[ucodegen]

This article seems to claim that you can mix these two fuels and surpass the second law of thermodynamics.

I’ve noticed stuff like that.. or poor attention to detail all through the article. Another example:

quoted:

It announced the same year that, beginning in 2008, it would convert its gasoline Hummers to run on ethanol; by 2010, it said, Hummers would be biodiesel-compatible.

The military ‘H1’ Hummers are already biodiesel compatible.. all you have to be is ‘diesel’ to get that. The reason why the military Hummers are pokey is because they have to run on all types of fuel, not just diesel. It also affects their efficiency and mileage.

The show chose a ’65 Chevy Impala, and when the conversion was done, he’d doubled its mileage to 25 mpg and increased its pull from 250 to 800 horsepower.

Several people have beat him to this.. most of them diesel tuners.. and they are racing full-sized trucks against sports and performance cars, including Vipers. The Chevy LBZ diesel and Cummings are favorite starting points. The Ford Navistar less so.

Whenever the truck’s juice runs low, the turbine will roar into action for a few seconds, powering a generator with such gusto that it’ll recharge a set of “supercapacitor” batteries in seconds.

Umm, slight problem. “Supercapacitor”s do not hold much current compared to a battery. The higher the current, the more likely you are to heat up any wiring and the greater the resulting resistance in the wiring. Turbines are most efficient when they have been operating continuously and are up to temperature. They don’t do on and off well, nor do they like to change speed (high thermal mass and high rotational inertia).

This is more than a mere American Chopper–style makeover. Goodwin’s experiments point to a radically cleaner and cheaper future for the American car. The numbers are simple: With a $5,000 bolt-on kit he co-engineered–the poor man’s version of a Goodwin conversion–he can immediately transform any diesel vehicle to burn 50% less fuel and produce 80% fewer emissions.

There is a reason why diesel automobiles are hard to buy in California.. they are not legal because of emissions (NOx). You have to buy one from someone who brings the vehicles into California and has held on to the vehicle for at least a year. There is only one diesel passenger car that has made it past California’s auto emissions standards(that I know of), the Volkswagen TDI. Mercedes’ BlueTec may also pass CA passenger car emissions. Yes, emissions from a current diesel are lower than a 1960 Lincoln or probably a 1987 Wagoneer, but not current passenger cars..

Putting a diesel engine in the Hummer, however, required Goodwin to crack GM’s antitheft system, which makes it a pain to swap out the engine….

This is very true.. and annoying to anyone wanting to use these diesel engines in a ‘project’. The engine he is talking about here is the LBZ variant Duramax.

PS: Instead of trying to worry about getting Hydrogen fuel for the diesel combo engine.. use Propane (8 hydrogens to 3 carbons) or Methane (4 hydrogens to 1 carbon). You should get almost the same effect. NOTE: Natural gas is largely Methane. A lot more plentiful and cheaper to get than raw H2 (Hydrogen).

[ucodegen]

This article seems to claim that you can mix these two fuels and surpass the second law of thermodynamics.

I’ve noticed stuff like that.. or poor attention to detail all through the article. Another example:

quoted:

It announced the same year that, beginning in 2008, it would convert its gasoline Hummers to run on ethanol; by 2010, it said, Hummers would be biodiesel-compatible.

The military ‘H1’ Hummers are already biodiesel compatible.. all you have to be is ‘diesel’ to get that. The reason why the military Hummers are pokey is because they have to run on all types of fuel, not just diesel. It also affects their efficiency and mileage.

The show chose a ’65 Chevy Impala, and when the conversion was done, he’d doubled its mileage to 25 mpg and increased its pull from 250 to 800 horsepower.

Several people have beat him to this.. most of them diesel tuners.. and they are racing full-sized trucks against sports and performance cars, including Vipers. The Chevy LBZ diesel and Cummings are favorite starting points. The Ford Navistar less so.

Whenever the truck’s juice runs low, the turbine will roar into action for a few seconds, powering a generator with such gusto that it’ll recharge a set of “supercapacitor” batteries in seconds.

