Renters Unite!

Interesting article from Joel Stein, with an unexpected level of fact-based hilarity. I wonder if anyone is reporting on the impact of the housing crisis on renters who are NOT seeking to buy a home. I’ve seen some articles on renters being caught in foreclosed properties, but that’s about it. Maybe I haven’t been looking. I live in a college area, where the rents are ridiculous — based on the assumptions that (1) mom and dad are paying and (2) any room without running water is a bedroom.

I with you there. Can’t afford to buy something in my neighborhood either.

I am just wondering are wingnuts being disengenuous or are they really so phucking stupid that they don’t understand that over 4 million people have lost their jobs over the last year. 4 million people who at one time COULD afford their mortgages but with out a steady income now can’t. This is a pretty basic understanding of at least part of the housing crisis but you would think all of these fools just can’t seem to get that. And Scherer from your sympathy for Stein’s case it would seem that includes you.

Let me rephrase that slightly:
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“The only people affected by plummeting real estate prices are the ones who bought a house that cost more than they could afford…if one or more wage-earners in the family suddenly became unemployed, had a catastrophic illness in the family that insurance wouldn’t or would only partially cover, had their access to credit for things like their kids’ college educations drastically reduced because of their home’s new, worthless equity –basically a huge chunk of America’s middle class.”

And Michael — I know it doesn’t have the cachet of a DC address, but some of the older, inside-the-Beltway ‘burbs in Prince George’s County (Hyattsville, Mount Ranier) are not only cheaper but funkier –in a good way. And we have an excellent local brewpub.

Hey Scherer, next time why don’t you and your buddy try doing your got damn jobs for once. No help for renters huh?
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http://www.treas.gov/initiatives/eesa/homeowner-affordability-plan/ExecutiveSummary.pdf
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Provide $1.5 Billion in Relocation and Other Forms of Assistance to Renters Displaced by Foreclosure and $2 Billion in Neighborhood Stabilization Funds

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I wonder if either of you two morons realize that if the person who owns the spot that you rent gets foreclosed on you might actually NEED some of that relocation assistance. NAHHHH I mean you make those big bucks at Time right?

What Stuart said. Holy f##k the press is stupid. I know that stupid is kind of Joel Stein’s schtick, but I think we’re moving into an era where stupid is no longer a virtue.

The only people affected by plummeting real estate prices are the ones who bought a house that cost more than they could afford, hoping for a spike in value so they could sell at a profit or take out a new loan based on an increased value.
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SGW, SZ and Art Pepper beat me to it. But is Joel Stein really unaware of the rise in umemployment, unable to make the leap between people who lose their jobs? Is Scherer? The whole “catastrophic illness” thing?
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Amazing.

MS, you and Joel are overlooking two critical points.
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Plenty of people who bought in the past few years and who once could afford their homes now find themselves laid off through no fault of their own. Now they can’t make their mortgage payments, and what’s worse, they can’t sell their homes because the mortgages exceed the price they could get. They’re trapped.
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Second, say you find yourself laid off, but you have an offer of a good job but it’s in another city. You need to sell your home to take the job and have some sort of future. But you can’t, for the same reason as above. So here you have someone who did everything “right,” but is still trapped, facing foreclosure and economic calamity. Look, mobility is a key factor in economic growth, and the collapse of housing prices has destroyed much mobility as well. (And I’m not even going to bring up health crises as the leading cause of bankruptcies.)
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Please stop repeating this nonsense. It’s not just speculators who are in trouble. Can neither of you even imagine the need to sell for something other than quick profit? This is just willfully obtuse. Have you even noticed the employment figures lately? Guess not, since you and Joel still have jobs.

Demagoguery and media hackery differ from populism. Populists advocate policies that benefit more of the population, while the Santellis and Dobbses of the media subcult are interested only in creating and exploiting x-vs.-y antagonism in order to enhance their own positions.
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And Scherer, quick, now – what would free marketers say would be the effect of an increase in the demand for rental housing resulting from foreclosure?

Scherer, you are a worthless hack. God, you pissed me off. What a scumbag. Have you no brain nor heart nor conscience?

“The only people affected by plummeting real estate prices are the ones who bought a house that cost more than they could afford, hoping for a spike in value so they could sell at a profit or take out a new loan based on an increased value. ”

Bullphuckingsh!t!! I bought my house, expecting to live in the GD thing for 20 years. I have been downsized TWICE since then, and we have found ourselves unable to meet all of our bills. Ordinarily I could sell my house and buy or rent another, less expensive one. But, the house has lost over 20% of its value (and I don’t live in Hollywood **cking Hills) due to the down market in Atlanta, so there is no way I can sell it and get out of it what we need to pay off the note. So, we are going to lose the GD thing. I have worked hard my whole life and never got rich or tried to flip a house. And there are lots of folks just like me.

