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GREAT IDEA, WIFE SCREWED IT UP!
From Kiplinger. “Mike Franey, a mortgage loan officer in Bakersfield, Cal., saw trouble coming. For years, swarms of investors descended on his hometown, buying and flipping some of the cheapest housing in the state, driving up the area’s median home price from $99,000 in 2001 to $280,000 in 2006.” “Franey feared that when the investors left for greener pastures, prices would decline and he and his wife, might lose the equity in their home just as they approached retirement.” “‘I said, ‘We need to sell right now and rent until we can buy again cheaply,’ says Mike.” “The Franeys sold in May 2006, just as prices peaked, for $577,000, nearly twice what they had paid in 2002…and they moved into a much smaller rental home.” “But for Mira, owning a home meant security. She hated renting and wanted to buy again. So the Franeys purchased a four-bedroom, two-bath house in a nice neighborhood for $420,000. They used an ‘alt doc’ loan, one that lets borrowers state their income without proving it.” “For six months, Mike didn’t make a single loan, and his six-figure income dropped by half in 2006. Struggling to make their mortgage payments of $3,200 a month and running out of savings, the couple tried to sell the home last fall but had no takers.” “Mike approached their lender, Countrywide Financial, and offered the deed in lieu of foreclosure. Countrywide refused to do anything until the Franeys were delinquent, a common practice among lenders for legal and tax reasons.” “The Franeys missed their first mortgage payment in January, and in February they listed the home for sale at $368,500. Countrywide agreed to accept a ’short sale,’ meaning it would cancel the couple’s debt in exchange for the proceeds of the sale. In early May, the couple lost a buyer who had offered $350,000 but then found a better deal while everyone waited for Countrywide to approve the sale.” “The house is back on the market and now stands vacant. The Franeys moved into a rental with an option to buy in three years. By then, Mike’s loan underwriter tells him, he’ll be able to get a mortgage again, as his credit score and his income improve.” HTTP://BAKERSFIELDBUBBLE.BLOGSPOT.COM
27 comments from 11 users
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posted by
johnburnssucks
on Jun 23, 2007 at 02:31 PM
"Sometimes the surf is up, and sometimes the surf is down." - Gilligan
posted by
TomW
on Jun 23, 2007 at 02:37 PM
You ain't seen nothing yet. The 3 year ARMs are just starting to flip now and foreclosure rates were up 90% last month.
posted by
anonymous
on Jun 23, 2007 at 03:24 PM
"Sometimes the surf is up, and sometimes the surf is down." - Gilligan, so if you drown it is just collateral damage, free market style?
posted by
Bakersfieldbubble
on Jun 23, 2007 at 03:35 PM
TomW- Agree. There is still $2.0 trillion of loans to reset in the next 1 1/2 years.
posted by
NancyII
on Jun 24, 2007 at 07:53 AM
It may seem petty considering the seriousness of the market right now but I'm not crazy about the title above. It was the WIFE'S fault? Correct me if I'm wrong but doesn't it take two to make a mortgage. (play on words there.) This is coming as no surprise to most of us who sat back and watched. Outside the loss of so many families homes, the shame of it is that the housing prices will never come back down to where they were before this insanity. There will still be a lot more families who will never be able to afford a home thanks to the incredible rise in the market. It's no secret that increases in income in this area never came close to matching the increase in the cost of housing posted by
TomW
on Jun 24, 2007 at 08:26 AM
Well, Nancy, the only thing worse right now than families not being able to afford homes is if the prices did come back down to where they were.
posted by
NancyII
on Jun 24, 2007 at 08:49 AM
It's all relative though isn't it Tom? Prices coming down would cripple a lot of people and by the same token, would make it possible for others to own. It's like a two edged sword. So much of life it like that. posted by
Sooz58
on Jun 24, 2007 at 08:52 AM
I agree with Nancy that it takes two here. It is obvious that Mike's idea of waiting "until they could afford" was put on the back burner due to the wifes "hate" for renting. But would they be able to afford it with Mike's unstable employment? Changing to a rental is probably the worst thing one can do financially. We had to rent in west central Bakersfield while we awaited our home in Sacramento to sell, and purchase another. Overall the move cost $35,000. Our company which gave the choice relocate or terminate allowed $13,000 for the move. The rental company required 6 months rent paid plus first and last...(WOW!) before even signing the lease agreement....and it was a dump to boot! It isn't fair to blame each other for this financial fiasco. Unless the title was a joke it overlooks the obvious in the blog that both parties agreed every step of the way and signed all the documents together. Holding it against your partner won't help. I think you'all are better off if you stand up and take responsibility, both of you, for what you've done..then move forward. Outside of the future, what else is there? I think it was Yogi Berra who said, "Don't look back you're not going that way." posted by
NancyII
on Jun 24, 2007 at 09:01 AM
Sooz...who in the world required 6 months rent up front? I've never heard of that. You said 6 months paid...did you mean a 6 month lease? Some are requiring 6 mo to a year lease now and as a former rental owner I can understand it. Every rental I've ever had or looked at only required the rent and the deposit which is often equal to one monts rent. In addition to that, I had to pay a $200 non refundable pet deposit which I thought was fair. I've heard of first and last as well as deposit but never more than that. At one time requiring first and last as well as deposit was illegal. I'm not up on the current rental laws so that might have changed. posted by
TomW
on Jun 24, 2007 at 09:06 AM
When I was a property manager, 3 times the rent was the most they could take up front legally, so they'd do first, last and deposit. I think San Francisco has a local ordinance that limits it to 2 1/2 times the rent. If a company asks for 6 months upfront, you should take the form to the BBB.