Umm, slight problem. “Supercapacitor”s do not hold much current compared to a battery. The higher the current, the more likely you are to heat up any wiring and the greater the resulting resistance in the wiring. Turbines are most efficient when they have been operating continuously and are up to temperature. They don’t do on and off well, nor do they like to change speed (high thermal mass and high rotational inertia).

This is more than a mere American Chopper–style makeover. Goodwin’s experiments point to a radically cleaner and cheaper future for the American car. The numbers are simple: With a $5,000 bolt-on kit he co-engineered–the poor man’s version of a Goodwin conversion–he can immediately transform any diesel vehicle to burn 50% less fuel and produce 80% fewer emissions.

There is a reason why diesel automobiles are hard to buy in California.. they are not legal because of emissions (NOx). You have to buy one from someone who brings the vehicles into California and has held on to the vehicle for at least a year. There is only one diesel passenger car that has made it past California’s auto emissions standards(that I know of), the Volkswagen TDI. Mercedes’ BlueTec may also pass CA passenger car emissions. Yes, emissions from a current diesel are lower than a 1960 Lincoln or probably a 1987 Wagoneer, but not current passenger cars..

Putting a diesel engine in the Hummer, however, required Goodwin to crack GM’s antitheft system, which makes it a pain to swap out the engine….

This is very true.. and annoying to anyone wanting to use these diesel engines in a ‘project’. The engine he is talking about here is the LBZ variant Duramax.

PS: Instead of trying to worry about getting Hydrogen fuel for the diesel combo engine.. use Propane (8 hydrogens to 3 carbons) or Methane (4 hydrogens to 1 carbon). You should get almost the same effect. NOTE: Natural gas is largely Methane. A lot more plentiful and cheaper to get than raw H2 (Hydrogen).

[ucodegen]

This article seems to claim that you can mix these two fuels and surpass the second law of thermodynamics.

I’ve noticed stuff like that.. or poor attention to detail all through the article. Another example:

quoted:

It announced the same year that, beginning in 2008, it would convert its gasoline Hummers to run on ethanol; by 2010, it said, Hummers would be biodiesel-compatible.

The military ‘H1’ Hummers are already biodiesel compatible.. all you have to be is ‘diesel’ to get that. The reason why the military Hummers are pokey is because they have to run on all types of fuel, not just diesel. It also affects their efficiency and mileage.

The show chose a ’65 Chevy Impala, and when the conversion was done, he’d doubled its mileage to 25 mpg and increased its pull from 250 to 800 horsepower.

Several people have beat him to this.. most of them diesel tuners.. and they are racing full-sized trucks against sports and performance cars, including Vipers. The Chevy LBZ diesel and Cummings are favorite starting points. The Ford Navistar less so.

Whenever the truck’s juice runs low, the turbine will roar into action for a few seconds, powering a generator with such gusto that it’ll recharge a set of “supercapacitor” batteries in seconds.

Umm, slight problem. “Supercapacitor”s do not hold much current compared to a battery. The higher the current, the more likely you are to heat up any wiring and the greater the resulting resistance in the wiring. Turbines are most efficient when they have been operating continuously and are up to temperature. They don’t do on and off well, nor do they like to change speed (high thermal mass and high rotational inertia).

This is more than a mere American Chopper–style makeover. Goodwin’s experiments point to a radically cleaner and cheaper future for the American car. The numbers are simple: With a $5,000 bolt-on kit he co-engineered–the poor man’s version of a Goodwin conversion–he can immediately transform any diesel vehicle to burn 50% less fuel and produce 80% fewer emissions.

There is a reason why diesel automobiles are hard to buy in California.. they are not legal because of emissions (NOx). You have to buy one from someone who brings the vehicles into California and has held on to the vehicle for at least a year. There is only one diesel passenger car that has made it past California’s auto emissions standards(that I know of), the Volkswagen TDI. Mercedes’ BlueTec may also pass CA passenger car emissions. Yes, emissions from a current diesel are lower than a 1960 Lincoln or probably a 1987 Wagoneer, but not current passenger cars..

Putting a diesel engine in the Hummer, however, required Goodwin to crack GM’s antitheft system, which makes it a pain to swap out the engine….

This is very true.. and annoying to anyone wanting to use these diesel engines in a ‘project’. The engine he is talking about here is the LBZ variant Duramax.

