Marketplace Report: Housing Crisis As Seen via One Foreclosed House

[SD Transplant]

Thanks to “The Big Picture”, here is a great story of a foreclosed home:

Source Linky:

http://www.ritholtz.com/blog/2011/01/housing-crisis-as-seen-via-one-foreclosed-house/

Listen:

http://marketplace.publicradio.org/display/web/2011/01/13/pm-lot-354-a-tale-of-americas-housing-meltdown/

Watch:

http://www.ritholtz.com/blog/2011/01/lot-354-americas-housing-meltdown/

SoCal Connected and the acclaimed public radio show Marketplace have teamed up to take a tough look at the housing market crisis through one Los Angeles home. This special, reported by Marketplace’s Kai Ryssdal, traces the property from savvy investment boom to foreclosure bust and back again. We’ll meet the couple who bought the home low in 2002, improved it, and sold it four years later at almost triple the price; the couple who bought high and lost the home to foreclosure; and the couple who bought it this year at a fraction of the price it sold for in 2006.

The story of Lot 354 reflects the lending practices that contributed to the crisis in America’s housing market, how economic forces led to the housing crisis and what the future may hold for both buyers and sellers.

[jameswenn]

2002 was not a low in Los Angeles, there were articles in the LA Times at the time talking about the how heated the market was.

750K for the place makes SD real estate look dirt cheap.

[jameswenn]

2002 was not a low in Los Angeles, there were articles in the LA Times at the time talking about the how heated the market was.

750K for the place makes SD real estate look dirt cheap.

[jameswenn]

2002 was not a low in Los Angeles, there were articles in the LA Times at the time talking about the how heated the market was.

750K for the place makes SD real estate look dirt cheap.

[jameswenn]

2002 was not a low in Los Angeles, there were articles in the LA Times at the time talking about the how heated the market was.

750K for the place makes SD real estate look dirt cheap.

[jameswenn]

2002 was not a low in Los Angeles, there were articles in the LA Times at the time talking about the how heated the market was.

750K for the place makes SD real estate look dirt cheap.

[bearishgurl]

That was an great video explaining the mechanics of the housing “meltdown” through the lens of sellers/buyers of the same property over 8 years.

I don’t think $765K was a bad price for the last buyers to pay considering the convenient location, house style/size, lot size and neighborhood ambiance. Convenient location is EVERYTHING in LA.

The downfall of the owners who were foreclosed on was a large purchase-money pay/option ARM, NOT HELOCing. A purchase-money “jumbo loan” doesn’t usually have different terms than a conforming loan in these (Alt-A or prime) programs, thus are attractive. As I’ve stated before on this site, there’s really nothing wrong with these products, if used correctly. Many were assumable (not sure if this is still the case). The owners who lost the property here were local business owners who simply borrowed too much and didn’t choose to pay Option 3, the fully-amortized rate, causing their loan to negatively amortize. They also didn’t put enough down and no doubt had to make big PMI payments. It’s as simple as that.

Perhaps the loan wasn’t explained to the (foreclosed owners) properly or there was some sort of language barrier in the disclosing. Mortgage-speak can be difficult to understand, even for people who are very smart in other areas.

If I sold and chose to mortgage my next property and another pay-option ARM was available to me, I might take it again. I’ve had several and they’re good loans, unless interest rates go thru the roof, which has never happened while I’ve had these loans. These loans have built-in annual and life caps, anyway. I’ve had fixed-rate mortgages at 3% higher than any of my Option ARMS ever rose to.

Thanks for sharing, SD Transplant!

[bearishgurl]

That was an great video explaining the mechanics of the housing “meltdown” through the lens of sellers/buyers of the same property over 8 years.

I don’t think $765K was a bad price for the last buyers to pay considering the convenient location, house style/size, lot size and neighborhood ambiance. Convenient location is EVERYTHING in LA.

The downfall of the owners who were foreclosed on was a large purchase-money pay/option ARM, NOT HELOCing. A purchase-money “jumbo loan” doesn’t usually have different terms than a conforming loan in these (Alt-A or prime) programs, thus are attractive. As I’ve stated before on this site, there’s really nothing wrong with these products, if used correctly. Many were assumable (not sure if this is still the case). The owners who lost the property here were local business owners who simply borrowed too much and didn’t choose to pay Option 3, the fully-amortized rate, causing their loan to negatively amortize. They also didn’t put enough down and no doubt had to make big PMI payments. It’s as simple as that.

Perhaps the loan wasn’t explained to the (foreclosed owners) properly or there was some sort of language barrier in the disclosing. Mortgage-speak can be difficult to understand, even for people who are very smart in other areas.

If I sold and chose to mortgage my next property and another pay-option ARM was available to me, I might take it again. I’ve had several and they’re good loans, unless interest rates go thru the roof, which has never happened while I’ve had these loans. These loans have built-in annual and life caps, anyway. I’ve had fixed-rate mortgages at 3% higher than any of my Option ARMS ever rose to.

Thanks for sharing, SD Transplant!

