No, the four buyers thought that’s what they were doing. I won’t get into whether two families with a combined income of $80,000 a year can afford a $720,000 home, that’s a different discussion.
One buyer, making $15,000, is the only one listed on the loan. The agent & mortgage broker played New Century’s inept underwriting and should be investigated for potential fraud of their clients.
New Century’s fault – funding a $720,000 loan with a $15,000 income. We’ve seen them do worse, so no surprise there.
Agent’s fault – pretty obvious if she was contributing to float the difference between wanted payment and needed payment until the magic refiance didn’t occur. Not to mention the questionable purchase price.
Broker/Agent fault – putting forward a single borrower loan when a four borrower loan was done. Wonder if other docs were doctored?
Two couples fault – not bringing someone to actually tell them what they were signing.
Anybody want to take a shot at how a bail-out will work for them?
For them to afford the home, you first have to forgive $200,000 of the purchase price and then refi them into an interest only loan at the current 30 year treasury rate to get them to a payment that will be 41.3% of their combined incomes.
This is why the bailout will fail to save the market, there is no saving these kinds of deals.
