(h/t Novahog): From CNN Money:
"Take Joe Martinez of Bristow, Va., who fits the profile of the 'responsible' homeowner Obama cited in the plan. The government contractor and his wife thought they did everything right when they bought their brand new $600,000 house two years ago. They put 5% down and got a 30-year fixed-rate mortgage they could afford.
Others in their neighborhood, however, couldn't keep up with the payments. As foreclosure rose, the value of the couple's home plummeted to $450,000, leaving them doubtful they'd ever recover their investment.
Martinez called their lender to try to get into the Hope for Homeowners program, which would reduce their loan balance to 90% of the home's current value. But they were turned down because they weren't in default.
So two months ago, the couple stopped paying their mortgage, hoping they could then qualify. But even if they don't, they are willing to take the hit on their credit scores to stop throwing money down the drain.
'There's just no point to stay here,' said Martinez, 29, adding he could rent the house across the street for half his monthly mortgage payment. 'We don't want to give up our home, but it's never going to come back'.
. . . . Martinez isn't interested in having his interest rate lowered. He would like to see some of his principal forgiven.
'Why would it be such a big deal for them to modify my loan?' he said, noting that his tax dollars are being used to finance the program. 'Wouldn't that stabilize the economy?'"
25 comments:
What a selfish prick. He made a bad investment and wants to have his principal reduced. This is why all loans should be made full recourse immediately. This self-entitlement is guy-wrenching and growing by the day. Americans have morphed into these selfish, sycophantic zombies that want nothing but excessive profits and subsidies, but aren't willing to accept the potential losses on their risks.
No Joe. Doing everything right would be to take a minute to look at the big picture, not just what you wanted right then, and realize that everything was overpriced and to wait. Doing everything right would be to get smaller loan you could make a larger downpayment on, or to wait and save up a larger one.
You made a bad decision, it happens all the time. I made a bad decision in going to a college I had to take out loans to pay for instead of the college that offered a full scholarship but was right down the street (too close to my parents). And yet, I still make my loan payments and don't expect that the government will just "forgive" my stupidity.
huh?
i'm still scratchin my head..huh?
@kevin,
That's because we've enabled this behavior. Anytime anything bad happens, now, the gov't is there with the cash binky to quiet the screaming children. It all started with the Victim's Compensation Fund after 9/11. It was a terrible tragedy, but I know someone who worked on the dispensation of the funds and let me tell you, most all the victims just wanted the check.
huh?
can I purchase lottery tickets and ask for my money back when(excuse me, if) I lose?
Sounds like a few years renting will do them some good.
If I had made the same mistake I would want to be bailed out as well, why not me afterall? Because I did something stupid, but not quite stupid enough to get free money?
As for defaulting on their mortgage... that is their choice. The bank was stupid to give them a loan for virtually zero down. If the deal they signed says they can give up the house and walk away... well then that is their choice.
Their house is worth a lot less than $450,000. That was the 2008 tax assessed value. These are some recent bank takeovers in the neighborhood:
9673 GRANARY PL
$283,000 12/23/2008
12142 MILLBILL CT
$255,500 11/5/2008
9891 SOLITARY PL
$272,000 10/17/2008
Recent sales:
9797 RUNNER STONE PL
$299,500 11/18/2008
Last sale: $514,900 3/1/2006
9652 GRANARY PL
$315,125 12/1/2008
Recent sale on their street:
12509 ERROLL LN
$329,000 11/3/2008
Last Sale: $655,000 3/1/2006
On Erroll, they're 4BR/2.5BA/2500sqft homes. I've been in a couple. They are stacked up like townhouses. They all sold in the $600Ks in 05/06, except for one genius who paid $720K; some sold in the $300Ks this past year.
There are many neighborhoods like this on Bristow, where I ask myself, why stay? Why keep paying when it is an impossible situation?
I went to an open house in Bristow this past weekend. The owners were asking mid-$400Ks, but they bought it for $665K and added a $50K deck and patio. We asked if it was a short sale. The realtor said they were just taking the loss themselves--better now than later.
What would you do?
this guy is perfectly ok. he is just executing ruthless agent strategy.
moral issues aside, it may be very reasonable decision for him to abandon the property than to stare at 300k hole in his finances. and he can legally do it without recourse (de facto). maybe our laws should be different, but they are not.
all the talk about "moral hazard" has been pretty futile, you start talking about "helping people" and then everyone will want the g-help.
for all of us who do not like to live above our means it can be the lesson --- sometimes it makes more sense to follow the herd unless you can stop it.
Konstantin said...
...for all of us who do not like to live above our means it can be the lesson --- sometimes it makes more sense to follow the herd unless you can stop it.
agree 100%. i think now is really the time to buy.
This is a perfect example of why the bailout won't work for Joe anytime soon.
The only way to make Joe's house more valuable, and "make it comeback", is to increase demand for housing in his neighborhood/region. This is going to take TIME, a long time.
