Builders' role in predatory lending part of problem sometimes

[CSchnack]

http://www.denverpost.com/business/ci_4890161 Part of a Denver Post series on mortgage fraud, predatory lending, & builders part role in it. This is not confined to CO; it's national but the post did a good series on it. Thought your readers would like to see this.

[cknelson]

We have had the same thing happen in the Charlotte, NC area with Beazer homes. The worst part is that not only were things wrong on the mortgage papers(income, left off debt, etc.) the homes were not built properly so alot of the homes have mold problems, siding coming off etc. There are so many homes in foreclosure due to unethical business practices by the builder and mortgage companies. HUD is now doing a full investigation and has requested the mortgage papers for alot of the homes and lawsuits are being filed.

[David]

I just heard a friend of ours lives in a subdivision with 320 houses. 260 have been foreclosed upon.

[CSchnack]

The link to the Charlotte Observer series on Beazer and foreclosures: http://www.charlotte.com/523/index.html

[kadoka]

Whatever happened to people being responsible for what they do. While I am sure there is a lot of fraud out there, the idea that all of these people over bought because of a builder is ridiculous. Don't they know how much money they make and how much they can afford? They over bought because they wanted more than they could afford and were more than willing to listen to a fairy tale and believe it so they could get a bigger more expensive house. Everyone wants to blame someone for their stupidity. Sorry but that is the plain and simple truth. And I am not a builder or lender, just a normal homeowner. People need to take care of themselves and not sit around and expect someone to hold their hand day in and day out.

[David]

Hey Kadoka -

It's not so simple. If I sold you a car and showed you falsified maintence records, would you accept it was your mistake or would you consider it fraud?

Mortage fraud is real.

And common folk don't understand how an interest only loan works. The numbers look good at the time - they can afford it. 6 months or 2 years later they don't even understand the payments change. I know. I've dealt with individuals like that. Seriously, some people cannot understand loans. At all.

Do they have stupidity? yes. At times, don't we all? And sometimes our stupidity is that we trusted someone we should not have. Someone we consider a 'professional.' Sometimes that pro is a contractor, a builder, a developer, a loan officer, a realtor, and on and on...

You might think differently if your neighborhood was populated with foreclosures.

:)

Dave

[CSchnack]

As the problem has become more widely known, (i.e. as more financial institutions and investors have gotten burned instead of "mere consumers"), it's getting more media coverage and the reports aren't pulling punches as much as before: Bonfire of the Builders, Business Week: http://www.businessweek.com/magazine/content/07_33/b4046601.htm

That's astounding, the rates of foreclosure you noticed, David. If you have any news links to it please post 'em. I am seeing quite a few builder complaints now include an element of predatory lending or mortgage fraud. I also love your analogy, and agree...a buyer can be "stupid," but that does not excuse the industry people for their fraud. And, many buyers report that documents were forged, etc. That's something that can happen to even the most educated and intelligent buyer, and it has. Not everyone who has this problem is "stupid." I do agree that anyone who was complicit in fraud should pay the consequences. Sadly, a lot of the "stupid" buyers will also have to suffer. At some point we have to draw the line and say this is not the tax payers responsibility. My concern is that a lot of truly innocent buyers who didn't do anything stupid will have to suffer along with them. I certainly do not believe the industry deserves any kind of bail out!


Hey Kadoka -

It's not so simple. If I sold you a car and showed you falsified maintence records, would you accept it was your mistake or would you consider it fraud?

Mortage fraud is real.

And common folk don't understand how an interest only loan works. The numbers look good at the time - they can afford it. 6 months or 2 years later they don't even understand the payments change. I know. I've dealt with individuals like that. Seriously, some people cannot understand loans. At all.

Do they have stupidity? yes. At times, don't we all? And sometimes our stupidity is that we trusted someone we should not have. Someone we consider a 'professional.' Sometimes that pro is a contractor, a builder, a developer, a loan officer, a realtor, and on and on...

You might think differently if your neighborhood was populated with foreclosures.

:)

Dave

[David]

No news links that I am aware of.

I sent you a PM.

[CThomp]

Back when my wife and I bought the crack house our mortgage broker slid a number across the table to us of the mortgage amount we could afford. This of course never takes into account insurance and taxes.

I almost started laughing my a$$ off. There was no way I was going to be a slave to the number I was given. Even at a fixed rate.

I guess the mortgage guy and the realtor were working together because the next day my realtor started showing me homes $100K over what I wanted to pay. He wasn't my realtor to much longer after that.

That's the clincher with Florida that most folks don't pay attention to. You might have a $1K a month or less mortgage but your taxes and insurance will tack another $500 a month onto what you pay. Insurance is what has gotten to me though now that my house is "hardenned I may be able to drop $500+ off of my insurance. Not bad.

[David]

This of course never takes into account insurance and taxes.

Never say never. ;)

L/O's are supposed to include best estimates of insurance, taxes, and HOA's when actuals aren't available. I was an L/O for a few months, part time. My wife was an L/O for almost 2 years (while also being a pilot). We always included those amounts.

[Jasmine]

Well folks accept it or not, we are really responsible to where our money should go. If we are going to make a big investment, just make sure all documents are legal before giving a downpayment and afterwards check the structure if it is build good before accepting it...Always take note there are alot of voltures around us, just waiting to get our money for free.