The word foreclosure is now one of the most used, and abused words in our English language. Every day, every newspaper, TV show, blog, or even the lady at the nail salon is talking about “foreclosures.”
This media coverage is mainly in lower to middle class towns. It was thought of as only a problem on main street, where Homeowner Joe and his family are getting annihilated everywhere. From the gas pump, to milk for Johnny, and now in his own home, Joe is not getting a break and may soon become extinct.
Now, it looks like the elite of our society are starting to get infected by the foreclosure bug.
The people who reside in glass houses and live in fancy zip codes like the 90210 are no different than homeowner Joe. Hell, they put on their pants the same way. Yes, they might be different brands, but they still go on, one leg at a time.
Celebrities, the ex-rich, and the wanna be’s, in their leased (soon to be reposed) Ferrari’s are getting their fair share of foreclosure medicine, and the media is making sure they get it directly in their veins. Whether they like it or not.
Hell, what’s more fascinating to someone who is struggling on the street, then to see these movie stars and famous athletes in their glass houses and with larger than life personalities lose their home? It makes homeowner Joe kind feel good that he’s not alone in this debacle. He can now share a little misery with the Ed McMahon’s and Jose Conseco’s of the world.
Here’s Johnny!
CNNMoney – Housing Crunch 90210
Three of the nation’s richest zip codes saw particularly steep home-price declines in the three months ending April 30, compared with the previous three months.
Prices down, foreclosures up
In Palm Beach,Fla. (zip code 33480), median home prices fell 38% during that period, according to the real estate Web site Trulia. Prices in Greenwich, Conn. (06831), dropped 15%, while homes in Wayzata, Minn. (55391), are selling for 28% less.
Prices in other wealthy towns also declined: Gladwyne, Penn. (19035), was down 6%, and Beverly Hills (90210), Lincoln, Mass. (01773), and Ladue, Mo. (63124), each slid 2%.
“What I’m finding is that million dollar plus homes declined 4% or so [over the past 12 months],” said Don Kelly, a spokesman for Zaio, which is building a national data base of home value appraisals.
And foreclosure data tracks the pricing information. In Beverly Hills, filings nearly doubled to 41 in the first four months of this year, up from 22 in the same period last year, according to RealtyTrac, which compiles foreclosure stats. In Palm Beach, there were 34 foreclosure filings, up from 9 in the period a year ago. Greenwich had 23, up from 10, while Wayzata had 18, compared with 14 a year ago. Kenilworth, Gladwyne and Medina had just one each, while Lincoln had none.
AP:
Ed McMahon blames the possible foreclosure of his multimillion-dollar Beverly Hills house on a set of problems all too familiar to many Americans: a foundering economy, health problems and poor planning.”If you spend more money than you make, you know what happens,” McMahon said Thursday night on CNN’s “Larry King Live.” “You know, a couple of divorces thrown in, a few things like that. And, you know, things happen.”
McMahon, 85, appeared with his wife, Pamela. The couple said they are $644,000 behind on their mortgage payments and are in negotiations with lender Countrywide Home Loans Inc. to set a foreclosure date.
I truly feel for Ed McMahon, I saw part of the interview he had on Larry King. They were friends etc who offered to help him economically and Ed did not want handouts. Has Countrywide not been able to modify his loan ????
He is an example of what some of us are facing, but on a larger scale, Jose Canseco as well as many others who may be embarassed to come out.
We need SOLUTIONS to this terrible state we are in, I for one feel for Mr. McMahon, he has worked all his life, has helped so many and now he is in this situation.
MOE again what a way to bring it out in the open.
I really don’t get what happened to ed.
His picture was on publishers clearing house for years.
He was a spokesman… even if he is sick and bedridden…he could still license his picture?
There has to be more to the story… the divorce makes some sense but I suspect he also was swindled along the way and had some bad investment advice. I had heard of a stckbroker who was a “broker to the stars”… that had bilked a bunch of celebs…carmen diaz, cruise… i wonder if he took ed out as well??
I think that wealthy people have money problems too… but we don’t hear about it .. When you look at celebs like Cher or Mik Jagger or the celebs who have been around alot are still performing and working it would seem that WEALTH is an individual definition.
wealth is simple-
how far in advance you can pay your bills without working…
Yeah i agree its all about planning really. Pay you bills on time and avoid foreclosure.
People that are in the spotlight usually have a lot of pressure on them. They need to look good for their audience. They spend money carelessly. In order to avoid foreclosure such people should plans monthly payments and stick to it. They should also get a reliable professional.
Regardless of the cause, it is important to oppose government buyouts or subsidies of these distressed mortgages. There are private enterprise solutions. For example, ABC news (LA) reported that Foreclosuretrackers.com would buy Mr. McMahon’s mortgage and workout affordable terms for him.
[...] from celebrities, to in denial billionaires, over paid CEO’s and now, the people’s voice and [...]
I guess it really comes down to the price of the home….that seems to be the key theme in most of the posts.
I have one possible solution…let’s drive home values back down to affordable levels while rates are still low.
If you happened to buy a house in 2005/06 during the peak…look in your hood for the same or similar home that is now worth almost 50% less than when you purchased yours….make a low ball offer on any that are for sale at the fire sale price and move quickly to close on the new home at a much lower value. Now that the 95%-100% loan is back.
