American Nightmare - Whose fault is it?

[NW-Bound]

On another thread, I wondered how the American Dream became the American Nightmare.

The AARP bulletin (Oct 2008 ) I just received has an article on the new homeless - "ordinary" middle class people who are now sleeping in their car. With all the recent turmoil and more bad news promising to come, of course I got interested.

So, I immediately read this article, which posts a picture of a surely ordinarily looking middle-class woman and a city social worker, sitting on the tail gate of her SUV parked at a city park, where she spends her nights.

"I figured I'd always have money", says the woman, 55, who preferred to remain anonymous and recently owned two homes worth nearly $2million. "I never dreamed this woud happen". Unable to sell her homes or shoulder the $10,000-a-month mortgage payments, she declared bankruptcy in 2005. A year later, she lost both properties, becoming an early statistic in America's foreclosure crisis.

What? What was she doing with two expensive homes? By the way, she lives in Santa Barbara, CA. So I reread the preceding paragraph, which explained all.

No one knows she is homeless - not her coworkers at the coffee shop where she earns $8 an hour nor her colleagues at the real estate firm where she spends time each week trying to rebuild a business.

So, this woman was a realtor, trying to flip homes. Obviously, she did not have much equities in these two houses, because she had a tough time unloading them, even in 2005, way before the bubble burst.

Good grief! This is no CRA home mortgage, I don't think! What banker lent her money? Did the guvmint make her banker lend to her?

[Lusitan]

Americans'.

[Sevo]

Secondarily the cause of the present upheaval is linked to government policies that go back to the 1970's at least.

Primarily the fault rests squarely on the shoulders of the American Voter who has never even bothered to learn any history or taken time to even look at the constitution. Consequently the average voter believes in economic magic and the idea that the Cynical Narcissistic B*stards that they keep reelecting are going to look out for them. RANT OFF!

[Fastfade]

Quote:

Originally Posted by Sevo Consequently the average voter believes in economic magic and the idea that the Cynical Narcissistic B*stards that they keep reelecting are going to look out for them. RANT OFF!

True Sevo, but it's not my Congressman that's the problem...it's yours

[Leonidas]

Uncle Warren was on Charlie Rose a couple of weeks ago and he said that people should know better than trying this sort of thing when they don't really know what they're doing. But they are greedy and get jealous when they see somebody else getting rich so they try it themselves. The order of people into money making ideas is Innovators first, followed by Imitators, and finally the Idiots at the end.

[chinaco]

Wow! I guess she bet big and lost. She probably won't gamble with her life's stability again. Reminds me of the many people who took out a HELOC to invest in the market. There was a recent post on the board asking if it was a good time now to take a HELOC and invest in the market. ... what happens of they lose their job and wind up in a cash crunch?

[CuppaJoe]

Where does the reporter get the idea to include this "middle class" lady in a story about the homeless? The "new homeless"? Come on, that's not what we fear when we worry about running out on money:

Subject of the story has a roomy SUV to call home; a job in a coffee shop to bring home the bacon, heck, she probably gets free meals there; and an office to hang her hat and receive phone calls and messages. She parks her home is a nice (probably safe) park in the mild climate of Santa Barbara. Not exactly a hard life, and at age 55, has lots of upside potential.

IMO, the real story here is: Lazy reporter fails to spend time among the real homeless. Reporter can keep this lady in her rolodex for a follow-up in a couple of years, no need to talk with those without any shelter.

[novaman]

It is the fault of the people who live in this country.

[CuppaJoe]

Here's the link to the AARP story:

No Place to Call Home: Older Homeless in the U.S. - AARP Bulletin Today

[UncleHoney]

Quote:

Originally Posted by NW-Bound "I figured I'd always have money", says the woman, 55, who preferred to remain anonymous and recently owned two homes worth nearly $2million. "I never dreamed this woud happen". Unable to sell her homes or shoulder the $10,000-a-month mortgage payments, she declared bankruptcy in 2005. A year later, she lost both properties, becoming an early statistic in America's foreclosure crisis.

I think I see the problem. If she did the figures I'm sure any fourth grade student good at math could point out where she made the error.

Her failure was she didn't figure anything and neither did the mortgage broker that gave her the loans.

Remember the part about always showing your work?

Both are GUILTY. Pay the clerk, next case please.

One of those cases where "Everything is all right as long as everything is all right."

