 Registered: 11-2003 |
A very interesting article that provides a rare individual perspective of the national foreclosure epidemic. I can't help but wonder what some folks in places like NYC and San Francisco think when they take a look at the online interactive map and see the houses and the relatively modest outstanding loan balances (as compared to those booming areas). In San Francisco, houses of comparable size and quality would have another digit on the loan balance. | ||
Gannon Member Username: Gannon Post Number: 9323 Registered: 12-2003 |
That one above was for Qdaddy77...y'all posted too quickly for my edit procedure! Great post Karl, but I did consider those people and their choices. quote: What you fail to realize is that most people are not economically savvy, but they all pretty much watch television and have been sold on the hazy concept of 'ownership' of a piece of this third rock from the sun. The American dream has been forced upon an unsuspecting populace, especially by their parents who saw home ownership the ticket to acceptance in society...indeed in the wayback it finally allowed them to vote! NO, greedy corporate capitalists and our very government either advertently and/or inadvertently conspired to make this verdant goal a TRAP that real honest (if unsmart or untaught) citizens could only escape with their lives...leaving possessions, what little wealth they previously had, their credit rating, AND their pride churning in the turbulent wake created by their forced launch! Nice try attempting to paint me into liability, Karl. I've been an advocate for people actually USING and ENJOYING their home entertainment electronic equipment, something that is largely NOT done in the average family with a separate home theater room NOT on the floor with the kitchen and/or family room...even MORE seldom because the stuff is just so darned tough and intimidating to operate! I stopped selling gear long ago, when it was apparent my industry was just taking people's money with higher and higher priced gear that provided little more than bragging rights. While writing for the major national magazines, I became an advocate for many innovations that SAVE people money...like updatable surround processor (so folks didn't have to upgrade with the next round of the Dolby/DTS pissing match), affordable but engaging and lively speakers, and responsible high-performance video projectors. I revelled in the affordable product that spanked the more expensive stuff, yet gave incredible designs and manufacturers their due. I actually called an $11,500 DVD player a 'value' because for DVD viewers, plugging it into the cheapest CRT projector of the time, a $12,500 Dwin, this combination was easily as engaging as setups costing five to seven times MORE! Plus, I always brought to folks attention the maintenance costs of the new technology they were rushing out to buy...and STILL hate all projectors that use bulbs, I cannot wait until the LED backlighting from firms like Luminus Technology replaces these poisonous glass-encased vaccuums...nature hates 'em as much as me. I assuaged what little guilt remained by merely skimming the top, doing the things the dealers mostly didn't do well. Things like hooking the equipment up correctly, teaching the family how to understand and use the system, dialing in the speaker placement, levels, and equalization...video calibration and projector adjustment...and remote control programming to make things easy for the non-technical significant other. That is still my bread-n-butter until I can get my own internet magazine launched...then you will see applied philosophy parsing my insane industry...indeed I am calling the e-rag AudioVideo INsanity, a multi-layer pun and call to arms against the idiocy rampant in the market that has paid most of my bills for twenty-five years!! I figured my talents were better there, making people happy with stuff they'd already bought, since it is very tough to find them before they make mistakes. For the record I never fully designed and installed any isolated home theater room. I've been waiting for some true enthusiast to wander along and give me a reason to do it right from the ground up. Might happen in the Vinton for the right guy. I've worked in some of the most amazing residences in the nation...even one on Seventeen Mile Drive on Pebble Beach, another on the ridge of the Hollywood Hills...and met many, many people for whom this hobby is NOT a burden. My favorite was the financier from Chicago with the summer home where W and Rumsfeld have slept...his family actually uses their system, but it isn't hidden in some closed room! Not unlike with their fast cars, I found that much of wealthy money (monied money) is spent mostly for show, they rarely 'drove' their theaters...after three years I would find the same damn DVD in the dusty player. I have NO problem profiting from these folks. Trickle that shit DOWN, and hurry! For those who don't have money to burn, I've GIVEN away my services. So, again, nice attempt at painting me into the liability here, Karl. Won't stick. | ||
