NYT: “How a financial pro lost his house”

[patientrenter]

[quote=sdrealtor]….Simply taking punitive actions is not the solution. We can only go forward in cleaning up this mess to the best of our abilities.[/quote]

No accountability.

This is definitely the grand plan, as organized by Congressmen, the Treasury Secretary, the Fed chair, and the doyens of Wall Street. All members of the 1%. I am sure the fact that this plan is best for them has nothing to do with their preference for it.

“No accountability”. The new motto for a good and just economic system.

[svelte]

I read this article at lunch today. What struck me is a man who made so many – and there were many – financial mistakes and could not do simple math to project expenses vs income going forward could call themselves a financial planner.

It is astounding, really.

[bearishgurl]

[quote=sdrealtor]Why couldnt you have rented?

We want to hear the precise reason why you purchased and your exact thought process every step of the way when you took out new loans. You have no problem digging into others reasons and situations in excruciating detail so please do the same or stop asking others to do so…[/quote]

For the record, I took out ONE purchase-money loan and I still have it. Why am I NOT underwater now? I’m one of those few (…drumroll…) who put an excess of 30% down, I’ve made a few strategic improvements along the way and my home is NOT the same age as the rest of my ‘hood. It was gutted and rebuilt about 19 years ago and was designed by a local architect.

With a few more minor repairs, I believe I will be able to recover my downpayment + a co-broke fee (and if I’m lucky, perhaps more) in a few years. If not, I’ll rent it.

Renting at the time would have cost me at least $1500 mo for the 3 bdrms I needed and I also had pets.

I have much more square footage and a large yard for $1200 mo P&I.

How about YOU, sdr? How many times have YOU refied “cash out?” And why aren’t YOU renting??

[sdrealtor]

LOL I was only kidding. You dont have to explain your actions to anyone not the least of which is me.

[bearishgurl]

[quote=sdrealtor]At some point you bought into the same herd mentality as the author of the article.[/quote]

Was there a (RE) “herd mentality” prevalent 10-11 years ago? Am I missing something here??

[bearishgurl]

[quote=sdrealtor]LOL I was only kidding. You dont have to explain your actions to anyone not the least of which is me.[/quote]

Does this mean you’re not going to tell us about your (cash-out?) refi(s)??

[sdrealtor]

Dont you pay taxes, insurance and maintenance on top of P&I like the rest of us? One question, if you had invested your 30% down and not spent money on strategic improvements would you be in a better financial position today?

[sdrealtor]

[quote=bearishgurl][quote=sdrealtor]LOL I was only kidding. You dont have to explain your actions to anyone not the least of which is me.[/quote]

Does this mean you’re not going to tell us about your (cash-out?) refi(s)??[/quote]

Sure I took some money out to do some improvements when we bought the property. I used some to invest in properties which I already sold for substantial profits and one I still own which is very profitable as a rental. I invested in a business that was very successful and was subsequently sold. I consolidated about $30K in student debts also. I have never had less than 30% equity in my home. I’ve been paying down the HELOC (even though my rate is around 4% and will stay there for a very long time because its prime minus 1%-its sitting at its low end cap)rapidly out of income because I dont want to cash out long term investments to do so. I could rent out my house easily because of my neighborhood for a very nice profit each month too.

Once the HELOC is paid off my loan to value will be under 30%. My life doesnt suck.

[sdrealtor]

[quote=bearishgurl][quote=sdrealtor]At some point you bought into the same herd mentality as the author of the article.[/quote]

Was there a (RE) “herd mentality” prevalent 10-11 years ago? Am I missing something here??[/quote]

Yes that herd mentality has been around since at least the mid 80’s….moooooo

[bearishgurl]

[quote=sdrealtor]Dont you pay taxes, insurance and maintenance on top of P&I like the rest of us? One question, if you had invested your 30% down and not spent money on strategic improvements would you be in a better financial position today?[/quote]

First, you answer my last question then I’ll answer this one ;=]

[eavesdropper]

[quote=sdrealtor]I think its a very good article. He’s not looking for sympathy, he’s just telling his story. It shows less sophisticated distressed homeowners that they are not alone. That people of all education and income levels fell prey to the same thing. Its a story about risk taking and herd mentalities which are endemic in our society. Its not about fingerpointing anymore. Its about cleaning up the mess and we still have much work ahead of us.[/quote]

I agree with you: He’s not looking for sympathy. He’s actually looking to justify his actions. And he’s looking to sell his book. I’ll buy a copy if he gives ALL of the gross profits to people who have lost their retirement funds due to bad advice from financial “experts” and to homeowners who have lost their rightfully owned properties due to robosigning “errors”.

The entire article was filled with excuses. And incredibly lousy excuses that, in reality, don’t qualify as excuses at all. It is a tale of incompetence, of greed, of immaturity, and of stupidity. He spent 6 years living on nothing more than wishful thinking. But the article talks about “everybody doing it”, and real estate agents who took them to more expensive neighborhoods, and acquaintances who were buying bigger houses and boats and other toys. Even the statement, “We had Chevys and Volkwagens” was self-serving: after all, many of the models made by Chevy and Volkswagen are $40,000 and up, and I’d place money on a bet that the Chevy was a fully-loaded luxury model $50,000+ Tahoe.