posted by
Sooz58
on Jun 24, 2007 at 09:38 AM
Hi Nancy and thanks for asking. That was quick! (-0It was RMI Property and Real Estate Management on H Street. We had to pay first last and the entire 6 months rent, cash up front. Yes, it was a lease. The house was off of Hughes 12 or so blocks south of White Ave on Connie Avenue...a 1 block street. Yes, this was completely ridiculous but we were desperate as all get out. As he said, "It was the only game in town", we had to jump on it. There was no extra time. He had work, my daughter had to by law be enrolled in a school. We had no idea how long the home sale in Sacramento and our purchase of a new home here would take. Sooz posted by
TomW
on Jun 24, 2007 at 09:50 AM
Well, Sooz, I'm almost positive that's illegal, but that doesn't really help someone who needs a place to live.
posted by
NancyII
on Jun 24, 2007 at 09:57 AM
Sooz..I don't know how long ago that was but there are several rental agencies in town...that really wasn't the only game in town..they just played on your situation and your unfamilarity with the area. I'm with Tom..I'd still report them. You may have some recourse financially and besides, I HATE seeing crooks get away with fleecing people. posted by
Sooz58
on Jun 24, 2007 at 10:22 AM
You both, Tom & Nancy are very thoughtful and no doubt changes happen for the powerless and possible uneducated due to people such as yourselves. I commend you. However, what is done is done and in the time of need we were able to swing this absurd request. Considering the final outcome we find ourselves about even where the rental is concerned. The cleaning deposit was even returned, and this is a first for me.BTW, I love our new town and our new (new to us) home here. I must say we have come a long way! On our return trip from vacationing in the Pacific Northwest we swung past our old home in our old neighborhood which we left 2 years ago in Sacramento. Built into a showcase with custom coy pond in the back and landscaped privacy, shaded front yard etcetera our old home looks disturbingly stark now. None of the things the new owners said would be done have, and the neighborhood has taken a turn for the worse. As I look at the pool out my office sliding door and listen to the waterfall splashing it's melody into the middle depths while writing this I feel lucky. Thank you for your concerns. Glad to be here, now. Sooz posted by
NancyII
on Jun 24, 2007 at 10:52 AM
I admire your positive attitude Sooz. And one good thing about it was you didn't have to bother with paying rent those 6 months. LOL
posted by
any1
on Jun 24, 2007 at 02:11 PM
My husband has done work for the Franey's and from what he has ever related to me about them I don't believe that Mike would have said what this headline proclaims. I believe the title here is solely from whoever authored this blog. The Franey's are good,decent people and I really hated reading of this misfortune. I pray that the grace of God will shine thru, their ship will be righted and they will be back on an even keel again. Keep faith, Mike and Mira! posted by
anonymous
on Jun 24, 2007 at 02:38 PM
hey bubbleboy (you silly rabbit), do you only focus on the negative media attention to the market? You have to go to Kiplinger to find negative local news?
I notice you have been quiet of late with the positive Californian stories (i.e. Inc Magazine business article, job growth, etc...). On a personal level, may I direct you to the following website: http://www.thesecret.tv/hom... I love people like you. You leave the door of opportunity open for the rest of us..... posted by
anonymous
on Jun 24, 2007 at 03:50 PM
bubbleboy only likes to talk about gloom and doom I think that she wants to find work at a tabloid and be the first to report that "THE SKY IS FALLING!!". bubble boy is chicken little. She wasnt a typo you girl get in the game and off the sidelines. I think I saw david crisp jaywalking the other day maybe you should report that blog girl.
posted by
GrpThink
on Jun 25, 2007 at 09:35 AM
There is still $2.0 trillion of loans to reset in the next 1 1/2 years It's going to get a whole lot uglier real soon.
