San Diego Housing Bubble News and Analysis

They made her a psychiatrist on the application, gave her a business name and imaginary savings, and she didn't question any of this at the time? I have no sympathy whatsoever.

She knew they were lying for her.

There's a huge number of these liar loans out there. A good amount will be cleaned up thanks to FHA Oct 1st. A quarter have already foreclosed, and the other quarter will either do the payments and keep the house or foreclose.

Sympathy for the devil.

and they were willing participants in this scam because they signed the contracts and collected the money.

Well this is interesting. Did they just admit on record that they committed mortgage fraud?

I wonder if they are going to get prosecuted for it? I mean, could a lender technically go after them if they wanted?

Certainly, if I was a participant in something illegal and subsequently got burned by it, i wouldn't want it to others to know, let alone be on a interview video.

Ignorance of laws isn't an excuse.

And regarding the title of this news story "The foreclosure crisis may not hit home for a lot of us until we hear the stories of those who lost a home."

..um, no. To date, i still don't know anyone among my friends/relatives that have or are in danger of losing a home. So can't really relate.

I do have sympathy.

If she lived in Canada, she'd be fine.

Caveat Emptor is fine for well-educated people. But it's the government's job to protect the most vulnerable. She should not have been able to get a loan.

Sometimes we do need to protect people from themselves.

They won't lose their home if they didn't have some big bills to pay. The problem is not the loan, it is their bills. They couldn't expect to keep everything with such life changing events.
The house was their saving for the rainy day, just like others who chose CD. Should I complained to my bank for not letting me to keep my $50K CD intact when I have $100K bill to pay ?

Here's the kicker

LOAN DATE: 1/11/2007
LOAN AMNT: $364,000
NOD DATE: 9/6/2007
NOS DATE: 12/11/2007 10:00A 01/02/2008 AT:220 W BROADWAY SAN DIEGO
REO DATE: 02/13/2008

Shots in the video clearly show an eviction notice dated 8/15.

They have been living in that house for free since last June and the bank has just gotten around to evicting them.

Also, is it really possible to sink 364k of cash into a few years of payments for a nursing home, drug bills, and a hospital bill for a broken ankle? IMHO, if the bank wants to track down the rest of that money, they should check with local casinos.

Shadow inventory being held by banks is an interesting topic. Mr Mortgage goes into it a little. But recently he has stated that he thinks it's coming to a point where the lenders may have to come clean and do some "bulk asset" sales. Worth a look at what he's saying. IMO.

Having lived near sky scrapers most of my life, I know the shadows grow very long as the sun rises and then again when it sets.

Exactly. They started out with no mortgage payment, which is an ideal situation even if you're unemployed, and a few minor medical bumps (and those are definitely minor) should not have derailed that. Even living on some kind of assistance they could have easily made it and had the mother-in-law live with them until they saw better times.

Instead, they saw a big payday and couldn't resist. People with no real experience with money will spend whatever you give them, which they did. I'm guessing the house was previously owned by the mother-in-law, because I can't see that couple having the discipline to pay off a house on their own. They got her to transfer it to their names and then booted her.

That said, I agree that sometimes you have to protect people from themselves (and other taxpayers from them). They shouldn't have been able to get the loan.

They lied to get money, then they had financial problems now they are crying that they want to keep their home? What kind of arrogance is this? Many of us financially responsible people can't even afford homes and we should have sympathy for those that feel entitled to have their home even if they don't pay their bills?

What do they expect someone (or the government) to give them a free or greatly subsidized home?

Who do they think they are, Wall Street rich guys?!!

All the BS executives that got their huge end of year bonus's in January knew damn well where the company stood.Yet, they said things were great there. Then all of the sudden they're at deaths door and the stock drops over 90% in 2 days.
The bail-out by their pals at the Fed, made sure they could keep the bonus. What a scam.

Moral hazard is learned from out leaders. If they can do it, why cant I ?!

Instead, they saw a big payday and couldn't resist. People with no real experience with money will spend whatever you give them, which they did. I'm guessing the house was previously owned by the mother-in-law, because I can't see that couple having the discipline to pay off a house on their own. They got her to transfer it to their names and then booted her.

You're probably right. The house has a curious property tax assessment history:

2004: $420,000
2005: $428,400
2006: $436,968
2007: $64,851

Translation: the house was purchased by its previous owner sometime before 1983. in 2004, there was a property transfer from the owner to one of his/her children. The owner either died or signed off the house on the way to the nursing home.
Children turned out to be deadbeats with no jobs or health insurance. They took out a "liar loan" and then refinanced it several times. In 2007, subprime crisis hit and their next refi fell through. So they just stayed in the house and waited for the bank to come and evict them.
At some point in 2006 or 2007 they must have learned that they could revert their prop 13 tax reassessment because the transaction was exempt, so they took care of that.

Sadly, the trustee sale was so long ago that ForeclosureRadar does not show that house any more. So I don't see the exact history of the loans. But it would probably fit this description.

Wow. Cynics you lot!

Am I the only one who heard that they owned the house outright before using it as an ATM to pay for (supposedly necessary) medical bills?

If the "supposed" IS in fact true, that speaks more to our vulnerability under our current health care system, should we, or our family members, get really sick, than to the stupidity/greed of borrowers, or the corruption of lenders.

If this hard luck story is the truth, it has crap to do with the property bubble----other than the amount of dollars the homeowners were allowed to borrow. Lax lending standards and liar loans may have increased this credit amount beyond all logic, but that's 100% the lender's fault for agreeing to it. Both parties were gamblers, but only one of them had an altruistic motive.

It really does gall me, though, that either due to a young age or hubris, those here can't imagine a scenario where despite their best efforts, they might fall victim to the vagaries of life. Shit happens. Life isn't fair. It just is. A serious ongoing illness, in America, insurance or no insurance, could wipe you out in a heartbeat.

I know this is KUSI, but one of the serious issues I have with the UT is that they give a neighborhood name that I am not familiar with, even though I've lived in S.D. most of my life. Had to ask a friend where Oak Park was. He said it was south of 54th and University. Did anyone else notice that almost all of the other houses they showed in that neighborhood have cement front lawns?

I do feel some sympathy. Good nursing homes aren't cheap.

We heard it, and it's one reason I have such a hard time sympathizing. They were doing fine, better than fine, until they used their house as an ATM. Note that she didn't break her ankle until AFTER the loan was taken out and spent. What the hell did they do all those years without a mortgage? Sit on the couch and drink? That's very likely exactly what they did.

Certainly awful things can happen, but their medical issues in particular are relatively minor. Again, they were in an ideal situation without a mortgage payment. In order for things to go so terribly wrong for them, there was a lot more going on than just arthritis, such as extended periods of unemployment.

No sympathy at all. Don't tell me that she didn't know she became a psychiatrist when she signed the doc until now. That is lie. But I do think that the lender should sue everyone from broker to them for fraud.