Joel Stein is full of bullcrap, and Michael Scherer is stupid.

That’s one thing that will become difficult for people to get their heads around, but there’s no reason home values are supposed to be at any particular level. I suppose that if their selling price falls below the rebuild cost then we’ll have reached an unnatural state, but in the meantime, it’s the peak prices that were unrealistic, not the current ones.
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If it weren’t for a near universal belief in magic, this would have all settled out years ago.

Wow. I just forced myself to read through all of Stein’s piece. If the word “unemployment” is in there, I missed it while rolling my eyes.
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Dear God I wish Molly Ivins was still her to tear this contemptible little wannabe hipster know-it-all a new one
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I don’t like populists. First of all, they seem a lot more popular than I am. Second, they derive their popularity from exploiting our base fears — Joe McCarthy’s fear of communist takeover, George Wallace’s fear of black people, Lou Dobbs’ fear of other cultures, Joe the Plumber’s fear of working. Whereas I derive my popularity from ending paragraphs with middling jokes.

Paul Dirks
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But here is the problem. Lets say you are a family of four and you want to live in a decent house. If the market says those houses go for $250k what are you supposed to do? Especially if at the time you could comfortably afford $250k? I mean nobody had a crystal ball to know for sure the prices would fall. So now after your home prices are “realistic” does that mean you are just phucked for buying your home at a time when it was “unrealistic”? I am not saying that is your position but I would like to know your thoughts on it.

Meanwhile, mortgages held by the responsible people Obama says he is trying to help only go into foreclosure when the owners lose their jobs. But the best way to help them is through increased unemployment benefits and job creation.
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This of course fails to mention that refinancing with the Govermnment helping the banks close the gap between the open principle and collateral value could help a lot of people keep their homes. And I shouldn’t even need to mention that an occupied home is significantly more valuable than a vacant one. It should be a win-win appraoch.

But if these loans were all clearly a bad idea at the time (which for the most part they were), then why did sophisticated wealthy banks, with all the resources and information in the world at their disposal, go ahead and make them? You might want to listen to this show, Michael, for insight on how this all came about.
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Really sorry to hear about what you’re going through, donovong.

As an informed member of the populace I know the entire housing market collapse (and thereby the economic collapse) was caused by two welfare mothers in Akron. As a middle class white guy and God fearing patriot I’d say the obvious solution is to jail all welfare mothers. We could pay for the prisons from the oil revenue coming from Iran once we have them on our leash after the Republicans sweep back in in 2010.
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Make sense to you Michael?

@sg, If you’re defaulting on your 250K mortgage, it can’t just be the resale value of your home that’s causing you to fall behind. As donovong tellingly reveals, many other factors are contributing to the problem.
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All I know is that when I was watching developers flip farmland into subdivisions at an alarming rate in the nineties, that there would be some point when the gravy train would have to stop. It was the creative banking that allowed the boom to extend 8 years beyond it’s natural life. Allocating the discomfort is never easy, but I do maintain that housing was a distorted market thats now experiencing a needed correction.

Meanwhile, mortgages held by the responsible people Obama says he is trying to help only go into foreclosure when the owners lose their jobs. But the best way to help them is through increased unemployment benefits and job creation.
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Okay, my bad. I did miss that part. But… how much does Stein imagine unemployment benefits are? Is he aware of things like COBRA payments? How long does ‘job creation’ take?
There’s a lot I don’t like about this plan and others of Obama’s. But Stein’s column bespeaks an upper-middle class cluelessness that is at the root of a lot of the misinformation flying around. CNBC is probably the best example of that, and the mindless cheerleading of housing and stock bubbles that network incarnates has been no small factor in the economic instability of the last ten to fifteen years.

I am a renter and my taxes have been going to subsidize home ownership ever since Reagan decided to cut my deduction for sales tax and interests rates while keeping mortgage interest deductions in tact. Add to that having no dependents, 35 years of smoking and drinking more than my share of alcohol excise taxes I pay more taxes than most and I am tired of hearing these rethugs complaining about who deserves help and who doesn’t.
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These people are just addicted to stepping on someone else’s neck and they can’t sleep at night unless they identify someone who they think is undeserving.
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Now that race is officially off the table, although that stupid mayor in California clearly didn’t read the memo that said watermelons on the white house lawn is a non starter, all that’s left for these people to look down on is fat people and unlucky homeowners.
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I want my taxes to help those who have lost their jobs, got suckered by the fine print, and reached for the American dream and got burned. MS and Joel Stein you can pay for the war in Iraq and the no bid contracts for Haliburton and Zee (formerly known as blackwater).
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And for God sake please keep these people in their homes — the increasing demand for apartments is sending my rents through the roof.