PS: Instead of trying to worry about getting Hydrogen fuel for the diesel combo engine.. use Propane (8 hydrogens to 3 carbons) or Methane (4 hydrogens to 1 carbon). You should get almost the same effect. NOTE: Natural gas is largely Methane. A lot more plentiful and cheaper to get than raw H2 (Hydrogen).

[ucodegen]

I was struck by that also. But it actually might be a realistic figure. I’m more than a little familiar with the challenges of hillside development. (We built a companion unit on a sloped hill.) I assume this “grading and design” included the following:

I was wondering about that.. but I have also built on a hillside, and there are two areas you get really hit, but not this bad. If you are keeping with fairly ‘standard’ construction and standard building code, these costs are severely reduced. The soils engineer was not that much of a problem for us, though we did multiple perk tests(septic in that area) and had the soils engineer out as we were drilling the holes for the perk (this way he can look at the drill tailings). The work I was dealing with was where the house was on a slope, hitting bedrock on one side at 2 feet. This meant that the whole house had to be on bedrock (foundation flex issues). We had to go down over 8 feet on the other side of the house (thankfully the backhoe with the extending boom could just reach the bedrock on that side, but it was touch and go. 9 cubic yards of concrete in one corner 8-( .).

The last kicks in (OSHA) if there are footings of a certain depth or if retaining walls are a certain height. 5 or 6 feet from top of wall to bottom of footing. If you’re building on a hillside, you have big retaining walls to secure the building pad.

Did one of those two. House was dug into hillside, slope intersected at 10 feet for almost the entire width of the house. ‘Retaining wall’ was also back wall of house for the first story.

With 3 houses on similar situations above, we didn’t hit $250k(inflation adjusted) on the total..

Considering what I read about the kids right before my post.. I wonder if the parents are the type of people who keep changing their mind on the design and layout, and try to change the grading plan when the dozers are already there and working. Great way to run up the costs.. (when building a house, got to get a plan and stick to it).

[ucodegen]

I was struck by that also. But it actually might be a realistic figure. I’m more than a little familiar with the challenges of hillside development. (We built a companion unit on a sloped hill.) I assume this “grading and design” included the following:

I was wondering about that.. but I have also built on a hillside, and there are two areas you get really hit, but not this bad. If you are keeping with fairly ‘standard’ construction and standard building code, these costs are severely reduced. The soils engineer was not that much of a problem for us, though we did multiple perk tests(septic in that area) and had the soils engineer out as we were drilling the holes for the perk (this way he can look at the drill tailings). The work I was dealing with was where the house was on a slope, hitting bedrock on one side at 2 feet. This meant that the whole house had to be on bedrock (foundation flex issues). We had to go down over 8 feet on the other side of the house (thankfully the backhoe with the extending boom could just reach the bedrock on that side, but it was touch and go. 9 cubic yards of concrete in one corner 8-( .).

The last kicks in (OSHA) if there are footings of a certain depth or if retaining walls are a certain height. 5 or 6 feet from top of wall to bottom of footing. If you’re building on a hillside, you have big retaining walls to secure the building pad.

Did one of those two. House was dug into hillside, slope intersected at 10 feet for almost the entire width of the house. ‘Retaining wall’ was also back wall of house for the first story.

With 3 houses on similar situations above, we didn’t hit $250k(inflation adjusted) on the total..

Considering what I read about the kids right before my post.. I wonder if the parents are the type of people who keep changing their mind on the design and layout, and try to change the grading plan when the dozers are already there and working. Great way to run up the costs.. (when building a house, got to get a plan and stick to it).

[ucodegen]

I was struck by that also. But it actually might be a realistic figure. I’m more than a little familiar with the challenges of hillside development. (We built a companion unit on a sloped hill.) I assume this “grading and design” included the following:

I was wondering about that.. but I have also built on a hillside, and there are two areas you get really hit, but not this bad. If you are keeping with fairly ‘standard’ construction and standard building code, these costs are severely reduced. The soils engineer was not that much of a problem for us, though we did multiple perk tests(septic in that area) and had the soils engineer out as we were drilling the holes for the perk (this way he can look at the drill tailings). The work I was dealing with was where the house was on a slope, hitting bedrock on one side at 2 feet. This meant that the whole house had to be on bedrock (foundation flex issues). We had to go down over 8 feet on the other side of the house (thankfully the backhoe with the extending boom could just reach the bedrock on that side, but it was touch and go. 9 cubic yards of concrete in one corner 8-( .).

