Sunday, January 4, 2009
Sorry, I haven't been swept away by a Tsunami or plague, or recession. Just on the road with spotty connections and new focuses and so I left MomBlog for a minute.
Sorry to those who missed me.
And yes, it is official, we are undergoing something called a recession. According to Wikipedia, that means a reduction of a country's gross domestic product (GDP) for at least two quarters. So that's like, what, half a year?
There are many stories around, but we can't help but notice the mortgage industry, that falsely bolstered a sense of wealth throughout the kingdom.
The Wall Street Journal runs a story about a little blue shack's sale that illustrates the delusion, predation and false hope that ran through this period called "my house is worth something."
Little town, big dreams.
"Four decades ago, when she bought the West Hopi Street house for $3,500, Avondale was a small town built around cotton farms. From 2000 to 2005, the heart of the housing boom, it doubled in size to 70,000 residents.
Today, one in nine Avondale houses is in foreclosure or close to it.
Her lender, Integrity, was one of a flurry of small mortgage firms that sprang up nationwide during the boom, using loans from big banks to generate mortgages to resell to larger financial institutions. Whereas traditional mortgage lenders profit by collecting borrowers' monthly payments, Integrity made its money on fees and commissions.
The company was owned by Barry Rybicki, 37, a former loan officer who started it in 2003. Of the boom years, he says: "If you had a pulse, you were getting a loan."
When an Integrity telemarketer called Ms. Halterman in 2006, she was cash-strapped, owing $36,605 on a home-equity loan. The firm helped her get a $75,500 credit line from another lender.
Ms. Halterman used it to pay off her pickup, among other things. But soon she was struggling again.
In early 2007, she asked Integrity for help, Mr. Rybicki's records show. This time, Integrity itself provided a $103,000, 30-year mortgage. It had an adjustable rate that started at 9.25% and was capped at 15.25%, according to loan documents.
It was one of 197 loans Integrity originated last year, totaling almost $47 million.
For a $350 fee, an appraiser hired by Integrity, Michael T. Asher, valued the house at $132,000. Mr. Asher says although he didn't personally believe the house was worth that much, he followed standard procedures and found like-sized homes nearby that had sold in that price range in 2006."
Yeah right. "Integrity."
We all have heard similar tales.
So the banks lent money, not really supported by value.
Now we all feel something crunchy.
Let's hope that we can dance away from this, with the grace of a four-year-old.
Innocent. Hopeful. Alighting on dreams that do exist, just not in fashion right now.