Then let your current home move into foreclosure…(after 4 years you will be able to qualify for a conventional mortgage again anyway. I also suspect that with the number of people who are going into foreclosure that the time-line to qualify for a conventional loan will be reduced at some point).
Why should you pay 50-60% more than you need to? Your mortgage payment will be lower and as well as your property taxes. A real win-win…except for the old lender….but so what?? they were the one’s that let you buy an over valued home in the first place and now when you ask for help….the lender does not even try to help you out.
This would be one approach to help home values become more affordable…
it seems the high end home-buyers are beginning to do this very tactic…esp when their current value has dropped 40-50%. Most Jumbo financing this year (loans >423k in most areas) are in the 7%-8.25% range or higher. So it is very difficult for those borrowers who bought the past few years to even refinance into more affordable terms when the rate offered now is much higher than what they have from 2 years ago.
it is time to fight back with some creative tactics of our own….
Gator,
Question, how will I qualify to buy another home if I currently have one?
I understand your train of thought here, but How can we do it?
One of my co-workers said that the home next door to hers foreclosed & the bank soldit for 48% under the original price (the bank lost almost 50%). So instead why don’t the banks just lower everyones payments so that they can afford the house they are in now and the banks/investors still get paid.
why the loss instead of a lower gain????
Carrie,
The answer is you can’t do it. Try reading this article:
http://www.pressdemocrat.com/article/20080612/NEWS07/806120400/?ref=patrick.net
The banks are wising up and if they catch you doing it in some states they can go after your new house.
Do yourself a favor this time – get the education you didn’t get when you originally bought your house and stop buying into these koolaid fantasies.
This is why banks should not write down principals – you idiots will go right back out and do the same shit again. It’s called a moral hazard.
Proud Homeowner:
I totally agree with you that this is completely wrong, but I have been in several discussions with Gatorbait & lookinthemirror to try to understand their way of thinking & I can’t get their blinders off….
I am fighting to stay in the home that I am in.
I just did not understand the advice Gator was giving on his post and how can someone do that…
i think gatorbait was being a little ironic??
yes lenders are wising up to some degree but with the amount of foreclosures in the pipeline it would take some time to catch this activity and then trace back. Not to mention going to another lender. If one really wanted to it can be done.
In many cases you can offer a deed in lieu of foreclosure at some point in the process so the snap-back is less likely. Banks do not offer this option you have to present it so, get this , you did not feel coerced into handing over your deed.
Another thing most are not thinking about is that the lender can go after other assets to recover any differential. I have never seen this but now with how the losses are stacking up I am curious if there will be more forensic accounting to some level.
proud homeowner-
I read the article and it seems if they make a rule to stop the few who “buy and bail” that it will hurt the legit folks who may be trying to purchase another home before the current one sells.
I read that they may require 30% equity on the new house?
I have a friend who was telling me he is buying a new house and renting out his current property until the values move up a little.
He had said that when he did this a few years ago all the bank wanted was a lease agreement on the old property.
He told me now the same bank wants to see, in addition to the lease, that he has enough money in the bank to cover a year worth of payments on his old house and a certain amount to cover payments in the bank on his new house. I wonder if they will also want him to have 30% down on the new house as well. That seems a little overboard to me?
Jeeze if that is the case then only the wealthy are going to be able to buy new homes.
Dog Chapman – yes this is an another unfortunate consequence of this entire mess. But I can’t help thinking that in the long run we will all be better off for having gone through this. The whole mortgage business will be cleaned up and the traditional rules will once again apply. Homeowners have to change too, though – you buy a house because it is cheaper than renting, you buy a house to make it a home not to sell it to make a profit or leverage it to finance a “lifestyle” that your salary won’t support. We’ve turned into a nation full of Donald Trump wannabes – isn’t it funny though that people forget how many times he’s been bankrupt and lost everything? Most of us don’t have the stomach for that.
Carrie – I hope you are able to save your house but I also believe you should be realistic. You bought at the height of a bubble that has now burst. Your problems occurred not because of that and not because of some evil lender but because your circumstances changed – you lost your job. Things like that happen in all economies under Democrats and Republicans. If you can hang on or if you get your lender work with you, more power to you but please realize this is not something you are “entitled” to. Until you are willing to share any profits you make on that house you cannot ask the lender to bear the entire burden of the loss by writing down or forgiving any portion of the money you borrowed to purchase this home. It may take 30 years before your house is once again an asset. Can you live with that? Is it a home or just something you expect a return on? Think long and hard about that.
risk-reward is a quite an equalizer… i like your donald trump example as it does express that if you want the big reward be prepared for the huge downside risk.
the one important factor with the Donald though…he did get help from the lenders he owed money. They restructured and reduced some significant coin, of course these lenders knew the donald would rise again. All the donald wannabes do not have the luxury of the same help.
Bryce, I am fighting for my home.
I never bought my property with the intention to sell it to make a profit, i bought it to make it a home to raise my family in.
I do totally understand that i am not entitled to a mod but requesting one is not wrong. it is better to be upfront with the bank who lend you the money to purchase it , than not to contact them and not make payments….
I am responsible to provide food, shelter and love to my kids that is all I am trying to do. How can I share the profits with the bank If I gave them a down payment, used their appraiser, their title company, their broker/LO??? Trust me I would’ve much rather the appraisal have come in lower, (ie lower taxes, lower insurance, lower mtg payment) I believe a lot of us were hit between the eyes because of the big dogs greed.