The last kicks in (OSHA) if there are footings of a certain depth or if retaining walls are a certain height. 5 or 6 feet from top of wall to bottom of footing. If you’re building on a hillside, you have big retaining walls to secure the building pad.

Did one of those two. House was dug into hillside, slope intersected at 10 feet for almost the entire width of the house. ‘Retaining wall’ was also back wall of house for the first story.

With 3 houses on similar situations above, we didn’t hit $250k(inflation adjusted) on the total..

Considering what I read about the kids right before my post.. I wonder if the parents are the type of people who keep changing their mind on the design and layout, and try to change the grading plan when the dozers are already there and working. Great way to run up the costs.. (when building a house, got to get a plan and stick to it).

[ucodegen]

I was struck by that also. But it actually might be a realistic figure. I’m more than a little familiar with the challenges of hillside development. (We built a companion unit on a sloped hill.) I assume this “grading and design” included the following:

I was wondering about that.. but I have also built on a hillside, and there are two areas you get really hit, but not this bad. If you are keeping with fairly ‘standard’ construction and standard building code, these costs are severely reduced. The soils engineer was not that much of a problem for us, though we did multiple perk tests(septic in that area) and had the soils engineer out as we were drilling the holes for the perk (this way he can look at the drill tailings). The work I was dealing with was where the house was on a slope, hitting bedrock on one side at 2 feet. This meant that the whole house had to be on bedrock (foundation flex issues). We had to go down over 8 feet on the other side of the house (thankfully the backhoe with the extending boom could just reach the bedrock on that side, but it was touch and go. 9 cubic yards of concrete in one corner 8-( .).

The last kicks in (OSHA) if there are footings of a certain depth or if retaining walls are a certain height. 5 or 6 feet from top of wall to bottom of footing. If you’re building on a hillside, you have big retaining walls to secure the building pad.

Did one of those two. House was dug into hillside, slope intersected at 10 feet for almost the entire width of the house. ‘Retaining wall’ was also back wall of house for the first story.

With 3 houses on similar situations above, we didn’t hit $250k(inflation adjusted) on the total..

Considering what I read about the kids right before my post.. I wonder if the parents are the type of people who keep changing their mind on the design and layout, and try to change the grading plan when the dozers are already there and working. Great way to run up the costs.. (when building a house, got to get a plan and stick to it).

[ucodegen]

I was struck by that also. But it actually might be a realistic figure. I’m more than a little familiar with the challenges of hillside development. (We built a companion unit on a sloped hill.) I assume this “grading and design” included the following:

I was wondering about that.. but I have also built on a hillside, and there are two areas you get really hit, but not this bad. If you are keeping with fairly ‘standard’ construction and standard building code, these costs are severely reduced. The soils engineer was not that much of a problem for us, though we did multiple perk tests(septic in that area) and had the soils engineer out as we were drilling the holes for the perk (this way he can look at the drill tailings). The work I was dealing with was where the house was on a slope, hitting bedrock on one side at 2 feet. This meant that the whole house had to be on bedrock (foundation flex issues). We had to go down over 8 feet on the other side of the house (thankfully the backhoe with the extending boom could just reach the bedrock on that side, but it was touch and go. 9 cubic yards of concrete in one corner 8-( .).

The last kicks in (OSHA) if there are footings of a certain depth or if retaining walls are a certain height. 5 or 6 feet from top of wall to bottom of footing. If you’re building on a hillside, you have big retaining walls to secure the building pad.

Did one of those two. House was dug into hillside, slope intersected at 10 feet for almost the entire width of the house. ‘Retaining wall’ was also back wall of house for the first story.

With 3 houses on similar situations above, we didn’t hit $250k(inflation adjusted) on the total..

