Did you see the Clayton Couple on ABC World News Tongiht?

Did you see the Clayton Couple on ABC World News Tonight?

Another sad foreclosure story (well not foreclosure really)... it sounds like they may be on track to avoid it. I was caught off guard when the national news story was about a couple right here in our backyard here in Clayton. Sounds like they just got in over their heads. I was suprised they had an introductory interest rate of 9% when they bought the place 3 year ago. That is really really high! Usually those introductory rates are low teaser rates like 4-5%. Sounds like some other things like bad credit issues are going on as well. These stories rarely give the full story.

Here is a link to the story:

http://abcnews.go.com/Business/story?id=4210326&page=1

One interesting comment made during the news cast was that the house they own in Clayton has actually gone down in value. I don' know if that fact is true, but if it is I am surprised as I have not heard many people complaining about their home values declining here in Clayton.

"They put no money down and the house was worth less than what they paid for it, so they had no equity."

 

That's the first I've heard about values going down as well. Sorry I missed the episode...

 

Yep, had to do a double take while I was on the PC, heard them mention Clayton, North Carolina, and I had to mentally check that I wasn't home (Beaumont, Texas, got in last night punched in the clients location on the GPS and promptly went to prison via the back road (got the hell out of there as about 6 individuals started to approach me)).

 

I truly feel bad for them, but I know of no areas around here where home values are "declining". With a 9% intro rate and no money down, it sounds like they had credit issues to start with and probably ended up with one of those sub-prime lenders. Again, I hate it for them, but buyer beware, you MUST read the fine print if you are doing an adjustable mortgage. I'm glad they were able to get help in re-negotiating their rate though.

 

Let's see.. 9% intro rate on an ARM when you could get a 30 fixed somewhere in the 4's.....and they actually signed the paperwork....nope, don't feel sorry for them one bit. :nopity:

 

I'm with you. Chances are they had to shop around to just get that 9%. And the company that gave them the loan, probably did a good job of inflating the appraisal too.

So...it may very well be that the value of the house hasn't really gone down. It's true value is what they are seeing...and comparing it to the inflated loan-given value.

 

Did they mention the subdivision?

 

This is what frustrates me with all the news about foreclosures. Most in the situation bought more home that they could afford and/or were not in a financial position to even buy a home. :nopity:

 

I'm interested to see where we end up.

For years, there were complaints that lenders were "redlining" and being racist for not giving loans to minorities. This despite the fact that it had nothing to do with race and everything to do with credit scores, job history, income, etc. I know this for a fact, because I've been working in the mortgage industry for 17 years.

Eventually, the lenders were forced to lend to those unqualified minority borrowers.

Now...those same groups and individuals who complained that the banks weren't giving loans to unqualified minority borrowers, are complaining that the defaults that are resulting from the banks giving unqualified minority borrowers the loans they demanded...amounts to "financial apartheid". (and yes...that is actually the term being used). They are crying foul, racism, predatory lending...whatever term du jour they choose.

So where will we end up 3 years from now? Will banks be forced to continue to lend to those that are not qualified? Or will they be allowed to go back to smart lending, and lend only to those who can pay? And if they end up with the latter resolution...will the "disenfranchisement-of-minority-borrowers" claims start the cycle again?

 

It's the market value of the house that has dropped. They may have bought their house for $172k, but with the current market, they may be able to sell it for $150k. They'd be upside down on their loan and they already didn't have any equity. They got lucky with the bank.

Homebuilders are dropping prices everywhere so they can sell their inventory and new builds. Current homeowners, especially up north, in Florida and out west can't sell their houses. Some are them are being stingy because at the height of the market they could have gotten $600k and think they still can. Hardly anyone's willing to pay that much for something they knew 5 years ago was only worth $300k. Also, homebuilders and realtors don't like contingencies. Pricing is the key issue. You could have bought your house for $200k a couple years ago, but the same house is being built brand new around the corner for $180k or less. If you want to sell yours, you'd have to drop your price to meet or beat that price. Someone would be more likely to buy a new home then a older one if it's that close. I'm running into that issue now in my neighborhood. I bought mine over 2 years ago for what I considered a fair price at the time. I got it for less than half of what it would have cost me for the same house where I used to live. Luckily, I had sold my house up there before the bubble started to pop. Last year, KB took over the section behind my neighborhood, put their houses on on postage stamp lots and started selling for around $130k. The houses are comparable in square footages to my builder that's still in the neighborhood with slightly larger lots, but they start around $180k. Which would you buy?