Mrjoshua Member Username: Mrjoshua Post Number: 1363 Registered: 03-2005 |
I'm surprised no one has commented on what is sitting in April Williams' driveway. | ||
Gannon Member Username: Gannon Post Number: 9324 Registered: 12-2003 |
Good lord, I've GOT to get quicker and/or more concise. Rick Howard is the owner of The Gramophone, the high-end audio and video establishment where I seriously entertained people for seven or so odd years in the eighties. I never tried to sell, I just shared my enthusiasm...and was their best or second best salesperson for most of my tenure. I thought we agreed Gordy from ABC was an actor! Those other three are definitely NOT!! Not professionally, at least. | ||
Qdaddy77 Member Username: Qdaddy77 Post Number: 45 Registered: 05-2007 |
http://www.michigan.gov/docume nts/WWF_Non-Renewal_135732_7.p df THE END OF LOAN GIANT... wonder how much money Jacob put in Mr. Mayor's and Senator Ms. Ronald McDonalds Pocket before he went under... | ||
Swingline Member Username: Swingline Post Number: 830 Registered: 11-2003 |
Good eyes, Mr. Joshua. Replacing the Navigator with a compact car might put $600-$700 per month into the Williams' pocket. | ||
Qdaddy77 Member Username: Qdaddy77 Post Number: 46 Registered: 05-2007 |
"For the past 10 years, Hartunian has been featured in the company's TV ads with the infamous slogan "The Closest Thing to Wholesale." The spots help personalize the business, especially since its a regional, family-owned chain, said Jim Bieri, president of Bieri Co., a retail consulting firm in Detroit." http://www.theoaklandpress.com /stories/082104/bus_2004082100 8.shtml I guess it's really him, but I didnt know they owned Mickey Shorr. | ||
Iheartthed Member Username: Iheartthed Post Number: 850 Registered: 04-2006 |
She'd have to pay someone to unload that Navigator... | ||
Larryinflorida Member Username: Larryinflorida Post Number: 420 Registered: 02-2007 |
The problem is, when loan sharks are the only loan available, poor planning can result in broken fingers. I get that. But loan sharks don't have 100 foot billboards and saturate the airwaves with baiting ads. Thats all. | ||
Karl Member Username: Karl Post Number: 7785 Registered: 09-2005 |
It looks as if April Williams was any wider, she might have blocked the view of the Navigator. So let's review: April is a morbidly obese woman who drives a gas-guzzling Lincoln Navigator, doesn't read what she signs, is from a 2-income family, saw signs of cutbacks in her husband's income before she took out the loan, but decided it was time to borrow more to add "stainless steel appliances, custom tile, a new bay window and central air conditioning". She admits "I knew better than to be stupid like that" And this is someone else's fault?? But the WSJ saves the best for last. At the very end of the article (spanning 3 pages and in full color) we read this: "Consider Jacqueline McNeal, a school principal who has lived in the house two doors north of Mr. Ransom since 1995. In 2002, she says, she took out a $112,700 loan from Full Spectrum Lending, a subprime arm of Countrywide Financial Corp., to pay off department-store bills, provide financial help to some out-of-work relatives and retire her old fixed-rate mortgage. But last year, as the interest rate on her loan rose to 12% from an initial 8.75%, she fell behind amid a litany of difficulties, including a teachers' strike and problems with the payment of her back property taxes..." With educators like Ms McNeal, and students like April Williams, tell me: is there hope for Detroit, and/or citizens of other places with such values/attitudes? | ||
Larryinflorida Member Username: Larryinflorida Post Number: 421 Registered: 02-2007 |
You're right. The WSJ should have centered the story on a pasty-white Sterling Heights resident with a Kia who got sucked into the same shell game from not being fluent in money. Responsible for their own destiny? Yes. But what burden do we place on saturation advertising of risky financial offers? Is it like cigarettes and liquor? And are these children in adult bodies that need protection? Possibly. | ||
Carolcb Member Username: Carolcb Post Number: 879 Registered: 11-2006 |
"It looks as if April Williams was any wider, she might have blocked the view of the Navigator." Mean Karl, mean. | ||
Livernoisyard Member Username: Livernoisyard Post Number: 3230 Registered: 10-2004 |
Another thing... The political slant to the features presented in the WSJ were determined by some recent study on political bias to fall to the left of even the NYT. Only the op-ed pages of the WSJ are conservative in nature. | ||
Track75 Member Username: Track75 Post Number: 2534 Registered: 10-2003 |