Bear Stearns Cos. offered $3.2 billion in loans to bail out one of its failing hedge funds, the biggest rescue since 1998, after creditors started seizing assets and investors demanded their money back. Bear Stearns offered to salvage the fund, one of two that made bad bets on collateralized-debt obligations, after creditors including Merrill Lynch & Co. took the funds' CDOs as collateral and started selling them in auctions. An agreement with creditors would prevent a fire sale of the collateral, and help stem a plunge in prices, while potentially increasing the risk to Bear Stearns, the second-biggest underwriter of mortgage bonds.
The $2.5 trillion dollar hedge market is made up of high risk mortgage loans, mostly the ARM loans that are causing the 90% jump in foreclosures. Hold on to your shorts, folks. posted by
mattloch
on Jun 25, 2007 at 10:39 AM
Fingers crossed that the Feds stay the hell out. This would make the S&L bailout look like a simple bartab.For those of you who think you're unaffected by the sub-prime market, I hope you don't own stocks or have a hedge fund as part of your retirement plans...... because you may be working longer than originally planned..... posted by
GrpThink
on Jun 25, 2007 at 10:55 AM
Fingers crossed that the Feds stay the hell out They would have no choice. The economic damage would make 1929 look like a minor correction. And we're seeing the many of same indicators today that were seen just before Black Tuesday. - uneven income distribution It's funny how the Dow is way up today because investors are happy the housing market didn't drop as much as it could have. It's not up on any positive economic news, only that it's not as bad as they thought it could be. posted by
Bakersfieldbubble
on Jun 25, 2007 at 11:51 AM
GrpThink- I have been following the Bear Stearns story for a while now and believe it is the tip of the ice-berg. Once of the best economic blogs out their is Calculated Risk and they have some great writeups on this story. posted by
Bakersfieldbubble
on Jun 25, 2007 at 01:38 PM
http://www.bloomberg.com/ap...
Bear May Have to Save Second Hedge Fund, Merrill Says (Update1) By Christine Harper June 25 (Bloomberg) -- Bear Stearns Cos. may have to salvage the second of its two teetering hedge funds after offering $3.2 billion last week to bail out the first one, Merrill Lynch & Co. analyst Guy Moszkowski said. Investors ``can't rule out'' the chance that Bear Stearns will ``stump up even more for a similar, more-leveraged, fund,'' Moszkowski, who rates the firm a ``buy,'' wrote in a note to clients today. He estimated that the second fund, the Bear Stearns High-Grade Structured Credit Enhanced Leveraged Fund, owes about $7 billion to its financiers. Bear Stearns, the biggest broker to hedge funds, is struggling to keep the funds from collapsing after losses on securities backed by home loans led lenders including Merrill Lynch to demand more collateral. By assuming the loans, New York- based Bear Stearns is protecting the funds' investors while increasing the risk to the firm itself, according to Moszkowski posted by
Bakersfieldbubble
on Jun 25, 2007 at 01:39 PM
``In its two decades as a public company, we do not believe Bear Stearns has faced a situation of this magnitude,'' Moszkowski wrote
posted by
GrpThink
on Jun 25, 2007 at 02:20 PM
believe it is the tip of the ice-berg I wholeheartedly agree. The extent of the damage won't be known until the 3rd and 4th fiscal quarters. I'm already in the process of moving my holdings into low risk bonds and traditional mutual funds until the storm blows over.
Bear May Have to Save Second Hedge Fund, Merrill Says Can't say I didn't see that coming. And it's twice the size of the first fund that failed. You can bet the sphincters of hedge fund managers are collectively tightening. Except for the ones who already know they're in trouble and are hiding the fact from their investors using Enron style accounting. Theirs are tightening for a whole 'nother reason, the SEC investigations into their business practices. I've been following the hedge fund market ever since I received a prospectus from the company I invest with encouraging me to throw some money into them. I politely told them to forget it as I saw the egragoius risks involved as lenders gave out grossly inflated mortgage loans to anyone with a heartbeat. I read an interview two or three years ago from a hedge fund manager and he basically said, sure we know the risks, but because we'll get so big the federal government will have no choice but to bail us out when we get into trouble. The managers will make money, everyone else will be heading to bankruptcy court.
The Dow lost all its gains from this morning and is floating in the negative. I guess someone woke up and told them bad news is bad news regardless of how good it might look. posted by
anonymous
on Jun 25, 2007 at 03:54 PM
O my GOD, THE SKY IS FALLING!!!!!!!!!!!!!!!!!!!!!!!!
posted by
GrpThink
on Jun 25, 2007 at 10:14 PM
Not yet. Or your retirement accounts are invested in these hedge funds.
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