A $103,000 mortgage on an $18,000 shack
Filed under: Real Estate
The Wall Street Journal reports (subscription required) on one of the most flagrant cases of stupid underwriting decisions to have come out of the current mortgage mess:Less than two years ago, Integrity Funding LLC, a local lender, gave a $103,000 mortgage to the owner, Marvene Halterman, an unemployed woman with a long list of creditors and, by her own account, a long history of drug and alcohol abuse. By the time the house went into foreclosure in August, Integrity had sold that loan to Wells Fargo & Co., which had sold it to a U.S. unit of HSBC Holdings PLC, which had packaged it with thousands of other risky mortgages and sold it in pieces to scores of investors.
The Avondale, Arizona house has been declared unfit for human occupancy and and was recently sold for $18,000. This lady hasn't had a job in 13 years. The appraiser claims that his estimate of the property's value was appropriate, but no one has been able to find appropriate comparable sales to justify it.
The story reads like a parody of real estate bubble excess: The borrower was even able to take out more than $10,000 in cash at closing! What makes this case so typical of all this subprime garbage are all the fees that were made by people who had no stake in it: The ironically-named Integrity Funding earned $6,153 in fees for making the loan, and then another $3,090 when it was sold to Wells Fargo. Then Wells Fargo made more when it was sold to HSBC, which also took a cut before dumping it on investors in mortgage backed securities that were inexplicably rated AAA by rating agencies that were somewhere between crooked and incompetent.
Actually, the piece perfectly illustrates the greedy, deceitful practices that has since brought our economy to its knees. It's a great piece of reporting
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Reader Comments (Page 1 of 1)
1-06-2009 @ 1:20PM
Foreclosure buyer said...
Ha! Thats NOTHING! I go to sheriff sales all the time, I just looked at one yesterday that needs demolished...the bank lent him $1.4 Million cash....worth only the land value....another property $1.6 million a toxic dump....another one 1.8million...junk...the house next to it they lent the guy $3million...and the guy just got out of jail for defrauding a bank in NYC out of 1.3million on a mortgage! All 5 of the houses on that cul-de-sac are vacant...bank owned..or bankrupt builder going to be bank owned. Wells Fargo still has all these major Jumbo loans that are no good...they will all be pawned onto the taxpayers this month!!! $500billion in bad loans...fed is buying them at face value! OMFG!! this is totaly an inside deal between congressmen/the fed reserve board and bank executives who are all one and the same family.
I
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1-06-2009 @ 2:30PM
David said...
You think that is bad, this all happened when we had a republican President and a democratic Congress. Now with both a Democratic President and Congress, there is NO checks and measures. Your mattress is the best place for your investments.
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1-06-2009 @ 7:47PM
John Doe said...
Actually this happened when we had a Republican president AND a Republican congress. Democrats haven't been in control of congress that long and Bush consistently vetoed any legislation that would have helped.
Republican greed created this mess. Hopefully we can fix it before it gets any worse.
1-06-2009 @ 2:53PM
Angela said...
I have been selling Real Estate for 15 years and that is horrible that places are pulling that off. At least in Alabama the market is holding on (by a thread) but nothing like that mess bogging down the economy. So sad that we are all paying for it too.
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1-06-2009 @ 3:19PM
D.Fisk said...
I paid 50k for my house in 2001. I owe 65k. I bank did a mond loan. I told them the house isnt worth more than 20k. They did it anyway. They jacked up my payment 100.00 to cover the extra money. Now I really cant afford my house. I wish I could sell it and buy it back for the 20k.
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1-06-2009 @ 3:26PM
Observer said...
Sell the Condo, Buy a Cheap Mobile Home, Pay Lot Rent, Drive a Inexpensive Car, The New American Dream. Proud to be a Democrat, Proud to be an American.
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1-06-2009 @ 3:33PM
Reagonomics Did This said...
You can thank Reagonomics for this. If you want to see what deregulating the market does, this is it. If you want to see what giving massive tax breaks to businesses and rich people does, then this is it. If you want to see what free trade does to a nation, then this is it.
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1-06-2009 @ 5:04PM
Jim said...
You're an idiot. The Dems in Congress that pushed loans to people that can't even afford rent did this. It's the Dems that say the Republicans won't help the poor. Well the Dems did this to the poor themselves.
