Avery Salkey’s four-bedroom house in Royal Palm Beach, Fla., is still so new that the appliances gleam as bright as the day she moved in four years ago. But she’s not sure how much longer she’ll live there. Salkey has been facing foreclosure for months now and is desperately looking for a way to save her home ”” so far, without success.
Her story is an extreme version of one that’s happening to millions of people across the country.
It’s a story that began full of hope ”” a single mom who, with the help of her family, had moved from the Bronx in New York to make a fresh start. She made a substantial down payment on the house in Florida and got a great fixed interest rate of 5.3 percent. She closed on the house in 2003 and moved in 2004.
Her monthly payments were affordable. The mortgage, along with tax and insurance, cost a little more than $1,500 a month.
“I thought that was pretty good,” Salkey says.
But a series of bad decisions soon got her in trouble.
Answer — Federal usury laws. They are now regulated by states. The states compete to get the banks and lenders for jobs and, no doubt, political contributions, by allowing outrageous percentages. Banks locate to get the best deals for exploitive lending.
Paternalism is in order where ignorance/desperation meets no conscience.
[blockquote]She says she didn’t pay too much attention to the paperwork, and when it came time for closing, she was shocked at the terms. [/blockquote]
It is a sad story. But I honestly just don’t understand how someone could engage in a financial transaction of nearly a third of a million dollars and not “pay attention” to the terms of the obligation. Just mind-boggling.
Bruce Robison
This is sad. I pray God helps her through this. She never should have used a secured loan to pay unsecured debt. It would have been better to let the 20K “ride” and work out payments on that debt than risk her home.
Who buys a house in another state, takes a mortgage loan, and moves there without having a job? I sympathize with her plight but the “blame” has to be shared and she deserves the largest share of it.
Not everyone in danger of losing their homes has made the same unfortunate mistakes as this lady. I just found out from my son that he may end up “loosing it all” if something doesn’t change in the very near future. He drives 18 wheelers for a trucking company and has had to take a huge pay cut, and I do mean huge! What was economically doable last year isn’t this year. Who knew?
T
“It’s rape.” Salkey says. “It’s raping me of everything, stripping me of everything. Providing me with a loan that I cannot afford? That means it was your intent in the first place to take my home away from me.”
I have to go bang my head on the keyboard now. Why oh why are the very same schools that do not hesitate to demonstrate condom usage not teach student’s about safe financial practices? Why oh why do the same schools that assign ” Heather Has Two Gender Questioning Parental Units” not assign ” Doris Has Two Mortgages” ?
Why oh why are students not being taught how to calculate interest, read a contract, and all those ins and outs of financial literacy?
The mess this woman is in is her own fault. The shame is if she truly had received any sort of worthwhile financial education she would not be in this mess.
There is plenty enough blame to go around on this issue. There are mortgage companies who sought out customers and made loans that they knew a certain percentage would default on. There are people who speculated and borrowed too much on their houses in the belief that houses would always increase in value. There are those who used the equity in their home to pay off unsecured debt without changing the behaviors that got them into debt to begin with. There are people who were duped and people who were willingly duped and people who sought out being duped so they could continue their lifestyles of consuming and consuming.
As Bishop Michael Marshall said, we were designed by God to love people and use things. We have ended up loving things and using people. We spend way to much on “stuff” hoping that “stuff” will make us happy and we spend way to much time with our “stuff” trying to get it to make us happy. We trade momentary happiness for our future joy.
YBIC,
Phil Snyder
I have no use for hard money lenders but let’s be honest. They are the last resort for people who are in deep financial troulbe, likely to lose their homes and desperate for a “chance” to save it. In the optimistic view that something better is just around the corner and instead of flipping burgers at the local fast food joint, they are going to be hired to run GE, they close their eyes and hope for the best. The shame of it is that if they simply sold the house when times started to go bad for them, they might have salvaged something. Hard money lenders charge high interest rates because the borrowers to whom they lend are high risk borrowers. They are easy targets at which to shoot, but who among us would have loaned this woman $20,000, without security, and at rates comparable to what financially healthy borrowers would have to pay?
Albany* and Phil Snyder (Dallas), You are right on. The mortgage brokers, lenders, etc. laughed all the way to the bank with their exorbitant ‘fees’, ‘commissions’, etc., etc.
They took full advantage of the lack of regulation of ‘new mortgage products’ and hawked them to borrowers and investors alike. Result: much like 1930 and 1931, bank and mortgage company failures. It’s a tsunami and we’re far from the bottom of it yet.