Suddenly the whole sub-prime fiasco makes sense.

[TeeDub]

Hollister - Despite making only $14,000 a year, strawberry picker Alberto Ramirez managed to buy his own slice of the American Dream. But his Hollister home came with a hefty price tag - $720,000.

A year and a half later, Ramirez has defaulted on his loan, and he's hoping to sell the house before it's repossessed. And according to many housing advocates and civil rights groups, Ramirez is not alone. As mortgage foreclosures rise, many minorities are suffering.


http://hollisterfreelance.com/news/contentview.asp?c=213141

[Conan71]

I really fail to see how this guy is a victim.  His take-home pay is likely less than $1000.

The payment would have to have been three or four times his income level.  Either he committed fraud on his credit app, or that is one stupid lender.  

Even if he did not speak English, Mexicans use the Arabic number system. He's smart enough to know what he makes, he certainly could have figured out what the box with the payment amount on the loan meant.

[sgrizzle]

Maybe he (and the lender) were REALLY, REALLY, bad with math.

P.S. Nice avatar, Teedub.

[grahambino]

"Although Alberto Ramirez was the only one to sign the purchase agreement and the only one named on the loan documents, he actually bought the house with his wife Rosa Ramirez, as well as their friends Jesus Martinez and his wife. However, even in a good month, the Ramirezes and Martinezes together don't earn much more than a combined $6,500, and their official monthly payments were around $5,200.

With their combined incomes, the Ramirezes and the Martinezes estimated that they could afford monthly payments of $3,000 - around 50 percent of their income. However, the Ramirezes said Rancho Grande real estate agent Maria Avila promised they could refinance their home in three to six months to an affordable rate; until then, Rosa Ramirez said, Avila said she would pay for whatever they couldn't afford.

Avila did supplement the mortgage payments on the Hollister home, paying about $2,200 per month for nine months.

But the refinance never happened, and Martinez said Avila stopped helping with the payments at the end of 2006."


ell that answered my original question, which was, why it took someone making 14k/yr, 1.5yrs to default on the loan.

[Conan71]

Wow, the RE agent was subsidizing the payment?  That's got to go against their code of ethics I'd think.  

Sounds like sort of a builder kick-back to get a house sold.  Not only were individual sellers prospering by flipping houses home builders were doing pretty darn good as well.

What a wonderful idea, let's create lending vehicles to put people at poverty level into $750K houses.  The government will eventually mop up the mess, right?

[xx(]

[Rico]

quote:Originally posted by Conan71

I really fail to see how this guy is a victim.  His take-home pay is likely less than $1000.

The payment would have to have been three or four times his income level.  Either he committed fraud on his credit app, or that is one stupid lender.  

Even if he did not speak English, Mexicans use the Arabic number system. He's smart enough to know what he makes, he certainly could have figured out what the box with the payment amount on the loan meant.

There is going to be "federal bail out" money for Alberto isn't there?

If so... I'm looking at Taos, Lamborghini, and Carmel. [}:)]

[T Badd]

The sub-prime problem never made sense to me until I had it explained by stick-figures.

The Big Picture - How SubPrime Really Works

[inteller]

quote:Originally posted by T Badd

The sub-prime problem never made sense to me until I had it explained by stick-figures.

The Big Picture - How SubPrime Really Works

man that is great.  I'm going to have to start my own stick people slide shows.

[Conan71]

Yeah pretty simple stuff, stupid lenders making stupid people loans.

[Steve]

quote:Originally posted by Conan71

Yeah pretty simple stuff, stupid lenders making stupid people loans.

EXACTLY.  The lenders were well aware of the risks, and I assume that the up-front fee income made it worthwhile to them.  Any borrower with any concern for their future that takes on such risky debt, should do a "worse case" analysis before they sign the papers and commit themselves to 30 years of uncertain payments.

I am no big fan of the George Bush White House, but I applaud their reluctance to provide any major bail-out of this current mortgage situation.  It is all the result of greedy lenders out for a quick buck, uneducated borrowers wanting more than they can afford, and real estate speculators driving up prices so high that a crash was inevitable.  The participants should bear the consequences, not the general public/taxpayers.