Considering what I read about the kids right before my post.. I wonder if the parents are the type of people who keep changing their mind on the design and layout, and try to change the grading plan when the dozers are already there and working. Great way to run up the costs.. (when building a house, got to get a plan and stick to it).

[ucodegen]

Talk about blowing an opportunity, according to the article,they had 290k in savings when they decided to lay down their bets.

Actually, it looks like they never had $290k in savings.. read carefully from the article quoted:

With help from Steve’s stepfather and a bank loan, they came up with $290,000 for the property in Murrieta on which they planned to build their house.

Proceeds from a bank loan is not savings… neither is a loan from “Steve’s stepfather” which it also seems that the author of the article misses, because the author then says:

They spent $250,000 of their savings on design and grading.

Again.. a loan is not savings!! That is also a lot of money for design and grading.. are they trying to grade the entire 5.6 acres? The fact that they were jumping from mobile home to condo, to condo to try to fit the family in tells me that they did not have savings nor the income.

They spent 15 years moving from mobile home to condo to condo, trying to contain their growing family

Never use peak income to get a feeling of what you could afford…. I wouldn’t be surprised if $15,000 was a one month only (otherwise, why would you be doing the mobile home to condo jump routines combined calling a loan as savings..?).
Even when things started going bad, they had a chance to save a part. If they let the big house go and kept Sherry Lane, bankruptcy could have helped save the smaller house… but they had to keep the bigger house, couldn’t let go of the anchor as it weighed them down.
Um.. another strange statement:

When the construction loan for the custom house converted to a mortgage, the interest rate leapt to 8.5 percent.

Construction loans carry higher interest rates than mortgages because they are considered only partially secured (minimal value in the partially constructed structure until complete and past inspection – secured by the land only). I doubt that there was an interest rate increase, but I would not be surprised that it converted to amortizing.

Finally, it looks like they got a loan mod and then bailed on it. They should have kept paying the lower amount until it was ironed out. Defaulting on a trial mod is a guaranteed way to get foreclosed on..

They had a trial loan modification that lowered their $5,200 monthly payment to $3,000.

But after making three payments, no one from JPMorgan Chase & Co., which managed the mortgage, would send them the paperwork to make the loan modification permanent.

“They just don’t return calls,” Steve said. “I’ve called them 10 times. We’re filling out the paperwork again now, for the fifth time.”

With no paperwork for a permanent modification and no income, Steve and Lisa stopped making any payments, sending them into default.

Let me see.. no income. Maybe that is the real reason they stopped paying, and why the banks were nervous on completing the paperwork for the modification?

So in summary, they had been living from mobile home, to condo — as renters. Their income spiked because their income was tied to the construction business. Because they were feeling flush, got a loan from the stepfather and a bank loan for $290k and called it savings. Because they now had large savings and a growing income.. had to go no expense spared on their dream home and burned through $250k just on design and grading. Still feeling flush, they decided to speculate on the market and bought another house while their dream home was being built.

I don’t feel sorry for these folks.. they created their problems. They had many chances to avoid it. If they had stayed in the condo renting role, that spike of income could of gone to real savings instead of calling a loan ‘savings’. This real saving would have carried them through the lean times.

[ucodegen]

Talk about blowing an opportunity, according to the article,they had 290k in savings when they decided to lay down their bets.

Actually, it looks like they never had $290k in savings.. read carefully from the article quoted:

With help from Steve’s stepfather and a bank loan, they came up with $290,000 for the property in Murrieta on which they planned to build their house.

Proceeds from a bank loan is not savings… neither is a loan from “Steve’s stepfather” which it also seems that the author of the article misses, because the author then says:

They spent $250,000 of their savings on design and grading.

Again.. a loan is not savings!! That is also a lot of money for design and grading.. are they trying to grade the entire 5.6 acres? The fact that they were jumping from mobile home to condo, to condo to try to fit the family in tells me that they did not have savings nor the income.

They spent 15 years moving from mobile home to condo to condo, trying to contain their growing family

Never use peak income to get a feeling of what you could afford…. I wouldn’t be surprised if $15,000 was a one month only (otherwise, why would you be doing the mobile home to condo jump routines combined calling a loan as savings..?).
Even when things started going bad, they had a chance to save a part. If they let the big house go and kept Sherry Lane, bankruptcy could have helped save the smaller house… but they had to keep the bigger house, couldn’t let go of the anchor as it weighed them down.
Um.. another strange statement:

When the construction loan for the custom house converted to a mortgage, the interest rate leapt to 8.5 percent.