This is done through low taxes, good schools, accessible roads, plenty of jobs, etc., etc.
The current plan will take years, if not a decade or more to actually have this effect on 'ol Joe's property.
That being said, the best "plan" I have heard came from Jim Cramer on Mad Money.
He proposes a a 40-year 4.5% fixed note that will allow people to basically buy some time as well as reduce their mortgage payment.
It won't make Joe's house go up in value but it will reduce his payment and grant him time to ride out the storm.
"moral issues aside, it may be very reasonable decision for him to abandon the property than to stare at 300k hole in his finances. and he can legally do it without recourse (de facto). maybe our laws should be different, but they are not."
Exactly, I don't see this as that big of a moral issue. He signed an agreement, it is as simple as that.
Either he makes the payments, or the bank takes the house. If the law says he can walk away, then he can walk away. The bank knew that when they signed the deal and they could have protected themselves if they wanted to.
Both the buyer and the bank were idiots when they signed up for this particular deal, and one of them is going to get screwed. From the perspective of the buyer it might as well be the bank...
In the future the bank should consider requiring a meaningful down-payment.
Another semi-recent sale on their street:
12506 ERROLL LN
$348,000 8/4/2008
Last sale: $613,915 1/6/2006
I forgot to mention their street ends in an old cemetary on one side and a huge dirt mountain behind a busy shopping center on the other.
Tabitha-
Nice research and ouch.
I bet Martinez was pretty happy with his investment when that other guy paid 720k.
Nothing says upper-class hood like a "Free Dirt" sign.
Hi all, I'm starting my house hunt, and I'm looking for an affordable, commutable neighborhood in the DC area. What do people think about Mt Rainier, MD? The average price for a 3BR/2BA home in decent shape is about $250K - $300K. I know it's supposed to have a very liberal reputation, but I've also read that it's had problems with crime. What do people think--is this a good place to live? FYI, I don't have any kids.
Hi Todd-
I personally wouldn't feel safe there. Definitely make sure you have a garage to park your car in--tons of car theft in that area.
Are you commuting downtown? I'm not as familiar with Maryland as VA--but in VA I would look in the Burke area and around Kingstowne and the Van Dorn metro-I think you could get a nice TH for that price.
Thanks, Meshell. Yeah, there does seem to be a lot of car theft in Mt Rainier; but then again, there seems to be a comparable amount of crime in Takoma Park as well (another place we're considering), which surprised me. I actually work in McLean, but the person with whom I'll buy the house works in eastern DC. None of the areas convenient to both of us (Northwest DC, Arlington) are affordable, and we'd prefer a house with land because my friend is a botanist.
>Take Joe Martinez of Bristow, Va., who fits the profile of the 'responsible' homeowner Obama cited in the plan.<
News reporters need to give up looking for the so-called "responsible" homeowner.
Anyone who agrees to be interviewed for a news story about their "responsible" home-owning adventure is not making a responsible choice.
Their story will persist in search engines, and will be discovered by employers. It's not a good outcome but it happens because these folks are not thinking longterm, which is exactly the problem.
And reporters, in their search for "responsible" homeowners, have no idea what constitutes "responsible." They should first define "responsible."
I can't think of one homeowner news story that didn't highlight some really weird case.
For them to call him "responsible" is just disgusting.
welfare = disincentive
when the FedGov defaults and eventually has to apply food price caps which lead to food shortages, then this simple equation will become "conventional wisdom."
i could throw up... instead i will take solace in the following.
martinez is clearly looking to be unemployed.
Seriously... what is this dip shyt thinking. Government jobs come at a price. That price is that they control you.
You get a clearance. That clearance comes because your finances and other areas of your life are in pristine shape.
The gift for losing your free will is you stay employed while everyone else gets chopped. You stay employed as long as these finances stay in tact...
See.. if your not financially stable you can be subject to bribes...which then would put the system/government at risk as one could be compromised.
People would kill to be in his shoes.. literally bl@ckwater style. Look for this guy to be unemployed soon. I garuuunteee it. His security officer should be all over him come monday.
seriously.. he is the reason i would much rather have a free market crash. Spread the cheese or let everyone starve. They really don't want to collect taxes... or really believe housing is the cause of this. I swear we need jobs to pay for housing. Are they too stupid to figure this out.
anyways. cracks in springfield. but will the economy stick around long enough for everyone to take advantage
knife catching in a welfare country. Smart or not im not sure. Im going to go back to watching the oscars poke fun of the recession and wonder what nexts year show will be like.
this guy's neighborhood is right off lindell rd. i remember reading an article in the past month that cited lindell rd and it's neighborhoods as having THE, THE worst commute in the nation. that article, i assume, will not help prices in his hood.
what about the other neighbor who put down 25%
Today, it seems, we are all Reagan Welfare Queens.
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