I bought it in 2005 for $503,000, most of it borrowed [...] The sellers had trashed the house before leaving for Colorado [...] To help pay for the work, I refinanced in 2007 at $511,000 with a five-year fixed-interest first lien and a variable-rate equity loan. [...] In February, Zillow.com said the house on which I owed $511,000 was worth $381,500. A comparable house a block away sold for $260,000. [...] The bank set a date for a foreclosure sale, then postponed it. Finally, in April, it agreed to an offer of $325,000 for the house. The sale closed less than 48 hours before the bank's scheduled foreclosure sale. [...] My credit, once exemplary, is shot. My lack of financial security is disconcerting, and I expect it will dog me for years.
The house appears to be 520 Meridian Terrace, for which she paid more than double what it sold for less than two and a half years earlier.
Most people would learn quite a lot from that: don't buy a house in a bubble, don't buy a house at a ridiculous multiple of its rental value, don't do cash-out refis, don't take out an adjustable-rate mortgage, don't borrow money you can't afford to pay back, etc. But not an LA Times staffer!
I can't find a life's lesson here; no insight into why this has happened to so many people. The banks could help us, but they don't.
Reading the article I see that she should have walked away from the initial sale. She said the sellers "trashed" the house. That was a burden of tens of thousands of dollars that she could not afford.
Buying at a bubble peak isn't always a problem. We did so, but had 50% down,having sold at the height as well.
Are you sure this isn't Steve Liesman writing under a nom de plume? Sounds like something he would say.
She should have waited when the ARM reset next year. Most ARM's are tied with 1 year LIBOR and it is at record lows last 3 years. Her interest rate would have set much lower and her monthly mortgage payment lower.
She is an idiot!
Real estate has gone up continually for a long time in Los Angeles. This person by her behavior did not know that the bubble was going to burst. Few people actually knew that NAR was not telling the whole story when David Lereah said real estate always goes up. It was being said that if you do not get into the market now you would be locked out forever. It was a scam, and it was a ponzi housing scheme. It was the fault of the bankers who knew increased demand would drive prices upward. The upward mobility of prices gave investors confidence, and they were fooled too. Basel 2 thought all this up, and I speak to it in 5 ebooks and as a contributor to Business Insider. The bankers want you to blame the borrowers, so that they can be left alone to plan the next bubble!
Gary the history of commerce is filled with suckers. The term suckers is used disparagingly for a reason. The NAR were pumping out propaganda obviously. Anyone doing the slightest amount of research would be able to identify this. And there were many voices out there before the bubble burst stating that it was a bubble. If one chose to ignore those voices then one lost. Sure fraud was rampant and apparently legal looking back but I can't let the borrows off the hook as your brief statement suggests, and maybe you don't. Of course it was the banksters and the regulator and our Mozilla c#$ksucking congress that caused this but to those who were burned, I have little sympathy. Why? Because I was offered the same "sweetheart" deal in 2006. A 1 MILLION dollar loan with nothing down to purchase the home I rent. Well I still rent that home because I can do math. If a borrower can't do math or can't read a contract then the borrow deserves to whatever comes of the agreement. At the very least to show future generations that YOU ARE ON YOUR OWN and you need to take ownership for your action. If you don't understand the terms or the math then, well, you shouldn't do it. To suggest these people were victims implies we live in a nanny state full of children that are incapable of being responsible. That's how many of our purchased leaders want it but certainly not my understanding of the founding principles of our nation.
Oh and all bailouts are horrible. All the TBTF banks should be out of business as well. They're just children that contribute a lot more to the politicians.
One more comment - David Lereah is a fraud, a whore, and a fool. I hope he realizes that that is how he will forever be remembered and if I ever run into his children, if he has any, I'll remind them of that.
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