Construction loans carry higher interest rates than mortgages because they are considered only partially secured (minimal value in the partially constructed structure until complete and past inspection – secured by the land only). I doubt that there was an interest rate increase, but I would not be surprised that it converted to amortizing.

Finally, it looks like they got a loan mod and then bailed on it. They should have kept paying the lower amount until it was ironed out. Defaulting on a trial mod is a guaranteed way to get foreclosed on..

They had a trial loan modification that lowered their $5,200 monthly payment to $3,000.

But after making three payments, no one from JPMorgan Chase & Co., which managed the mortgage, would send them the paperwork to make the loan modification permanent.

“They just don’t return calls,” Steve said. “I’ve called them 10 times. We’re filling out the paperwork again now, for the fifth time.”

With no paperwork for a permanent modification and no income, Steve and Lisa stopped making any payments, sending them into default.

Let me see.. no income. Maybe that is the real reason they stopped paying, and why the banks were nervous on completing the paperwork for the modification?

So in summary, they had been living from mobile home, to condo — as renters. Their income spiked because their income was tied to the construction business. Because they were feeling flush, got a loan from the stepfather and a bank loan for $290k and called it savings. Because they now had large savings and a growing income.. had to go no expense spared on their dream home and burned through $250k just on design and grading. Still feeling flush, they decided to speculate on the market and bought another house while their dream home was being built.

I don’t feel sorry for these folks.. they created their problems. They had many chances to avoid it. If they had stayed in the condo renting role, that spike of income could of gone to real savings instead of calling a loan ‘savings’. This real saving would have carried them through the lean times.

[ucodegen]

Talk about blowing an opportunity, according to the article,they had 290k in savings when they decided to lay down their bets.

Actually, it looks like they never had $290k in savings.. read carefully from the article quoted:

With help from Steve’s stepfather and a bank loan, they came up with $290,000 for the property in Murrieta on which they planned to build their house.

Proceeds from a bank loan is not savings… neither is a loan from “Steve’s stepfather” which it also seems that the author of the article misses, because the author then says:

They spent $250,000 of their savings on design and grading.

Again.. a loan is not savings!! That is also a lot of money for design and grading.. are they trying to grade the entire 5.6 acres? The fact that they were jumping from mobile home to condo, to condo to try to fit the family in tells me that they did not have savings nor the income.

They spent 15 years moving from mobile home to condo to condo, trying to contain their growing family

Never use peak income to get a feeling of what you could afford…. I wouldn’t be surprised if $15,000 was a one month only (otherwise, why would you be doing the mobile home to condo jump routines combined calling a loan as savings..?).
Even when things started going bad, they had a chance to save a part. If they let the big house go and kept Sherry Lane, bankruptcy could have helped save the smaller house… but they had to keep the bigger house, couldn’t let go of the anchor as it weighed them down.
Um.. another strange statement:

When the construction loan for the custom house converted to a mortgage, the interest rate leapt to 8.5 percent.

Construction loans carry higher interest rates than mortgages because they are considered only partially secured (minimal value in the partially constructed structure until complete and past inspection – secured by the land only). I doubt that there was an interest rate increase, but I would not be surprised that it converted to amortizing.

Finally, it looks like they got a loan mod and then bailed on it. They should have kept paying the lower amount until it was ironed out. Defaulting on a trial mod is a guaranteed way to get foreclosed on..

They had a trial loan modification that lowered their $5,200 monthly payment to $3,000.

But after making three payments, no one from JPMorgan Chase & Co., which managed the mortgage, would send them the paperwork to make the loan modification permanent.

“They just don’t return calls,” Steve said. “I’ve called them 10 times. We’re filling out the paperwork again now, for the fifth time.”

With no paperwork for a permanent modification and no income, Steve and Lisa stopped making any payments, sending them into default.

Let me see.. no income. Maybe that is the real reason they stopped paying, and why the banks were nervous on completing the paperwork for the modification?

