Just when you thought the economy might just be back on the upswing, a story like this pops up…
Denise Tejada bought a house last month at the age of 20, thanks in large part to a loan guaranteed by the Federal Housing Authority…
… Without question, Tejada’s loan is toxic — to her and to the taxpayers who are backing the loan. Her house cost $155,000. Tejada’s loan was apparently made on a micro-down payment of just 3.5%, the minimum down payment to qualify for an FHA loan. On top of this, however, she got an additional government backed loan to make improvements. Her total loans amount to $183,0000. In short, she was immediately underwater on her new house.
The monthly payments on her debt amount to $1328. Her income is $2470, leaving her with just $285 a week to live on. She’s paying 54% of her income to make the mortgage payments. She earns that income by holding down one full time and two part time jobs. Obviously, this woman has a strong work ethic. But it also means her income is precarious…
“Precarious”? Ya think? Did we learn nothing in the last 12 months? Whoever is writing & approving loans like this ought to be slapped. Hard.
Reading that article, it’s quite obvious that woman is delusional. She truly believes her house is worth $100K more than she paid one month ago, and she plans to buy more houses as “investments.”
It’s tough to help people who are operating in a different plane of reality.
The problem is less that people are “operating in a different plane of reality’ than that the lenders are willing to make financing happen for them. This woman should never have been approved for the first mortgage, much less the second.
How very liberal of you to blame the institution, rather than the individual. 🙂
For the housing crisis, I lay the blame equally on both sides. Either side could have stopped it — the bankers could have no made stupid loans, and the consumers could have not bought things they couldn’t afford.
Either side could have prevented the mess. Neither did. And here we are.
An insult?!?! Watch it, buster; them’s fightin’ words! 😉
Actually, there are more than two parties that bear culpability here; don’t leave the Federal Government out of it. Do some reading on the Community Reinvestment Act and the effect that has on lending practices. Also look at the way that Fannie Mae & Freddie Mac effectively relieve the banks of any risk by writing loans like the ones in this story. The likes of Barney Frank, Bill Clinton & Jimmy Carter are the brainiacs behind all that… Does that redeem my Conservative credentials a little? 😀