There are basically two kinds of homeowners on Dana Lane ”” those who bought high like the Sandovals, and those who had been there awhile and saw their equity ballooning until it stopped.
“Like everybody else, I’m in an upside-down loan,” says Brenda Moore, who owes more than $300,000 on her mortgage. This is remarkable considering she bought her house in 1989 for $80,000. A search of public records reveals that Moore, a retired nurse, has refinanced her home eight times since 1998.
The loans are from a who’s who of subprime lenders. With each loan she took out more equity, and each time the loan terms got worse.
I caught this yesterday on the midday run. Eight–count them 8!–refinancings. The mind boggles.
As someone who believes in the necessity of free markets, there should be consideration of regulating fictitious profits; the profits the lenders made in 2004, 2005, etc. where there was no concern for the long term. If the lenders knew they had to own a substantial number of the loans they made for 10 years, would they have made them?
From the story:
When it got to the point that she could no longer make her mortgage payments, Moore thought about walking away.
But she says the Lord intervened. A nonprofit group helped her get a loan modification. Her payments have been cut in half. When a reporter tells her about the Betts family down the street, she seems a little surprised that there’s anyone on the block who didn’t refinance.
“So that’s good they didn’t have to,” Moore says. “But then, too, I look at it this way: You’re sitting on a bank, so if you can use it, use it because you can’t take it with you, so enjoy it while you can.”
Wow–is this woefully ignorant or woefully irresponsible?