Here’s the thing. If you went out and bought the most house you could possibly afford with nothing down, then you were imprudent and, frankly, stupid. But the bank that was willing to make those two loans was also imprudent and stupid. And the federal reserve system that permitted that bank to make such a loan was malfeasant and stupid.
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It’s easy to get ticked off at the imprudent and stupid individual. But there will always be imprudent and stupid individuals. That’s why there are institutions that are supposed to enforce reasonable prudence.
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The result is that prudent are going to pay for the imprudence and malfeasance of the very institutions that were meant to keep this from happening. And the bill is a huge multiple of the real estate market that supposedly underlies it.

I’d also note that the Manhattan market hasn’t cratered. There may be several reasons why, among them just fashion, but I think it’s mostly because nobody who owns a coop can be under water. Coop boards did not permit those crazy 80%/20% mortgage/HELOC loans. 20% down is a minimum in most buildings, and 30% and 50% is not unheard of. So if the market is off ten percent, you still have positive net equity, even at an early stage of your repayment period.

“And for God sake please keep these people in their homes — the increasing demand for apartments is sending my rents through the roof.”
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I think an income tax deduction for rent would be a really good idea.
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Considering the basics behind it, it seems an eminently reasonable thing to do.

But the bank that was willing to make those two loans was also imprudent and stupid.
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Jay Ackroyd:
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I think this statement drastically understates the banks’ role in this episode.
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Banks weren’t just willing to make imprudent loans, they and their proxies endlessly solicited customers for imprudent loans for years through massive advertising campaigns.
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In light of such forces actively promoting a virtual tsunami of irrationality in the marketplace, perhaps the statement:
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If you went out and bought the most house you could possibly afford with nothing down, then you were imprudent and, frankly, stupid.
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isn’t a terribly accurate description of reality in this country.
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Until economists find equations that adequately address the impact of marketing on market actors, instead of calling the intended message recipients of sophisticated, well-funded campaigns to create irrational behavior “stupid”, it might behoove said economists to find more descriptive terms for this phenomenon.

It was the creative banking that allowed the boom to extend 8 years beyond it’s natural life.
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I was waiting for someone to make that point.
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The subprime and below-subprime mortgage mess is not the cause of the breakdown of the financial sector, but an inevitable result of it. This whole thing was a giant Ponzi scheme that, as all Ponzi schemes do, eventually collapsed, and the “people who bought houses they couldn’t afford” are victims here, not perpetrators.
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The real perpetrators are those who created and marketed the derivatives based on mortgage backed securities. It used to be that Pannie Mae would bundle mortgages, and you could buy shares of that bundle as an investment to hold on to. But the creation of the derivatives based on those securities added enormous sums of cash to the system that could only be sustained by the continuous issuing of new mortgages.
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Subprime and below sub-prime mortgages got issued because of the demand for bundled mortgage securities that could be used for the creation of derivatives. An entire industry was created to push mortgages that people “could not afford” in order to feed the demand for mortgage backed securities.
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Once the problem mortgages started going bad, the derivatives market dried up — nobody wanted to buy the “highest risk/highest return” traches of these derivatives because the risks were suddenly too high, and without a market for the riskiest traches, derivatives could not be created.
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the companies that were creating these derivatives weren’t paying cash, but “borrowing” based on the expectation of selling the derivatives in a quick turnaround — and found themselves in deep doo-doo because they couldn’t pay for the securities they’d bought, and certainly couldn’t buy more securities.
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credit dried up, housing prices plummeted, and the poor schmucks who got in late to the big Ponzi scheme — the ones who “bought houses they couldn’t afford” and suddenly found themselves without the promised “out” of refinancing or (worst case scenario) selling at a profit — got screwed.
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as for upper middle class white people like Michael complaining that they “can’t afford to buy a house now”, BULLSH*T. What you can’t “afford” is to buy the house that lives up to your inflated image of what you deserve. The only reason you can’t “afford” a house is that you refused to compromise your current lifestyle in a way that would have allowed you to save a whole pile of money that you could use to buy a home right now.

So, um, why exactly do we subsidize home ownership through income tax deductions? I ask while knowing full well that the residential housing market pays my salary (we make circuit breakers). But I’ve really never understood the reason for this other than that lots of home-owning voters like it.
I may stand with the blue dogs here for once — we may have subsidized our way into this bubble at the same time we deregulated ourselves into popping it.