So in summary, they had been living from mobile home, to condo — as renters. Their income spiked because their income was tied to the construction business. Because they were feeling flush, got a loan from the stepfather and a bank loan for $290k and called it savings. Because they now had large savings and a growing income.. had to go no expense spared on their dream home and burned through $250k just on design and grading. Still feeling flush, they decided to speculate on the market and bought another house while their dream home was being built.

I don’t feel sorry for these folks.. they created their problems. They had many chances to avoid it. If they had stayed in the condo renting role, that spike of income could of gone to real savings instead of calling a loan ‘savings’. This real saving would have carried them through the lean times.

[ucodegen]

Talk about blowing an opportunity, according to the article,they had 290k in savings when they decided to lay down their bets.

Actually, it looks like they never had $290k in savings.. read carefully from the article quoted:

With help from Steve’s stepfather and a bank loan, they came up with $290,000 for the property in Murrieta on which they planned to build their house.

Proceeds from a bank loan is not savings… neither is a loan from “Steve’s stepfather” which it also seems that the author of the article misses, because the author then says:

They spent $250,000 of their savings on design and grading.

Again.. a loan is not savings!! That is also a lot of money for design and grading.. are they trying to grade the entire 5.6 acres? The fact that they were jumping from mobile home to condo, to condo to try to fit the family in tells me that they did not have savings nor the income.

They spent 15 years moving from mobile home to condo to condo, trying to contain their growing family

Never use peak income to get a feeling of what you could afford…. I wouldn’t be surprised if $15,000 was a one month only (otherwise, why would you be doing the mobile home to condo jump routines combined calling a loan as savings..?).
Even when things started going bad, they had a chance to save a part. If they let the big house go and kept Sherry Lane, bankruptcy could have helped save the smaller house… but they had to keep the bigger house, couldn’t let go of the anchor as it weighed them down.
Um.. another strange statement:

When the construction loan for the custom house converted to a mortgage, the interest rate leapt to 8.5 percent.

Construction loans carry higher interest rates than mortgages because they are considered only partially secured (minimal value in the partially constructed structure until complete and past inspection – secured by the land only). I doubt that there was an interest rate increase, but I would not be surprised that it converted to amortizing.

Finally, it looks like they got a loan mod and then bailed on it. They should have kept paying the lower amount until it was ironed out. Defaulting on a trial mod is a guaranteed way to get foreclosed on..

They had a trial loan modification that lowered their $5,200 monthly payment to $3,000.

But after making three payments, no one from JPMorgan Chase & Co., which managed the mortgage, would send them the paperwork to make the loan modification permanent.

“They just don’t return calls,” Steve said. “I’ve called them 10 times. We’re filling out the paperwork again now, for the fifth time.”

With no paperwork for a permanent modification and no income, Steve and Lisa stopped making any payments, sending them into default.

Let me see.. no income. Maybe that is the real reason they stopped paying, and why the banks were nervous on completing the paperwork for the modification?

So in summary, they had been living from mobile home, to condo — as renters. Their income spiked because their income was tied to the construction business. Because they were feeling flush, got a loan from the stepfather and a bank loan for $290k and called it savings. Because they now had large savings and a growing income.. had to go no expense spared on their dream home and burned through $250k just on design and grading. Still feeling flush, they decided to speculate on the market and bought another house while their dream home was being built.

I don’t feel sorry for these folks.. they created their problems. They had many chances to avoid it. If they had stayed in the condo renting role, that spike of income could of gone to real savings instead of calling a loan ‘savings’. This real saving would have carried them through the lean times.

[ucodegen]

Talk about blowing an opportunity, according to the article,they had 290k in savings when they decided to lay down their bets.

Actually, it looks like they never had $290k in savings.. read carefully from the article quoted:

With help from Steve’s stepfather and a bank loan, they came up with $290,000 for the property in Murrieta on which they planned to build their house.

Proceeds from a bank loan is not savings… neither is a loan from “Steve’s stepfather” which it also seems that the author of the article misses, because the author then says:

They spent $250,000 of their savings on design and grading.