quote:"Protecting" one of these "children in an adult body" means denying them the freedom to enter into a contract of their own accord. Are you willing to take away their ability to get any mortgage, or select a particular mortgage? How will you or the government or some third-party determine which adults are allowed to make their own decisions and which are not? The solution to this problem is to treat adults like children, prohibited from making their own life decisions? That seems to be a worse fate than losing one's home. | ||
Gannon Member Username: Gannon Post Number: 9335 Registered: 12-2003 |
quote: THAT would be him vainly attempting to emulate his Savior, unfortunately for the rest of us...his spiritual advisors either haven't made a dent in his psyche OR are seriously flawed individuals themselves. Blind leading the blind...funny how warnings from two thousand years ago become worthwhile in our hearing now...for those with open ears to hear 'em...and an open mind to HEED them. | ||
Missnmich Member Username: Missnmich Post Number: 596 Registered: 11-2004 |
"funny how warnings from two thousand years ago become worthwhile in our hearing now" You mean like: "Do not judge, so that you may not be judged. For with the judgment you make you will be judged, and the measure you give, will be the measure you get."? | ||
Gannon Member Username: Gannon Post Number: 9336 Registered: 12-2003 |
Bring it on! I'm ready for whatever measure anyone would care to use...but only concerned about the one the One will use if and when I get to meet It. | ||
Karl Member Username: Karl Post Number: 7786 Registered: 09-2005 |
Funny, this is the equivalent of allowing children to drive cars on the Edsel Ford, then complaining when they have accidents. Defending this irresponsible behavior when the "children" themselves admit they knew better, places some of you in lesser mentality groups. However, blather on - the WSJ should profile a few of you next time. Perhaps they would feature your "Letter to the Editor" if it was as silly as some of your posts. | ||
Gannon Member Username: Gannon Post Number: 9343 Registered: 12-2003 |
NOT anywhere near equivalent dear boy. More like, let's sell the populace on their need to be unfulfilled until they own a car...their car, the only one they'll ever need all the way through retirement. Even BETTER if you can be seen cruising the highway. OH, can't afford it?! Let's work the numbers, my manager just gave me a lower interest rate...so for the duration it takes for you to sign the dotted line we will present numbers to you that will do nothing but allow you to see yourself driving this new car on the freeway...to be seen by all your friends and bypassers as finally achieving the status we all accept as secure and successful. NAH, don't worry, you don't need to know how to drive or maintain it...it comes with a WARRANTY, and my friend here confirmed that the price is fair...you see this appraisal here?! Don't ask ANY questions about tomorrow, and how this contract WILL, not might, increase your monthly payments beyond which you can dream of affording...oh wait, that is fantastic fantasy...they'd never warn a buyer of anything of the sort, it might squelch the deal. The closers in the Mortgage industry are cut from the same cloth as those in the auto sales business, they are MOSTLY crooks and shysters. Indeed the ONLY one I know came directly from that other business. If this is blather, then I am blathering for the indigenous and the poor...those who will be falling through the cracks here that YOU and your ilk obviously care nothing about. Good work, Xtian. Great testimony to the world. | ||
Karl Member Username: Karl Post Number: 7787 Registered: 09-2005 |
Gannon blathers: "I am blathering for the indigenous and the poor." No, but nice try. Not sure where you got "indigenous & poor" from this P.1 article in the WSJ - this was a 2-income family, older adults, owned their own home for 11 years (at least) drive Lincolns, live on Outer Drive, and admit they are smart enough to see how stupid they were. Too bad you can't do the same. | ||
Larryinflorida Member Username: Larryinflorida Post Number: 432 Registered: 02-2007 |
Track75: "Are you willing to take away their ability to get any mortgage, or select a particular mortgage?" Not what I said. I said, is it good to bombard people's conciousness with Shreiking TV and radio spots and billboards, and say, well thats just free speech and free market? They didn't take cigarettes and alcohol away, they made it harder to reach the public out of a growing concern for the results. Nobody is gonna take away stupidly-impractical loans. I would propose that my tv and radio not be saturated with them. I think there is compelling evidence that inhaling them causes financial death. Of course, that would apply equally for drug ads. But that's a different day. (Message edited by Larryinflorida on May 30, 2007) | ||