Coop boards did not permit those crazy 80%/20% mortgage/HELOC loans.
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Well, as president of my coop board, we did allow for applicants with smaller than 20 percent down-payments to buy our shares after 2002, but we turned short-term flippers away at the interviews.
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We didn’t want investors buying into our home, we wanted people to live with us who feel just as responsible for maintaining/improving our building as we do.

What Michael Scherer and Joel Stein are trying to say is that you losers who lose your homes should just go out and get a job as a columnist or teevee political consultant. They pay is good and there’s almost no actual work involved, and any one who can handle an email account and who can copy and paste should do just fine. Furthermore, Scherer and Stein can attest that there’s plenty of work in these fields and that there’s almost nothing you can do to get fired and no one ever loses their job…..or do they?
http://www.huffingtonpost.com/2009/02/24/liz-smith-longtime-inew-y_n_169617.html
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Let us hope this is just the beginning of a beautiful trend. PS Michael, you should let Tumulty know that there’s an opening for a gossip columnist at the Post.

There are two types of homeowners in trouble:
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1) Those who have suffered a catestrophic event in their life that has increased their expenses or decreased their income;
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2) Those who willfully took out loans larger than they could afford in the hope that home prices would rise forever.
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While I don’t have too much of a problem helping out the former, I don’t want even one red cent of my taxes going to help the latter. The most we should offer them is the option to walk away from their home, return it to the bank without putting up a costly administrative fight, and in exchange not get a black mark on their credit record. They should also be required to get current on their mortgage payments, or pay the bank back after they move out for the duration they’re in the property — this will solve the problem of people claiming six months of free housing while the bank forecloses on them.

There’s a third and perhaps a fourth:
3)Homeowners who were willfully pushed into sub prime mortgages by unethical lenders because it was to the lenders advantage.
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4)Homeowners who were perhaps naive enough to believe what an officer of a federally insured bank was telling them at face value.

Sure, Stuart, that’s perfectly reasonable. My point is that the institutions are primarily to blame.
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pluk, yes, it was indeed a ponzi scheme. They needed the money from refis, HELOCs, and subprime mortgages to keep the scheme afloat. And when that ran out, the government let them increase their leverage.
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Stuart, as treasurer of my coop board, we have always permitted 90 percent loans. But that is aberrational, especially up here on the east side. And we have rules in place, and an interview process in place meant to identify people who will stay and contribute to the community that a coop building is.

I like to tell a story of when I was house hunting about a year and a half back. I went to apply for a loan and was checking to see how much the bank thought I could qualify for. I’m a reasonably intelligent guy and I studied stastics and finance in college (I work as a contract/project manager, so I know a decent bit about investments, paybacks, etc.) Anyways I’m just starting out and after crunching the numbers I figured I could safely afford a home that was up to 150k (though I was looking at 100-125 to be safe about it). When I applied for a loan and talked with a ‘loan specialist’ they said they could approve me up to 300k. I could not have afforded that big a house. But, I actually had the classes and training to know that. I told a lot of people about it at the time as a funny kind of story, but didn’t think anything about it (I ended up going in on a condo with a friend.) Now though, I look back on that memory as a warning sign I should’ve picked up on.
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A lot of people out there trusted their banks, for better or worse. If you don’t know anything about loan structures, and a professional you’ve gone to for information says you can pay it, I can see how people would believe them. In my view, the real problem here is the bank, who clearly should’ve known better. I have trouble demonizing the people who are having trouble making payments. Maybe a good number of them made bad judgement calls. But the bad call they made was not looking for a big house, it was trusting the bank.

I don’t know if any one has mentioned yet but some local governments are changing their eviction laws when it comes to renters renting homes that then go into foreclosure. Giving renters extra notice time and a few more rights. Maybe at the local level is were renters like myself should be receiving the most help.

While I don’t have too much of a problem helping out the former, I don’t want even one red cent of my taxes going to help the latter.
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what do you do with this scenario.
Buyer purchases a 250,000 home with a “interest only” ARM.
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The rate is adjusted, making the mortgage unaffordable.
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However, the value of the home (after foreclosure costs) is now only 200,000, and the owner could afford the home based on prime rate mortgage on 200K.
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do you throw that buyer on the street, or do you provide the mortgage modification incentive to the bank to modify the mortgage by adjusting the principle and interest rate to reflect current market conditions.
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I say do the latter.

astarf
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That’s all very nice to say. But there’s no way to determine motives. The only real solution is the cramdown. Bankruptcy is painful for the borrower, so he will try to avoid it. The lender is punished for failing to do its job. And as Dirks says, the unavoidable recognition that the house was never worth what was paid for it takes place.
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That’s the real heart of the problem. Recognizing that these houses were overpriced really shouldn’t be on taxpayers’ dime.