Again.. a loan is not savings!! That is also a lot of money for design and grading.. are they trying to grade the entire 5.6 acres? The fact that they were jumping from mobile home to condo, to condo to try to fit the family in tells me that they did not have savings nor the income.

They spent 15 years moving from mobile home to condo to condo, trying to contain their growing family

Never use peak income to get a feeling of what you could afford…. I wouldn’t be surprised if $15,000 was a one month only (otherwise, why would you be doing the mobile home to condo jump routines combined calling a loan as savings..?).
Even when things started going bad, they had a chance to save a part. If they let the big house go and kept Sherry Lane, bankruptcy could have helped save the smaller house… but they had to keep the bigger house, couldn’t let go of the anchor as it weighed them down.
Um.. another strange statement:

When the construction loan for the custom house converted to a mortgage, the interest rate leapt to 8.5 percent.

Construction loans carry higher interest rates than mortgages because they are considered only partially secured (minimal value in the partially constructed structure until complete and past inspection – secured by the land only). I doubt that there was an interest rate increase, but I would not be surprised that it converted to amortizing.

Finally, it looks like they got a loan mod and then bailed on it. They should have kept paying the lower amount until it was ironed out. Defaulting on a trial mod is a guaranteed way to get foreclosed on..

They had a trial loan modification that lowered their $5,200 monthly payment to $3,000.

But after making three payments, no one from JPMorgan Chase & Co., which managed the mortgage, would send them the paperwork to make the loan modification permanent.

“They just don’t return calls,” Steve said. “I’ve called them 10 times. We’re filling out the paperwork again now, for the fifth time.”

With no paperwork for a permanent modification and no income, Steve and Lisa stopped making any payments, sending them into default.

Let me see.. no income. Maybe that is the real reason they stopped paying, and why the banks were nervous on completing the paperwork for the modification?

So in summary, they had been living from mobile home, to condo — as renters. Their income spiked because their income was tied to the construction business. Because they were feeling flush, got a loan from the stepfather and a bank loan for $290k and called it savings. Because they now had large savings and a growing income.. had to go no expense spared on their dream home and burned through $250k just on design and grading. Still feeling flush, they decided to speculate on the market and bought another house while their dream home was being built.

I don’t feel sorry for these folks.. they created their problems. They had many chances to avoid it. If they had stayed in the condo renting role, that spike of income could of gone to real savings instead of calling a loan ‘savings’. This real saving would have carried them through the lean times.

[ucodegen]

401K for a down on a house

1) You can borrow against a 401K (depending upon plan structure) and use the proceeds of that borrowing to use as a down payment for a house. The interest paid on the 401K loan will go back into your 401K, but that interest will not be tax deductible, it will be post tax as will principal payments against that 401K loan. My understanding is that during that period that you have the loan out.. you can’t use the amount for investing in the 401K because it will be tied up in a loan to yourself.
*) Risks.. if you change jobs or get laid off, the amount that was borrowed has to be paid back in very short order (either 30 or 60 days.. before it is considered a ‘distribution’ and you get hit with taxes)

2) Take a distribution.. taxed at income rate AND 10% penalty.

3) Hardship case can prevent fees, and possibly income taxes.. but it will be very difficult to prove if it is being used as a down payment on a house.

** There may be other ways to use a 401K in this manner, but I don’t know what they are off hand.

[ucodegen]

401K for a down on a house

1) You can borrow against a 401K (depending upon plan structure) and use the proceeds of that borrowing to use as a down payment for a house. The interest paid on the 401K loan will go back into your 401K, but that interest will not be tax deductible, it will be post tax as will principal payments against that 401K loan. My understanding is that during that period that you have the loan out.. you can’t use the amount for investing in the 401K because it will be tied up in a loan to yourself.
*) Risks.. if you change jobs or get laid off, the amount that was borrowed has to be paid back in very short order (either 30 or 60 days.. before it is considered a ‘distribution’ and you get hit with taxes)

2) Take a distribution.. taxed at income rate AND 10% penalty.

3) Hardship case can prevent fees, and possibly income taxes.. but it will be very difficult to prove if it is being used as a down payment on a house.

** There may be other ways to use a 401K in this manner, but I don’t know what they are off hand.

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