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!

More shady lending practices

Clint featured a story from the Oregonian on his blog today, highlighting shady lending practices at Chase.

Over on Mish's blog, he is also highlighting shady practices at Citigroup. "Dear Citigroup Customer"

The first example doesn't surprise me, as it's calling out past practices. But the second one is just sad. Even after all the bad publicity, write-offs, and shameful business practices it seems that some organizations are still at it.

Portland Not Immune From Foreclosures

The Oregonian has an interesting article about foreclosures in Portland and how they are not only affecting low or moderate income homeowners (article link: Foreclosures move into tony Zip codes)

This confirms my suspicions that most of the foreclosures in Portland will be due to:

1. Speculators getting caught by the bubble bursting and having to sell for a loss

2. Buyers living beyond their means and buying more house than they can afford with risky mortgages

3. Owners tapping into the equity of their house to take out money, and not being able to keep up with the additional payments

I'm seeing more examples of #3 and #1, but I haven't seen too many examples of #2 just yet, but I think they will increase as 2-3 year ARM's reset.