Fwd: [UC] Explaining Sub prime lending : Kudos to my colleagues, competition, local Lenders and PENN

[pmuyehara]

 I disagree that we have dodged the fallout from subprime lending tactics by 
lenders. The city has been going through a massive increase in foreclosures, 
much of it resulting from predatory lending. The mortgage market is no longer 
local and mortgages have become commodities traded on Wall Street. 

 -Original Message-
 From: [EMAIL PROTECTED]
 To: [EMAIL PROTECTED]; UnivCity@list.purple.com
 Sent: Wed, 9 May 2007 1:40 PM
 Subject: [UC] Explaining Sub prime lending : Kudos to my colleagues, 
competition, local Lenders and PENN
 
  
Lately, I have heard lots of general questions about the "market" and the
cause of sub prime mortgage foreclosures and the effects on individuals
and the economy.  The link is to an article which defines the big
picture, in simple terms, and gives snapshots of the devastation of two
families who signed onto sub prime loans.

http://www.reuters.com/article/wtMostRead/idUSN0329892220070508


Philadelphia, and especially UC, seems to be dodging the collateral
damage of sub prime disasters.
For this we owe a debt to:
Our city, conservative in banking matters
A sufficiency of local Lenders, mostly reputable Banks and Credit
Unions
The preponderance of Agents who have acted responsibly and not
chased kickbacks.
PENN, who has encouraged Home Ownership, with good programs.


In a theme I consider related, I have had many folks question my aversion
to Knox (I much prefer to discuss my faith in Michael Nutter and my hope
that Philadelphia keeps Chaka in Federal and Dwight in State government).
 Sometimes the questions come with some base implication that I am voting
the wrong "color" (implications I find easy to dismiss!) but sometimes
people have bought Knox's campaign spins of 'Business, better than usual'
and 'opportunity as charity'.
Knox might want to sell an image that he was one of very few who would
lend to those poor enough to "need" payday loans or ownership
"opportunity".  But true Charity does not come with interest totalling as
much as 400% per Annum. 

One sad local example:
I was called to a listing appointment.
The prospective Seller was an elderly man, who had hoped to stay in his
home "forever".
But, he was confronted with a notice of Sheriff Sale and wanted to know
if by hiring an agent he could sell, pay off all of his debts and retain
enough money to be independent.
Sadly, this man had refinanced twice in 10 years.
The first time was a straightforward refinance, through his own reputable
bank, during a period of 8.5% rates, and for the purpose of helping a
grandchild through college.
He want from owning his home free and clear to having a mortgage of under
$400.00.
It was admirable and survivable, barely, on his fixed pension income.
He understood the choices and risks.
But the second time, he was vulnerable and fell under the spell of a
usurious Mortgage Lender.
He had just heard that his wife had been pronounced terminally ill.
The couple determine to take the amazing vacation that they had postponed
through the raising of kids and grand kids.
They knew they had equity and wanted to know if they could lower their
rate to the then 5.5%, keep the payment where it stood, and take out some
equity for the vacation.
The person who promised to make "their dream come true" talked them into
a total refinance (versus a simple equity loan) and an A.R.M. that
started just under 5% (but capped at 12%).  They took out $10,000 in
equity and paid almost $13,000 in fees and charges (on a now $50,000
loan) to do so.  Money seemed to flow in only one direction, and even
now, after the damage is done, this potential Seller can not understand a
reconstruction of how the loan went from a debt ratio of $23K-on-$60K  to
one of $50K on $60K.  The potential Seller didn't understand why the
percentage charge on their loan had jumped 3% / year each year, or why
payments had jumped from under $400 to well over $600.  He only knew that
he was facing Sheriff Sale with a humiliating amount of debt.  To
compound matters, the loan also had a huge prepayment feature, and so
there was no way to clear enough to live independently.  Now this elderly
widower will end up living with Adult children or in subsidized housing. 
The cost to his pride and life style are enormous, a Lender got richer
($13,000 in fees for $10,000 in cash out! + 12% interest for most of the
term!) and we taxpayers may end up subsidizing the housing of this
mortgage victim.  BTW, the vacation was never made.  The wife did not
survive until the planned day of departure.  The $10,000 disappeared in
payments on the new debt.  I could not promise him any proceeds from a
sale.  And so, I referred him to agencies that pay people to advise on
home saving and legal aid.  He had my sympathy, but I support my family,
with commissions.  He was better served, by staying in his home,  as long
as possible, even if he had to declare bankruptcy.  I left the
appointment shaken, by the evidence of a gre

Re: Fwd: [UC] Explaining Sub prime lending : Kudos to my colleagues, competition, local Lenders and PENN

[Elizabeth F Campion]

Paul, you are correct.
I wrote with too much passion and haste.
I intended to say we are not seeing problems in the magnitude visible in
the Bush strongholds of Texas and Florida.
I am sincere, in feeling grateful for the people and institutions who
have kept some checks and balances in place, here in Philadelphia.
But it is true that Philadelphia seems to be seeing problems at two ends
of the spectrum, among condo speculators and in the poorer neighborhoods.
I gave an example of one of the failures.
The professional writer, in the article/link, wrote a clearer
presentation of the situation.

Even in Philadelphia, there are too many foreclosures.
And there is too little being done to put people into affordable homes.

As I drive through our poorer neighborhoods, I think Street (and others)
deserve some credit for getting homes built and occupied.
But much more needs to be done.
Close at hand, the Blackwell Homes, near 46th and Haverford have made
stake holders of a lot of people.
Behaviors improve as people acquire things (like homes) that they fear to
lose.
Home ownership is a good thing, even in 'flat' markets.
Being house proud, having privacy and control, being able to personalize
one's space, roots and familiarity do make for happier, healthier
neighbors.

