Thread: WAMU gives IA $615,000 mortgage he makes $9.00 an hr

I make an ok income and I cannot afford a $650,000 home. I would have to make 4 times what I make now.

You know the thing about a $650K house in this latest market, probably 2 years ago, it was a $350K house.

I'm thinking a person who truly can afford a $650K house, probably should be in the financial condition, that he/she wouldn't have to sweat a loan application.

What I'm saying is that someone who has to really worry about 'making the payments' and 'putting the pencil to it', and finagling loans, is not the people who should even be looking at a house at that price.

Another thing that really burns me in the article was that this guy got an 8.50 interest rate on his initial loan. That is .25 lower than the interest rate than we got when we bought our home for 123,000 in 2001 (we borrowed 100,00.00 as we used 23,0000.00 of our own money). The reason we got such a high interest rate was not because we had bad credit but because we lacked "established" credit. In other words, we didn't use credit cards (never have, and never will) or have charge accounts anywhere. It didn't seem to matter that we had always paid our household bills (utility, phone, cable, ect.) on time. and that we both had many years in with our respective employers.

Now here's the kicker: We are still paying 8.75 interest despite the fact that we have never been so much as a day late on our mortgage and our home is now worth double what we paid for it. Thats right, when we tried to refi for a better interest rate only (taking NO equity out) they said we have to wait a year or two as our mortgage is the sole basis of our credit rating. What do you wanna bet if we wanted to take equity out, even in this market, we would have no problem getting a better rate?

So very true Trixie. I used to work for a major credit union here, I was a member services rep, but they also had us cross-train in all sorts of areas. I did some training in mortgages (in order to understand it all for payments and calls I would get).

Even back then (88/89) I could not have understood someone buying a home when they did not have the income, and house prices here were not all that bad.

We have always wanted a place of our own, even more so now, but with our income and knowing what most mortgages are in comparison to the loan amount (payments are usually 1% of loan), I am realistic enough to know it is not possible unless something for us changes. I would never think to sign papers on a loan we really could not afford.

I told my husband that according to the HUD calculator on their site, we would qualify for 81,000 right now, and although that does not buy a site built home, it could get us a decent mobile home that is already in a park (the price would be well below that figure of course, most are going for about 20,000) and that we could afford and live with.

I hear of people getting million dollar homes and knowing the 1% rule, I have to wonder who they work for, and can one of us get a job there?

Originally Posted by bettsie

How do you know this family is illegal? I didn't read anything about that. I think this family is made up of legal immigrants and citizens.

First of all I don't think they would be drawing attention to themselves like this if they were illegals. ICE is actually doing it's job lately.

Also, My niece and her current husband wanted to buy a home a few years ago and when they found out that he wasn't a citizen they had to show a green card before they could get a loan anywhere.

Being illegal in America is no longer something to fear. Most of these people wear "illegal" like a badge of achievement. There are thousands who march in Atlanta with no fear of being apprehended.

HOUSING: Vista family misstated income, now struggles to hold onto their house

Vista family misstated income, now struggles to hold onto their house despite being current with payments

By ZACH FOX - Staff Writer | Sunday, October 12, 2008 12:16 AM PDT

Staff writer Edward Sifuentes contributed to this report. Contact staff writer Zach Fox at (760) 740-5412 or zfox@nctimes.com. Read his blog, "On the Realside," at nctimes.com/blogs/minding_your_business.


Among the hundreds of thousands of mortgages across the country that have turned sour is one held by a Vista gardener who, like most other Americans, just wanted a house for his family.

As did thousands of others, Mateo Martinez signed a loan application that showed his family's income to be considerably more than the actual figure.

It was what he had to do to qualify for the loan.

Martinez got it, moved his family in, and made the payments every month for the last two years, he said.

Then in January, he received a letter from his mortgage company and became a bit player in the largest financial drama to play in the United States since the Depression. Lenders are struggling to decide: What to do with all the bad loans? Borrowers are struggling to hang on.

Martinez bought his $536,500 Vista house two years ago with a stated-income loan, one of a swath of exotic mortgages that have widely become known as "liar loans."

Now his home is in foreclosure.

One thing separates Martinez from the thousands of North Countians who have lost their houses to banks: He never missed a mortgage payment, according to mortgage statements viewed by the North County Times.

His mortgage broker, Pascual Barajas, said Martinez could not afford any house in the area by reporting his income accurately. So Barajas included other sources of income and came up with $12,000 per month, showing it to Martinez for approval, Barajas said. He earns about $25,000 a year.

"I had no idea" that Barajas inflated the income, Martinez said. He said he had no knowledge that it was a "liar loan."

The misrepresented income was needed to qualify for the loan, which carried a monthly payment of about $4,000. Martinez said his family has kept up with payments by working odd jobs and relying on renting rooms to his sons.

