I’ve referenced many times Alberto Ramirez and his family and how he was able to purchase a $720,000 home on a yearly income of $14,000. Below is a quote from the article:
“Despite making only $14,000 a year, strawberry picker Alberto Ramirez managed to buy his own slice of the American Dream. But his Hollister home came with a hefty price tag, $720,000. A year and a half later, Ramirez has defaulted on his loan, and he’s hoping to sell the house before it’s repossessed.”
“So how did Ramirez, with an annual income of just $14,000, purchase a $720,000 home without any money down? He had help, for one thing. Although Alberto Ramirez was the only one to sign the purchase agreement and the only one named on the loan documents, he actually bought the house with his wife Rosa Ramirez, as well as their friends Jesus Martinez and his wife.”
“However, even in a good month, the Ramirezes and Martinezes together don’t earn much more than a combined $6,500, and their official monthly payments were around $5,200.”
“The Ramirezes said Rancho Grande real estate agent Maria Avila promised they could refinance their home in three to six months to an affordable rate; until then, Rosa Ramirez said, Avila said she would pay for whatever they couldn’t afford.”
You can read the rest of the article here. Trying to wrap my mind around this one is like beginning to assemble a 1,000 piece jigsaw puzzle. Where to begin. I’m not going to yell bubble because we are beyond that stage. If you still have a hard time seeing a bubble I suggest an appointment at Lens Crafters. Am I the only one feeling that the world around me has gone bananas? We are living in financial Wonderland where anyone can make up anything as long as the intended purpose is buying a home. You got your eye on that nice
How in the blue and green universe this isn’t criminal is beyond me. Think about this. If you were to rob a bank (don’t get any ideas), you might get away with $50,000 to $100,000 if you are extremely lucky. When you get caught, you get a felony and years in pound you in the arse prison. However, if you work in the mortgage industry you can create money out of thin air beyond the $100,000 mark and what happens? Nothing. How ethically one is better than the other is beyond me.
Here is another paragraph that highlights so many ills in the industry:
“With their combined incomes, the Ramirezes and the Martinezes estimated that they could afford monthly payments of $3,000 - around 50 percent of their income. However, the Ramirezes said Rancho Grande real estate agent Maria Avila promised they could refinance their home in three to six months to an affordable rate; until then, Rosa Ramirez said, Avila said she would pay for whatever they couldn't afford..”
So even at the maximum they would safely be able to handle $3,000 a month. This is the equivalent of purchasing a $300,000 home with 30 year fixed conventional financing. So the agent pushed a $720,000 home because? Whoever raised their hand and said the $43,200 commission check wins a free appraisal by the agent. This is absurd! I know many housing apologist out there are saying, “financial responsibility falls completely on the buyers” and other distorted logic that mitigates the outright fraudulent intent of the agent. Blame is not assigned equally in this case. Things are not black and white in this world. In terms of percentages the majority of the blame falls on those with a professional fiduciary responsibility; this includes the agent, lender, and those on Wall Street greedy for returns at any cost. The fact that this loan went through the system shows how relaxed and pathetic the industry really is. Do you really suspect the agent felt that they could refinance in 3 to 6 months? On what basis? Two OTHER families moving in? And this family will pay by being foreclosed upon and having whatever credit ruined and potentially all their savings wiped out.
Thinks this only applies to this family? Look at our beloved New Century and their recent announcement that they’ll be laying off another 2,000 workers. So by a rough estimate that leaves 750 of the initial 7,200 original workers. That’s a big change in two months. These liars also gave the impression that they were going to be saved starving off any further job losses to unsuspecting current employees. When you owe $8.4 billion and your company is worth $80 million you got some serious issues. 105 X $80 million = maximum leverage. And you wonder why so much pain is ahead and is destined for housing.