Thanks for correcting my course.

We need to anticipate multiple consequences of our choices.
And we need to vote.

Best!
Liz



On Wed, 09 May 2007 23:18:07 -0400 [EMAIL PROTECTED] writes:
I disagree that we have dodged the fallout from subprime lending tactics
by lenders.  The city has been going through a massive increase in
foreclosures, much of it resulting from predatory lending.  The mortgage
market is no longer local and mortgages have become commodities traded on
Wall Street.  

 
 
-Original Message-
From: [EMAIL PROTECTED]
To: [EMAIL PROTECTED]; UnivCity@list.purple.com
Sent: Wed, 9 May 2007 1:40 PM
Subject: [UC] Explaining Sub prime lending : Kudos to my colleagues,
competition, local Lenders and PENN



Lately, I have heard lots of general questions about the "market" and the
cause of sub prime mortgage foreclosures and the effects on individuals
and the economy.  The link is to an article which defines the big
picture, in simple terms, and gives snapshots of the devastation of two
families who signed onto sub prime loans.

http://www.reuters.com/article/wtMostRead/idUSN0329892220070508


Philadelphia, and especially UC, seems to be dodging the collateral
damage of sub prime disasters.
For this we owe a debt to:
Our city, conservative in banking matters
A sufficiency of local Lenders, mostly reputable Banks and Credit
Unions
The preponderance of Agents who have acted responsibly and not
chased kickbacks.
PENN, who has encouraged Home Ownership, with good programs.


In a theme I consider related, I have had many folks question my aversion
to Knox (I much prefer to discuss my faith in Michael Nutter and my hope
that Philadelphia keeps Chaka in Federal and Dwight in State government).
 Sometimes the questions come with some base implication that I am voting
the wrong "color" (implications I find easy to dismiss!) but sometimes
people have bought Knox's campaign spins of 'Business, better than usual'
and 'opportunity as charity'.
Knox might want to sell an image that he was one of very few who would
lend to those poor enough to "need" payday loans or ownership
"opportunity".  But true Charity does not come with interest totalling as
much as 400% per Annum. 

One sad local example:
I was called to a listing appointment.
The prospective Seller was an elderly man, who had hoped to stay in his
home "forever".
But, he was confronted with a notice of Sheriff Sale and wanted to know
if by hiring an agent he could sell, pay off all of his debts and retain
enough money to be independent.
Sadly, this man had refinanced twice in 10 years.
The first time was a straightforward refinance, through his own reputable
bank, during a period of 8.5% rates, and for the purpose of helping a
grandchild through college.
He want from owning his home free and clear to having a mortgage of under
$400.00.
It was admirable and survivable, barely, on his fixed pension income.
He understood the choices and risks.
But the second time, he was vulnerable and fell under the spell of a
usurious Mortgage Lender.
He had just heard that his wife had been pronounced terminally ill.
The couple determine to take the amazing vacation that they had postponed
through the raising of kids and grand kids.
They knew they had equity and wanted to know if they could lower their
rate to the then 5.5%, keep the payment where it stood, and take out some
equity for the vacation.
The person who promised to make "their dream come true" talked them into
a total refinance (versus a simple equity loan) and an A.R.M. that
started just under 5% (but capped at 12%).  They took out $10,000 in
equity and paid almost $13,000 in fees and charges (on a now $50,000
l

Re: Fwd: [UC] Explaining Sub prime lending : Kudos to my colleagues, competition, local Lenders and PENN

[UNIVERSITY*CITOYEN]

[EMAIL PROTECTED] wrote:
I disagree that we have dodged the fallout from subprime lending tactics 
by lenders.




I agree. I think everyone ends up getting bumped -- by the 
same dominos we said were moving our collective lots along 
when things were falling the other way, right?



..
UNIVERSITY*CITOYEN
[aka laserbeam®]
[aka ray]
SERIAL LIAR. CALL FOR RATES.






























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Re: Fwd: [UC] Explaining Sub prime lending : Kudos to my colleagues, competition, local Lenders and PENN

[Ross Bender]

On 5/9/07, Elizabeth F Campion <[EMAIL PROTECTED]> wrote:




Behaviors improve as people acquire things (like homes) that they fear to
lose.
Home ownership is a good thing, even in 'flat' markets.
Being house proud, having privacy and control, being able to personalize
one's space, roots and familiarity do make for happier, healthier neighbors.



It always burns my britches when my wealthy realtor friends blatantly
disrepect renters and then send them emails advertizing "cheap" houses for
sale. The master illusion in this society is that buying things will make
you happier, healthier and better-behaved.

I was happy to see this article last month in the (free) online NY Times:

ECONOMIX; A Word of Advice During a Housing Slump: Rent


April 11, 2007, Wednesday
By DAVID LEONHARDT (NYT); Business/Financial Desk
Late Edition - Final, Section A, Page 1, Column 2, 1176 words

DISPLAYING ABSTRACT - Analysis of housing costs reveals that people who
bought over last two years have paid more for their housing than renters;
housing prices may not yet have fallen far enough for buying to look better
than renting, except for people who plan to stay in a home for many years;
realtors insist that now is time to buy, but skeptics point to extended
slump in housing prices in 1990s, following last boom, and argue that buying
has never been quite as beneficial as realtors and others who make money off
home purchases would have you believes

To read this archive article, upgrade to TimesSelect or purchase as a single
article.
http://select.nytimes.com/gst/abstract.html?res=F20913FF395B0C728DDDAD0894DF404482

Of course, if you want to read the article now, you have to buy it.
--
Ross Bender
http://rossbender.org