[al_bundy]

Quote:

Originally Posted by NW-Bound On another thread, I wondered how the American Dream became the American Nightmare. The AARP bulletin (Oct 2008 ) I just received has an article on the new homeless - "ordinary" middle class people who are now sleeping in their car. With all the recent turmoil and more bad news promising to come, of course I got interested. So, I immediately read this article, which posts a picture of a surely ordinarily looking middle-class woman and a city social worker, sitting on the tail gate of her SUV parked at a city park, where she spends her nights. "I figured I'd always have money", says the woman, 55, who preferred to remain anonymous and recently owned two homes worth nearly $2million. "I never dreamed this woud happen". Unable to sell her homes or shoulder the $10,000-a-month mortgage payments, she declared bankruptcy in 2005. A year later, she lost both properties, becoming an early statistic in America's foreclosure crisis. What? What was she doing with two expensive homes? By the way, she lives in Santa Barbara, CA. So I reread the preceding paragraph, which explained all. No one knows she is homeless - not her coworkers at the coffee shop where she earns $8 an hour nor her colleagues at the real estate firm where she spends time each week trying to rebuild a business. So, this woman was a realtor, trying to flip homes. Obviously, she did not have much equities in these two houses, because she had a tough time unloading them, even in 2005, way before the bubble burst. Good grief! This is no CRA home mortgage, I don't think! What banker lent her money? Did the guvmint make her banker lend to her?

the housing bubble did burst in 2005

homes didn't drop in value, but that was the first year homes went up less than the amount required to make money flipping a property after all selling costs are paid

[Rustic23]

Bad news sells! The press love to find people like this and then portray them as the norm rather than an exception. When was the last time you saw a story of a 55 year old woman, with two kids, that had a 6 month emergency fund in the bank, and a headline

'WHY DON'T OLDER AMERICANS HAVE TO SLEEP IN THEIR CARS'

I won't hold my breath while waiting for AARP to publish.

[NW-Bound]

CuppaJoe,

Thx for sharing the link with the forum. I searched but couldn't find it.

Quote:

Originally Posted by al_bundy ... 2005... was the first year homes went up less than the amount required to make money flipping a property after all selling costs are paid

That's why I suspected she did not have any equity, else would be able to cut price and get out early enough to salvage what she has left.

Somebody, please tell me how a banker/underwriter would make a zero-down $2M loan to a person in a job with such high variation in income. The only reason I can think of is that he would be able to pass on the loan to unsuspecting bankers in Iceland, Belgium, China (put your favorite country here), via Wall Street.

Please enlighten me.

PS. By the way, from what I've read, these foreigners are mad like hell, and they won't take it anymore. Perhaps not even our FERN (Federal Reserve Notes). No more LCD TVs, no more Gucci bags... Tell me how our living of standards will not decline, even for forum members who are LBYMs. Collectively, our means have been reduced by our countrymen/women action.

[CuppaJoe]

Quote:

Originally Posted by NW-Bound .... Somebody, please tell me how a banker/underwriter would make a zero-down $2M loan to a person in a job with such high variation in income....

"Lier loans"? I'm sure someone will come along with a better response.

Isn't she the one with two houses valued at $2 million, I'm thinking the two loans may have each been well under $1 million?

[NW-Bound]

I forgot to divide $2M by two. Still a lot of money. Houses in CA were expensive but $1M was still above the median, I think.

About liar's loan, it could not be done without an eyewink from the loan originator, processor, underwriter.

My point is while there are always gamblers like this woman, there are many other enablers in the system to allow similar harebrained get-rich-quick schemes like hers to implode the world economy.

[tryan]

No need to lie ... go with a NINA (no income, no assets) loan.

[Tadpole]

The fault is the same as always - the free lunch crowd. That seems to be anyone with the price of a free lunch asset worldwide.

[NW-Bound]

Quote:

Originally Posted by Rustic23 Wall Street's Shadow Market Video - CBSNews.com Best video to explain this I have seen.

I have had some discussions with Rustic23 on this subject on another thread. He found a link, which he shared, and I am copying here for anyone who likes to learn a bit more about why we are in this pickle.

[freebird5825]

Quote:

Originally Posted by NW-Bound The AARP bulletin (Oct 2008 ) I just received has an article on the new homeless - "ordinary" middle class people who are now sleeping in their car. With all the recent turmoil and more bad news promising to come, of course I got interested. So, I immediately read this article, which posts a picture of a surely ordinarily looking middle-class woman and a city social worker, sitting on the tail gate of her SUV parked at a city park, where she spends her nights.

i read the same article. i think i felt sorry for her for about 4.2 nanoseconds.
you want to see homeless? take the Amtrak into NYC and just before you enter Manhattan, look out the window at the cardboard box house "developments" under the highway overpasses. oh, and make sure it's winter so you get the proper effect.

[NW-Bound]

Yep. I do not know who would have sympathy for her. The plight of another woman mentioned in the article was not so self-inflicted. Yet this second woman did not want to leave the expensive Santa Barbara environment, although she could no longer afford the $2K+ per month rent. If people prefer to sleep in their car, rather than move to another lower-cost location, what do we do to help?