Karl Member Username: Karl Post Number: 7788 Registered: 09-2005 |
Then we'd better lose the casino ads, Larry. Lottery too. | ||
Gannon Member Username: Gannon Post Number: 9347 Registered: 12-2003 |
Indigenous. THAT, they truly are...born here. Native to the area. Do I need to explain language to your ignorant self, too?! You are pretty stupid for an execudroid. I am smart and honest enough to admit when I'm wrong, Karly, from what I can tell that is the biggest difference between us. | ||
Peter Member Username: Peter Post Number: 92 Registered: 02-2007 |
Check out the navigator in April William's drive way. | ||
Karl Member Username: Karl Post Number: 7789 Registered: 09-2005 |
Gannon, you have no idea whether they are "native to the area" or not. Why would that make a difference? Something in the water? | ||
Missnmich Member Username: Missnmich Post Number: 597 Registered: 11-2004 |
Bring it on! I'm ready for whatever measure anyone would care to use...but only concerned about the one the One will use if and when I get to meet It Um Gannon, I was actually referring to Karl's comment about the woman's size. Although I don't disagree with Karl's original assessment, his style seems so mean-spirited. | ||
Karl Member Username: Karl Post Number: 7790 Registered: 09-2005 |
I must be missing something. Overindulging in food. Overindulging in cars. Overindulging in home improvements (with borrowed funds, no less) And this is the fault of sub-prime lending? | ||
Lilpup Member Username: Lilpup Post Number: 2241 Registered: 06-2004 |
FWIW Michigan was 9th in home foreclosures in April - Nevada was #1 with 1 of every 187 households in foreclosure: Nevada 1/187 Colorado 1/205 Florida 1/298 Arizona 1/438 California 1/484 Utah 1/564 Missouri 1/588 Illinois 1/612 Michigan 1/648 New Jersey 1/670 US 1/822 | ||
Higgs1634 Member Username: Higgs1634 Post Number: 95 Registered: 10-2005 |
Bishop Charles Ellis, senior pastor of the Greater Grace Temple in Detroit, says he has heard many similar complaints from people in the area who, either because they were new to the process or had good experiences in the past, had put too much trust in subprime-mortgage brokers. Still, he believes many bear responsibility for their predicaments. "If you have a contract in front of you, you have to read that contract," he says. Preach on Preacher Man! | ||
Mrjoshua Member Username: Mrjoshua Post Number: 1367 Registered: 03-2005 |
Subprime Sorrow: Borrower Knowledge Would Even the Equation June 4, 2007; Page A14 The Wall Street Journal, letters to the editor The woes of the West Outer Drive neighborhood in Detroit were well humanized in "Subprime Aftermath: Losing the Family Home" (page one, May 30). An element that comes through in almost every story of subprime-lending failure is the inability of borrowers to take personal responsibility because of ignorance of personal-finance concepts and their application. Detroit, with its high dropout rate, still has students in school for many years, and math is still a required subject. Changing the K-12 math curriculum to problem-based learning, with the knowledge and application of personal finance as its core, would lead to future generations having negotiating power with the big subprime mortgage firms, or whatever form this will take next time. The consumers would be able to understand finance contracts within their personal budget constraints and understand the effect of $20,000 in fees -- before the contract is signed -- and walk away. Borrower knowledge would change the supply-and-demand dynamics, mitigating future abuses. Stephen R. Ball, Ph.D. Associate Professor and Chair Department of Leadership Studies Lourdes College Sylvania, Ohio I read with great sorrow the result of reckless lending. A just goal would be to restore the finances of these families by converting the current subprime financing to conventional fixed-rate financing with carrying costs on par with what they had been. In this way, the families would have a shot at keeping their homes, the neighborhoods would have a shot at surviving this disaster and, in all likelihood, the lenders would suffer the smallest losses with the least burden to the taxpayer. The lenders and debt holders would have to stretch and bend their lending practices to accommodate this adjustment, but the reckless should pay the price. Subprime lenders and those who bought the debt should have seen this coming. Recent credit defaults would be forgiven in light of the situation. Incremental debt associated with the subprime loan would be forgiven. Grace periods would be granted until the revised debt is closed. In the event that the incremental debt has been used to improve the property, assessments should be adjusted back to pre-improvement levels, at least for the near future. It may seem unjust that