It is a crime to lie on a mortgage application. As of Friday, no charges had been filed against Martinez or Barajas or anyone else involved in the house sale.

In January, according to a letter provided by Martinez to the North County Times, PHH Mortgage of Mount Laurel, N.J., demanded that Martinez prove that a business listed on his mortgage application existed and that he earned the income declared.

PHH declined to comment.

Government on the hook

PHH now has more company in dealing with troubled loans ---- the federal government.

A $700 billion bailout bill that President Bush recently signed into law means that the government soon could face the same question, as the legislation gave the Treasury authority to become the holder of thousands, potentially millions, of mortgage-related loans. How much clout the government would hold and which mortgages would be affected might be tough to determine because it is not clear which provisions in the 451-page bailout the Treasury will act upon.

While the details of who holds which mortgage and how foreclosures are initiated have been muddied by financial wizardry, the effects are very real for the Martinez family.

After their home entered foreclosure five months ago, Mateo Martinez said he and his wife slept little. Since the bank demanded payment in full, the Martinezes' mortgage payments have been sent back, he said.

"I'm upset because they didn't want to accept the checks. And they don't seem to want to help us stay in the house," Martinez said in Spanish.

But many of the nation's largest banks are content to simply collect payments ---- not track down fraud, said several spokesmen on condition of anonymity.

"If somebody's current, I don't think that we care" if the borrower lied on the stated-income loan, said a spokesman for a multibillion-dollar bank.

Pervasive risky lending

Some of the security pools were filled with stated-income loans. The products were especially popular in California, where high prices meant that buying a house was too expensive for most of the population.

Of 1.16 million loans issued to riskier California borrowers, known as Alt-A and subprime loans, 795,450 were done with little or no documentation, according to data from the Federal Reserve Bank of New York.

During the housing boom, stated-income loans were widespread and carried a legitimate purpose because they allowed homeowners to count every penny they earned, including side jobs or their own businesses.

And because lenders did not require any proof of income, many analysts suspect that inflating the borrowers' income was commonplace.

And for many borrowers, including the Martinez family, the stated-income loans were coupled with interest-only or negative-amortization features, meaning that payments remained low for as long as five years before jumping significantly.

During the housing boom from 2000 to 2005, San Diego County houses appreciated 20 percent to 30 percent each year. Lenders bet that any appreciation would allow borrowers to refinance out of the liar loans before they couldn't afford the payments.

When prices started to decline toward the end of 2005, borrowers were stuck with mortgages they could not afford and no means of escaping the payments. Defaults have become so prevalent that nonpayments have contaminated security pools that were considered safe, investment-grade vehicles.

In many of those cases, foreclosure might be the only option, said Stephen Wacknitz, president of Temecula Valley Bank.

If foreclosure were a certainty, it might be best for a lender to absorb the losses sooner rather than later, especially considering a local real estate market that has lost as much as 3 percent a month this year.

"I think that people have to bear responsibility for their actions," Wacknitz said. "And if there's a problem, it's the people who are losing their homes. But I don't know what more you can do."

Whether foreclosure on the Martinez home was inevitable is uncertain.

The house has lost almost $200,000 in value since the family bought it in 2006, dropping from $536,500 to $350,000, based on comparable listings and county records.

But Mateo's wife, Eloisa, said the family was planning for the payment increase three years down the road. And when asked how long the family planned to stay in the home, she said in Spanish, "All our lives, if everything goes well."

Staff writer Edward Sifuentes contributed to this report. Contact staff writer Zach Fox at (760) 740-5412 or zfox@nctimes.com. Read his blog, "On the Realside," at nctimes.com/blogs/minding_your_business.

http://www.nctimes.com/articles/2008/10 ... ogcomments


COMMENTS SECTION

Skip
[-] wrote on Oct 23, 2008 8:51 AM:Since when can a "gardener" buy a house for over 500 Thousand Dollars?

And why did the very last line in the story admit that they probably do not speak English? "she said in Spanish, "All our lives, if everything goes well."

Now I have to wonder if there is much more to the story, such as the people's legals status, and if they were unfairly preyed upon because they do not understand English.

Either this story was buried or the comments were heavily censored because I do not see one comment that even suggests this scenario.

http://www.nctimes.com/articles/2008/10 ... ogcomments

Does anyone wonder who owned this $600,000 home before? what he paid for it and how much of a profit he made on it? I believe this goes way deeper than they are willing to search, or report!

This is the biggest rip off in the history of this country....we knew we would be bailing out illegals as we all seen this coming a couple of years ago due to the Maticular card.

Vista family misstated income

Hmm....usually that is called "lying" and usually, people get into trouble over it.