Monday, April 7, 2008

Would you buy a house from this Realtor?

Here's another incredible story of a couple about to lose their house, and the amazing part is that the woman is a Realtor and should know better.

A larger than life mortgage.

The analyst kicks in at about 2 min 45 seconds into the story, and basically lays into them.

The cliff notes version:

  • Couple buys house in Livermore CA for $1.5M
  • Couple elects to take a negative amortization ARM, and only pays $2800 a month
  • Full mortgage payment is equal to 70% of their gross income
  • Couple racks up an additional $100k in finance charges on $1M loan, which is added to principle
  • Principle reaches 110% of original loan value and bank requires them to pay full monthly payment.
  • Payment jumps to $8000 a month
  • Couple freaks out, asks to renegotiate loan at 2% for 40 years!
  • Bank offers 5.75% for 38 years, or a $6000 payment
  • Couple still can't afford mortgage at a rate most would be thrilled with

Again this couple wants us to feel sorry for them, but in the video she admits freely that she didn't read the loan paperwork. I also believe they were speculating, as even if they refinance to a 38 year fixed loan (as the bank offers) they still can't afford the mortgage.

I'm scared to think of how many customers she offered "advice" when she obviously has no clue what she's doing herself.

The value of this house has now fallen about 30% to roughly $1M, so they're looking at foreclosure, but vow to "fight it". Right.

I swear, I couldn't make up stories this crazy. I'm just not that creative!


Perplexed said...

Ever notice how many condos offered for sale state that the seller is a Realtor?

They bought into their own sales talk.

bearlee said...

I saw this on the Early Show this a.m. The couple appears to be in their late 50's and should have been wiser! And she gave the sob story that she used her dear Grandmother's inheritance and she'll be damned if the bank takes that from her.

Screw 'em.

Anonymous said...

Since this is a real estate blog: It's principal balance (i.e. main balance, or the funding balance).

Anonymous said...

perplexed: Do you have examples? Curious.

Perplexed said...

Current Mult County Craig’s list search “condo realtor”
Implied in and

Search of core area under $275 500+ w parking on Scott website (27 hits)
Seller is realtor: MLS 8016400
Seller related to realtor: MLS 7106124

I don’t have access to MLS any better than the public but I did a search of condos 2006-2008, $200-$700, zips 09 & 10 and noticed at least one seller realtor in the Cambridge, five ‘related’ at the Riverscape and all related at the Pacifica Tower.

One could say that this isn’t a rate higher than the general population since the entry into realtor status is a low test and there are lots of realtors out there but ..

Anonymous said...

Lots of houses too. Pretty scary..