But, hey! Lots of people decided that they, too, were in a position to star on “Lifestyles of the Rich and Famous” during that time, courtesy of the generous lending policies of their friendly bankers and mortgage companies. It’s not that I’m implying that the Richards should be condemned for what they did. What makes me sick is that this guy really hasn’t accepted that he’s done anything wrong, and that, in reality, he *did* have other choices. He offers bullshit excuses for everything they did.

He even tries to make it sound like law schools are now endorsing his actions as the only truly responsible way to handle your legally-contracted financial responsibilities. In truth, his source of inspiration for this delusion is an academic paper written by a University of Arizona Law School associate professor who was examining the motivations for and effects of strategic default. I know: I read that paper, and others by the same professor.

I’m sorry. You can’t purport to be selling a book that you hope will help people learn from your mistakes when you don’t really believe that you made any mistakes. Aside from that, exactly how will reading his miserable little story help anyone? I haven’t heard any advertisements from banks or mortgage companies trying to lure homeowners into debt-consolidation (or toy-buying) refinancing since 2008. Handy tip: Homeowners who are losing their homes (for WHATEVER reason) don’t want to hear all about your underwater mortgage/short sale/foreclosure. Hearing that someone else may have made stupid mistakes won’t make them feel better about their own, and more sad stories will likely just increase their desire to end it all.

So instead of making more money off susceptible, trusting people, Mr. Russell should stick his book where it will do everyone else the most good: down his throat so he won’t be able to peddle his valuable financial advice and bullshit stories to people who are actually trying to survive and move on.

[eavesdropper]

[quote=svelte]I read this article at lunch today. What struck me is a man who made so many – and there were many – financial mistakes and could not do simple math to project expenses vs income going forward could call themselves a financial planner.

It is astounding, really.[/quote]

Svelte, I could not come up with a more appropriate term than your choice of “astounding”. Described my experience reading this article to a T. I don’t know if Utah requires residents representing themselves as financial planners to be licensed, but, if they do, I hope someone goes after this guy.

I have met many financial “professionals” who were anything but. However, this guy seems to make no genuine connection between his actions and the minimum level of competence that should be expected of a paid financial advisor. He refers to it, almost abstractly, at times, kind of like he suddenly remembers, “Oh, yeah, that’s supposed to be the selling strategy for my book”. But, other than that, it’s just a “Wait…it gets even better!”-type of recitation, citing one act of incompetence after another, after yet another. I admit to being dazzled…..but not in a good way.

Yes, “astounded” sums it up nicely.

[eavesdropper]

[quote=sdrealtor]eaves
Thats the majority of the financial planning industry as a whole. Most are just selling what they are told. Caveat emptor is and always will be the rule.[/quote]

sdr, it’s not that he’s an unqualified financial planner. I object to the following:

1. That he really seems to make no connection between how he presented himself to others (and continues to do so), and his financial management actions in his private life; he appears to be incapable of seeing the existence and the width of the discrepancy.

2. His pompous attitude that he not only came up with a brilliant solution to his troubles, but that the world needs to hear all about it. Voila! He gives the less fortunate an invaluable gift in the form of a book.

But I won’t blame him entirely. After all, he had to have someone give him a platform.

[sdrealtor]

[quote=bearishgurl][quote=sdrealtor]Dont you pay taxes, insurance and maintenance on top of P&I like the rest of us? One question, if you had invested your 30% down and not spent money on strategic improvements would you be in a better financial position today?[/quote]

First, you answer my last question then I’ll answer this one ;=][/quote]

Obviously didnt read my answers to your last question that were already posted prior to your last winky dink post. You dont have to answer any way. Its your business and I dont really care to know the answers. They were simply rhetorical questions.

[bearishgurl]

Okay, I see sdr answered my question. In ’09 and ’10, my taxes were voluntarily lowered by the assessor beyond what I would have appealed them down to (for the time being). I had appealed in ’07 and ’08 and got the assessment adjusted downwards. I’m now happy with the current assessment (product of 4 consecutive downward adjustments).

The subject of this thread could have done the same thing (if the NV County Assessors are voluntarily adjusting property assessments). I don’t know the laws there.

My insurance is $985 annually for a $366K “replacement value” policy. I believe this is more than adequate to rebuild in the event of a total loss, such as fire.

I don’t think I would have made any money had I added my downpayment $ to my retirement accounts. After all the “gyrations” in recent years, they were underperforming when I went all cash in August of this year. As a matter of fact, a few of them were within “hundreds” of when I bought them in the nineties. I know others who have experienced the same. I don’t have the stomach for it, nor do I have the expertise to “pick” correctly and timely.

I would rather have a postive cash-flow rental in a ‘hood I was familar with than sink “retirement” $$ in the “stock market abyss.”

The “strategic improvements” I made were to replace broken appls and install new flooring, landscaping and sprinkler system (which I bartered for labor). The cash layout was minimal (a few thousand for mat’ls).

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