People that declared bankruptcy as late as 2008 and that were planning to buy a townhome for $200,000 to $250,000 which was their budget. What did they end up buying? A new home for $426,000… “far more than their budget”.
Or the other lady that paid 10% more than her budget.
“It’s much easier to buy a new home than an old one,” said Ms. Riley, a 41-year-old mother of two who works as a case manager for children with developmental disabilities in Alexandria, Va. “The builder’s whole attitude was, ‘No worries.’ They help you and they trust you. They really, really want you to get approved.”
My favorite part! “No worries!” “they help you and they trust you” “they really really want you to get approved”.
Gee, where did we see see this before??? LOL.[/quote]
ER, these shenanigans have been going on in builder’s offices since the dawn of time ;=)
Builder’s “in-house lenders” had a plethora of exotic ARMs and I/O products up their sleeves, lol, and liberally applied “builder participation” in the form of taking out second and even third TD’s so Joe Q Working-Class Buyer and his family are able to pay way too much for their cheap, substandard sh!t on substandard lots in CA’s Lizardland and former farmland. That’s how the masses of unqualified buyers got “approved” to buy a new-construction home during the millenium boom and even decades earlier than that.
Nothing has changed because our PTB like it the way it is. A few of our lofty “elected officials” even had season tix for professional football/baseball for YEARS in the skybox for them and their families to enjoy, courtesy of Big Development!
Virtually NONE of these buyers could qualify to buy a “mainstream” 3/2/2 property on a 6-7K lot under traditional qualification guidelines (80/20 conv) from a bona-fide individual seller with equity . . . no, not even in their hometown of Compton! Hence, all the billboards put up in their home turf luring these unsuspecting “hopeful” renters out to the IE to tour “model homes.”
Why did builders pander to the working poor? Because no buyer with a decent downpayment and FICO score would buy that sh!t and certainly not move from a superior location to a vastly inferior one. IOW, the “creampuff” buyers had “choices” in life.
This is just one example of what happened all over the state in the last decade.
Somehow, these “crooked” builder’s offices just made it happen for everyone who walked in with an SSN/EIN (or a pending application for one, lol) and could fog a mirror and now we are living with the results of their debacle of this mass “social experiment” where square pegs (the poor or near poor) were “modified on paper” to fit in a round hole (homeownership).
All this accomplished was to cause most of these new “owners” to fall behind on their property taxes the 1st/2nd year of ownership, due to monthly HOA dues and/or high MR. Then, exploding interest-rate mortgages 3+ years after purchase caused them to fall behind on their mortgages and we all know the rest of this story.
By then, the builders had long ago picked up shop with their profits and split town :=0
The common builder practice of “qualifying the unqualified en masse” is really disgusting to me. The many-faceted damage they caused to the existing surrounding communities of their cheap crammed-together stucco boxes will last for decades.
I think it’s well past time for CA’s former tract-slum builders (the ones who are still solvent, that is) to head for the Big Sky where they can try their tactics out on Montana’s knarly, crusty PTB. I’d be interested to see how far they get with ’em up there :=]