1-08-2009 @ 5:30PM
peter said...
You can thank pez carter and the dems who did not want regulation of freddie and fanny. If you can afford a mortgage then you can have one.
1-08-2009 @ 4:19PM
Mike said...
Do you want to see when Barny Frank is sleeping with a male exec at Freddie Mac. Here it is
Do you want to see when Barny Frank is forcing banks to do risky for low income family's or face fines. Here it is.
1-06-2009 @ 3:39PM
sweets said...
Iast year I refinanced my 3 year arm, I told them I wanted a 15 year term with NO money out. They kept pushing for a 30 and said if I took it I could also get an extra 100k for the same monthly payment-Isaid no thanks-I went to the closing and as I'm reading I see that the paperwork is in fact for 30 years-I walked out,2nd time 1 week later I read that its for 15years -BUT instead of the 11k closing costs it read 20k-and they had added it to my loan amount- 3rd time I sat there for almost an hour just reading every word on every page-the whole experience left me feeling disgusted .
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1-06-2009 @ 4:43PM
Bosco said...
Yes the banks had a big hand in messing up the economy, as did all areas of goverment; but let us not forget the other people involved in the why the economy is so messed up, the american people. I'm not talking about every single person, but the bulk of us carry large credit card debt, auto loans, and the same mortgage problems that are being discussed. Most of these people got in over their heads, and the bank helped, but lets face it, if you have less than perfect credit, then maybe you should not have bought a house that could possibly bankrupt you. Live within your means.
I have yet to be able to qualify for a loan due to being stupid and young with the bank cards that were all but given to me on a silver platter, but I accepted the cards, and I should be expected to pay off my debt. Although the bank needs to be realistic with their "get the little guy with interest rates", which are hiked by them anytime they feel fit.
It is time we all take blame, because it was not a one sided problem, and the only way we are going to get a grip on it is to make sure we are all living within our means.
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1-06-2009 @ 7:51PM
sharon p said...
the house pictured is not located in avondale az. put the right picture with the story.
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1-08-2009 @ 4:14PM
Mike said...
Isn't it funny how reporters try and mislead. (He never said the picture was the right one so he didnt do any thing wrong)
1-06-2009 @ 8:12PM
TERESA said...
WE HAVE A HOUSE WILL BE LOSING AFTER
33 YEARS. NO FAULT OF OUR OWN.
WE WILL BE CLOSING OUR BUSINESS AFTER
33 YEARS. WE HAVE NO CUSTOMERS AND
NO BUSINESS. PEOPLE HAVE STOPPED
SPENDING. WE HAVE THE IRS STOCKING US.
WHERE DO WE TURN??
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1-06-2009 @ 9:20PM
Finnegan said...
Try asking the politician in Washington DC who spent $250,000 of taxpayers money to remodel his office bathroom!Until we will have this kind of scumbags running the Country we will be always in the same situation.
President Obama if he stands for what he preaches should simply fire the guy.
1-08-2009 @ 4:20PM
Mike said...
Why do you feel that losing your house is no fault of your own?
1-06-2009 @ 9:12PM
Brian said...
Losing your home through no fault of your own? Why wasn't it paid off after 33 years? Because you kept refinancing and taking out equity? Sounds like someone was irresponsible and can't face that fact.
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1-07-2009 @ 3:48PM
Suzann said...
In as much as this illustrates the issues that we "honest" mortgage consultants face in todays environment, I see little or no reporting regarding the buyers/borrowers responsibilities. Whatever happened to Caveat Emptor? It is incumbant on all consumers to do their homework and live up to the obligation to which they have commited.
In our judicial system "ignorance of the law" is not a defense. Likewise, ignorance of what a person obligates themselves to should not be an excuse. You can't tell me that the majority of buyers/borrowers had no complicity in their situation.
Liken this to riding a roller coaster - you willing and knowingly get on the ride expecting a calm climb up the first incline (appreciation) and then the first drop makes you scream, but as the ride continues your fear subsides until the end when upon exiting the ride you promptly lose your lunch. You then feel embarassed because you shouldn't have eaten before you took the ride. So you don't go back and ask the amusement park to refund your ride ticket or buy you another lunch. As a matter of fact you promptly get back in line extolling the virtues of the great thrill you just had.
It's simply too easy to blame someone else for poor choices.
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