The housing market cycle corrects itself, on average, every 8 to 10 years. It seems to hit when a new President comes into office. It hit us harder this time because we skipped the last correction. The last time should have been around 2000-2001. Back in 2001, we had the attacks, so everyone got gung-ho about buying and house prices rose exponentially. Recently, ARMs hit their 3-4 year mark to jump the interest up, investors can't sell and banks made too many sub-prime loans. It's taking a bigger plunge now since it couldn't correct itself back then. Next year, things may look better, but it's going to be rough for a while longer.

 

They got the ARM with a starting rate of 9% and it went up to 14% :shock: on a house in the 170s with no downpayment...
Time for some personal responsibility, people...just because the bank says 'you can afford a mortgage up to $$$' doesn't mean you should GET a house at the top end of what they tell you...Contrary to what many think, just because you WANT to buy a house doesn't mean you have a RIGHT to... I'm so tired of the sob stories about the mean mean mortgage industry...grow up, people!

 

I hate to be a stickler about things, but these folks do not live IN Clayton. They live in the Clayton area of Johnston County, but there is a difference between living in Clayton and living near Clayton. The media has a responsibility to more accurately report the location of people, events, properties, etc. This issue geographic identification is in no way limited to this topic, but relates to crimes, new business locations, and yes, even real estate valuation.

 

Absolutely. I can't say I really feel sorry for them. Did they have an ARM, or did the % rate go up because of their payment history?

 

This might be tacky - but it IS public record.

http://www.johnstonnc.com/taxcardlookup/cardaction.cfm?Parcel_Num=05H04200N&Card_Num=1

I will edit out if requested.

 

Suggestions for this family:
1. Sell the pool table I saw their three big boys playing a game on.
2. Get those three big boys after school jobs and help pay some bills.
3. Sell the plasma or HD TV that they were watching during the interview.

I noticed these things with only one glance at the TV and things started clicking in mind head as to how I'd handle this.

 

They were told upfront that it was an ARM, then they even gave the definition as they understood it. "We just thought it would go up or down every six months".

YES. That is exactly what an ARM is.

I have some additions to ITB's list.

330$ a month on cellphones?? (are they all truely necessary?
400$ a month on electricity (turn some lights off, eh?)
176$ a month on cable (get some rabbit ears)
880$ a month on car payments... probably a worse deal to get out of them with that full size gas guzzler siting in the driveway
1000$ a month on food? (contact Faye, STAT!)
100$ entertainment (forget about it, you have 176$ worth of cable to be watching!)
800$ a month on gas (where do you people go? You're broke! Just go to work and come home! Disregard if you both commute to RTP daily, as that is probably what it would cost)


My final analysis? Champagne tastes, beer budget.

 

Wow!!! :iagree:

I did not see the clip of them on TV, just out of curiousity, did they have this as their budget?

 

I have to agree also. It was an ARM.... They had a 50 some inch big screen TV in the home decent furniture, cable TV (although it was cut off at times) but..... maybe you should not have the extras if you can not afford your home. Or just not get into the home to begin with. Now if they had lost their textile job to over seas buy outs or something like that and had a fixed rate or something and then at that time just could not make ends meet, then I would feel really bad. I mean I do hate to see them in that situation and am not happy for them, but they knew they had an ARM when they got into the house and that the rates were going to go up. So be responsible and not get into it something you can not afford the long run. I just think sometimes people want to blame to many others instead of their selves! I was dumb when I got into College and charged credit cards up and knew the interest rates, but that was my own fault and I had to learn my lesson and pay MY bills that I agreed upon. Took me 2 years but I learned, and I was a teenager not a grown 30 some...

 

I'm curious, it's says $172,00

but under it is says $125,000

They say that they didn't put any money down.. What is that "125,000"

 

That's what it sold for in 96. Look to the left, those are the sale dates.