[bearishgurl]

That was an great video explaining the mechanics of the housing “meltdown” through the lens of sellers/buyers of the same property over 8 years.

I don’t think $765K was a bad price for the last buyers to pay considering the convenient location, house style/size, lot size and neighborhood ambiance. Convenient location is EVERYTHING in LA.

The downfall of the owners who were foreclosed on was a large purchase-money pay/option ARM, NOT HELOCing. A purchase-money “jumbo loan” doesn’t usually have different terms than a conforming loan in these (Alt-A or prime) programs, thus are attractive. As I’ve stated before on this site, there’s really nothing wrong with these products, if used correctly. Many were assumable (not sure if this is still the case). The owners who lost the property here were local business owners who simply borrowed too much and didn’t choose to pay Option 3, the fully-amortized rate, causing their loan to negatively amortize. They also didn’t put enough down and no doubt had to make big PMI payments. It’s as simple as that.

Perhaps the loan wasn’t explained to the (foreclosed owners) properly or there was some sort of language barrier in the disclosing. Mortgage-speak can be difficult to understand, even for people who are very smart in other areas.

If I sold and chose to mortgage my next property and another pay-option ARM was available to me, I might take it again. I’ve had several and they’re good loans, unless interest rates go thru the roof, which has never happened while I’ve had these loans. These loans have built-in annual and life caps, anyway. I’ve had fixed-rate mortgages at 3% higher than any of my Option ARMS ever rose to.

Thanks for sharing, SD Transplant!

[bearishgurl]

That was an great video explaining the mechanics of the housing “meltdown” through the lens of sellers/buyers of the same property over 8 years.

I don’t think $765K was a bad price for the last buyers to pay considering the convenient location, house style/size, lot size and neighborhood ambiance. Convenient location is EVERYTHING in LA.

The downfall of the owners who were foreclosed on was a large purchase-money pay/option ARM, NOT HELOCing. A purchase-money “jumbo loan” doesn’t usually have different terms than a conforming loan in these (Alt-A or prime) programs, thus are attractive. As I’ve stated before on this site, there’s really nothing wrong with these products, if used correctly. Many were assumable (not sure if this is still the case). The owners who lost the property here were local business owners who simply borrowed too much and didn’t choose to pay Option 3, the fully-amortized rate, causing their loan to negatively amortize. They also didn’t put enough down and no doubt had to make big PMI payments. It’s as simple as that.

Perhaps the loan wasn’t explained to the (foreclosed owners) properly or there was some sort of language barrier in the disclosing. Mortgage-speak can be difficult to understand, even for people who are very smart in other areas.

If I sold and chose to mortgage my next property and another pay-option ARM was available to me, I might take it again. I’ve had several and they’re good loans, unless interest rates go thru the roof, which has never happened while I’ve had these loans. These loans have built-in annual and life caps, anyway. I’ve had fixed-rate mortgages at 3% higher than any of my Option ARMS ever rose to.

Thanks for sharing, SD Transplant!

[bearishgurl]

That was an great video explaining the mechanics of the housing “meltdown” through the lens of sellers/buyers of the same property over 8 years.

I don’t think $765K was a bad price for the last buyers to pay considering the convenient location, house style/size, lot size and neighborhood ambiance. Convenient location is EVERYTHING in LA.

The downfall of the owners who were foreclosed on was a large purchase-money pay/option ARM, NOT HELOCing. A purchase-money “jumbo loan” doesn’t usually have different terms than a conforming loan in these (Alt-A or prime) programs, thus are attractive. As I’ve stated before on this site, there’s really nothing wrong with these products, if used correctly. Many were assumable (not sure if this is still the case). The owners who lost the property here were local business owners who simply borrowed too much and didn’t choose to pay Option 3, the fully-amortized rate, causing their loan to negatively amortize. They also didn’t put enough down and no doubt had to make big PMI payments. It’s as simple as that.

Perhaps the loan wasn’t explained to the (foreclosed owners) properly or there was some sort of language barrier in the disclosing. Mortgage-speak can be difficult to understand, even for people who are very smart in other areas.

If I sold and chose to mortgage my next property and another pay-option ARM was available to me, I might take it again. I’ve had several and they’re good loans, unless interest rates go thru the roof, which has never happened while I’ve had these loans. These loans have built-in annual and life caps, anyway. I’ve had fixed-rate mortgages at 3% higher than any of my Option ARMS ever rose to.

Thanks for sharing, SD Transplant!

[faterikcartman]

I’m sorry but the blame the lenders/banks instead of the people who asked for and agreed to the loans arguments have yet to hit anywhere near my sympathy button.

[faterikcartman]

I’m sorry but the blame the lenders/banks instead of the people who asked for and agreed to the loans arguments have yet to hit anywhere near my sympathy button.

[faterikcartman]

I’m sorry but the blame the lenders/banks instead of the people who asked for and agreed to the loans arguments have yet to hit anywhere near my sympathy button.

[faterikcartman]

I’m sorry but the blame the lenders/banks instead of the people who asked for and agreed to the loans arguments have yet to hit anywhere near my sympathy button.

[Author]

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