Now let's see if my comment ever gets published.
During my daily blog run, I came across this little gem.
The house price is from 1977... Just to be real here, I ran a Constant Dollar Calculator on that $3,500 from 1977. I wasn't buying that point without something a little stronger. The cost for the house in 2008 dollars came out to $12.452.15. I am not pre-disposed to think that these folks bought a four bedroom house in North Minneapolis in 1977 for less than $12,500. In 1977, one could walk into a dealership and buy a Mustang for just over $6,000... (that would be a 1977 Mustang II King Cobra).
I just have a hard time believing that the price is accurate.
Now that the credibility of the writer is in question, let's talk about the rest of the story...
They needed to do a few things to the house, and pay off some credit card debt, so they got $228,000. Does that seem a touch extreme? Now the house appraises for $174,000, and the writer says that is optimistic. So, there is a good $60,000 in negative equity.
According to the story, the borrowers signed a thick stack of paperwork and never read now understood what they were signing. And then they got a check for a little shy of a quarter of a million dollars. And the implication is that they can't do anything but go into foreclosure because they have a $228,000 mortgage and a house worth less than $174,000.
I want to know what happened to the money.
My point is that I think they could solve this situation by selling some of the stuff they (no doubt) purchased with the proceeds. I would almost be willing to bet money that there are at least two new cars and a flat screen unaccounted for in this deal. Maybe a bass boat and a trip to Hawaii, too. I guess the trip to Hawaii isn't getting returned.
The bank is being punished for their stupidity. Even if this property doesn't go into default, plenty of others are and will. The lenders are and will continue to be on the hook for hundreds of millions of dollars.
I don't think that these folks deserve a free ride or absolute victim status. If the numbers presented in the article are to be believed ($4000 for an appraisal) then one could be sure they are dealing with a sleazy lender... but they still chose to sign the docs without even looking at them... and there wasn't a complaint when they got the money.
I posted similar comments to this blog. They have to wait to be moderated. We'll see if they show up.
Anyone know where I can buy a house for under $12,500?
Unless otherwise noted, all content of this blog is the property of Lane Bailey, ©2012 Lane Bailey.
I'd love to hear from you...
Libby - I think that the writer got the information to back up the point he wanted, and didn't question it. I also like the way he dropped that little comment in at the end, with nothing to say about it, but in a way that he could add the Soprano's "I'm just saying...".
Josh - Definately something amiss in the story.
Marlene - Still no comment posted... They can't be afraid of little ol' me? The problem for me is that the writer doesn't have much credibility with me after trying to sell me on the house being purchased for an unrealistic amount. I don't trust the rest of the article to be factual or unbiased.
Larry - I wonder if we indeed have ANY of the story... or if it is a real story.