"Hi. I'm a dumba$$."
Problem is, I bet his home does not even fetch $400K any more, certainly when the spring dumping of homes for sale comes in 2007.
he screwed himself. his house is supposed to be his home, not his money bag. his multiple refinancings are what did him in, that and his neglect of his existing debt.
the problem is that the money industry will support him - if he goes bankrupe they lose, so they'll try to get the government to bail this loser out.
Just a hint, trust people, not soulless companies.
Are we to feel sorry for this person?
My belief (and it is a belief, not a fact, not provable, so don't ask): That we will see RTC II. That, for a small amount, say $2500 (rolled into the refi loan) the gov't will allow homeowners to change to a 40-year loan, for $5000 (again, rolled into the refi loan) change to a 50-year loan. These securities will be packaged into tranches and sold as "new" government 40 and 50 year bonds, with US government self-insurance against default. And the game will go on.
He owes 319,000 and has a value of 400,000 if I read corretly. That's 80% loan to value and not bad. It's usually the 100% loans and having to sell or recast their loan that has many people upside down.
This guy could get a 90% loan and party on for another year or so. He's the type of fool to do it.
It's not the negative amortization that's the problem. It's spending all the money on liabilities and making what ever the bad investment was. If he has taken out 190,000, he should have three houses by now.
If you buy a 400,000 house and pay the negam loan payment and your add another 15,000 to your principle. You don't have a problem if you have 80% loan to value or better or if the home appreciates.
If he doesn't have to sell, he can wait out the market and recast. However, I hope he has kept his credit score up.
I'm sorry but it does not. Unless you're an idiot like Hertzberg.
And, to prove he's an idiot, if all this money was "free," why does he find himself in such dire financial straits today?
Holy. Crap.
APf
Last year, 1 in 5 loan applicants got one.
In the first eight months of 2006, even as the real estate market began to weaken amid fears of a downturn, the appeal increased again. Nearly 1 in 3 California loan applicants are now choosing them. The state boasts about 580,000 active pay option mortgages, about half the U.S. total. . .
2003 - 0.8% of loans
2005 - 20% of loans
2006 - 33% of loans
!!!! Econ101 is going to be a hard lesson for some.
"Hi. I'm a dumba$$."
I'm having trouble figuring out why the Times is still printing these articles now that we have a new congress and all this will be fixed in short order.
My oldest daughter & hubby bought a home 5 years ago for $160K and have managed to motgage it the hilt and now owe $475K and its street value is about $400K.
I'm a little slow, cuz I ain't quite figered how they're gonna dig themselves out of that hole.
I just bought a beautiful used Avalon (2002) for $7500...of course, I was only trying to impress myself...
I am in a traditional 15 year loan - amazing how quick the principle owed goes down...
Biggest. Moron. Ever.
This is just horrible. This guy bought a home for $129K and it is now worth over $400K. The guy has used this money to travel around the world, buy SUV's, and make many bad investments and he still has equity in his house. What a tragic story.
Wow. The guy drives a $32,000 Toyota Avalon. Comic book sales on E-bay must be good!
What a punk. Maybe a little less world travel and Toyota Avalon-buying, and a little more self-restraint would have been advisable.
The rise of folks' getting pay-option loans is what suggests to me that the housing market still has a ways to fall. It may not CRASH, but it may sink 5-10% a year for years yet.