these families will go forward enjoying these improvements while the thoughtful and conservative families next door live with their 20-year-old kitchens and baths, but we must observe that subprimes weren't devices of the families' construction so it is unjust that they suffer this demise. Federal assistance should be in the form of holistic financial counseling; the goal is to get these families back on track. Without doubt they have accumulated other recent debt that must be reconciled in concert with the mortgage. David H. Sprogis Watertown, Mass. Let's see if I have this right. Back in the 1970s, residents of the West Outer Drive area were denied credit by being "redlined" because they were unduly risky. They didn't like that. Now, they are granted easy-to-get subprime loans, and they don't like that either. Some people are never satisfied. James H. Fink Laurel Park, N.C. Choosing a cash-out refinance for stainless-steel appliances, custom tile, a new bay window and central air-conditioning was a mistake. Indeed, April Williams deserves all the credit for creating her current situation. She says in the article that "there's going to be no people left in Detroit if they keep doing this to them." Where is the personal responsibility? Maybe she would be wise to sell the Lincoln Navigator with which she is photographed and live according to her income. Mike Simone Gahanna, Ohio | ||
Iheartthed Member Username: Iheartthed Post Number: 886 Registered: 04-2006 |
Did the article ever say that it was her Navigator? | ||
Dds Member Username: Dds Post Number: 245 Registered: 10-2006 |
quote: No it didn't. Maybe it was parked in her driveway because she was borrowing it to move the 40 fish in her Koi pond. Something everyone needs to finance a loan so they can have one in their backyard. | ||
Bongman Member Username: Bongman Post Number: 1483 Registered: 12-2003 |
In the late 90's, I was an apartment renter...and quite happy. I doubled my income in two years, but had very little down payment stashed away. So instead of buying what I qualified for, I bought what I could afford without taking a hit on my lifestyle. That was an 80,000 two bedroom condo with 3% down on an adjustable mortgage. It's still only worth 80,000 or so, but if I would have bought the 150,000 - 200,000 model with an adjustable, I'd be in the same boat as these folks.....falling property values, rising adjustable interest rate, probably with a home equity loan to boot. Not everybody buys over their heads to keep up with the Jones'....and the easing of credit and qualifications did work for those people who bought within their means. Anyone seen Ralph Roberts lately ? Maybe he's jumped "the nail" ? | ||
Jiminnm Member Username: Jiminnm Post Number: 1289 Registered: 02-2005 |
Anyone who buys property, gets a new mortgage, or refinances an existing mortgage should always consult a lawyer before signing anything. Always, as it will be the best few hundred dollars you can spend. This couldn't be more true than in the above stories, where it is obvious these folks either didn't understand what they were signing or chose not to. How many times does this sort of thing have to happen before people finally realize that you have to accept the responsibility to protect yourself? | ||
_sj_ Member Username: _sj_ Post Number: 1859 Registered: 12-2003 |
I too do not feel sorry for them. There inability to manage basic finances has forced them into this, not any commercial or anything else. That is the easy way out. The new American way, blame everyone but myself. These loans were no different than the balloon loans of the past that got people in trouble. We need to spend more time educating people instead of placating them. | ||
Iheartthed Member Username: Iheartthed Post Number: 891 Registered: 04-2006 |
It's funny how when you put a (black) face on things it becomes all about taking responsibility for your own actions. No doubt a legacy of Reagan and his "Welfare Queen" ideology. | ||
_sj_ Member Username: _sj_ Post Number: 1860 Registered: 12-2003 |
Stop trying to turn something that has nothing to do with race into a race baiting argument. It is easy to call something racist when you put a (black) face on it because you are looking for it. | ||
Dds Member Username: Dds Post Number: 246 Registered: 10-2006 |
Amen. There's people all over the metro area losing houses due to financial stupidity. Irresponsible money management is not just a black thing and it never was. | ||
Dougw Member Username: Dougw Post Number: 1724 Registered: 11-2003 |
Bongman -- Ralph Roberts is here: http://flippingfrenzy.com/ Not sure what you mean by "jumping the nail". Is that like jumping the shark? I actually met Ralph at an open house in Boston-Edison several years ago, he was a pretty slick salesman. Still, his flippingfrenzy.com website is a good resource, I give him a lot of credit for that. |