What pluk said. There are lots of ways a homeowner could get caught in the wringer of the housing collapse, not just greed, stupidity, or fraud. On the other hand, those are the only ways I can see that the banks and security investors could get hurt, and we’ve already bailed them out.

That is, what pluk said.

Poor Michael Scherer. Can’t afford a house in his preferred neighborhood. Ever think about slumming it in a starter home somewhere else, Mike, like the rest of us?

This from sneezegaguard deserve repeating: “In my view, the real problem here is the bank, who clearly should’ve known better. I have trouble demonizing the people who are having trouble making payments. Maybe a good number of them made bad judgement calls. But the bad call they made was not looking for a big house, it was trusting the bank.”

Sure, Stuart, that’s perfectly reasonable. My point is that the institutions are primarily to blame.
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Jay Ackroyd:
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Until economists find equations that adequately address the impact of marketing on market actors…it might behoove said economists to find more descriptive terms for this phenomenon.
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I guess I was really looking for an economist to tell me if there were equations that can make decent predictions based on the impact of marketing on market actors, or at least more descriptive terms for this phenomenon.
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It seems like our discourse is ruled by the question “Who was the most stupid?” these days, but it seems to me that, unless the reality of inducement is factored into our calculations, most Americans will just go out and buy more SUV’s (or refinance their fixed mortgages with “lower monthly payment” ARMs) when that’s all they see for sale on teebee.
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Isn’t the system broken in more ways than the ones for which these Federal “packages” we’re agonizing over are meant to ameliorate?

A scenario: A couple goes into an office w/ an official from a federally insured financial institution. Which of these 2 entities, the couple and the financial officer, has the role of authority figure in this scenario?
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A)the couple
B)the financial officer of a federally insured bank
C)all of the above
D)none of the above

I think the current situation is even surprising to some seasoned real estate and lending folks. When we bought in 2004 a life-long friend of my parents was our real estate agent. He’s been in the biz for 30+ years, and even teaches classes. Our lending agent was my brother-in-law who would never have recommended anything detrimental to us for his own benefit, yet he laid out the positives of an ARM loan. Neither of the experts we worked with could have imagined the meltdown the country is currently experiencing.

Bobby Jindal is a phucking liar
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http://transcripts.cnn.com/TRANSCRIPTS/0509/11/lkl.01.html
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KING: You’re not getting it.
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LEE: I fully believe that when then matter is looked into, we tried to get some boats in the water early on. When I realized that we had a problem, I was the one that made the call in WWO (UNINTELLIGIBLE) radio if there was anybody with a boat to come to a place so that we can get the boats in the water because I was around when — the other big hurricanes, and most of the rescue done early on were individual fisherman, recreational fisherman that had boats that went in the water. Those boats where not allowed to get into the water when they were needed and I just found out about seven days later one of the reason boats couldn’t get in was they didn’t have enough life preservers and some of them didn’t have proof of insurance. And I’m sure that there’s a FEMA regulation that says that. But when a storm of this magnitude hits, you through those regulations out the window and you do what you have to do and start saving lives.

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Now how in the phuck did Jindal hear the Sherriff say something on the phone that the Sherriff didn’t know until 7 days later?
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During Katrina, I visited Sheriff Harry Lee, a Democrat and a good friend of mine. When I walked into his makeshift office I’d never seen him so angry. He was yelling into the phone: ‘Well, I’m the Sheriff and if you don’t like it you can come and arrest me!’ I asked him: ‘Sheriff, what’s got you so mad?’ He told me that he had put out a call for volunteers to come with their boats to rescue people who were trapped on their rooftops by the floodwaters. The boats were all lined up ready to go – when some bureaucrat showed up and told them they couldn’t go out on the water unless they had proof of insurance and registration. I told him, ‘Sheriff, that’s ridiculous.’

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That is just wrong on so many levels. This fact checking made possible by a dailykos diarist. Evidently Time magazine doesn’t have time to look such things up.

sgwhite: “Now how in the phuck did Jindal hear the Sherriff say something on the phone that the Sherriff didn’t know until 7 days later?”
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He has supernatural powers. didn’t you know? He casts out demons and foretells the future.

I think Michael is really narrowcasting here. Where I live in South Florida, the effects of the real estate collapse are everywhere — all sales of everything are down, ad revenue down, fundraising down, the developers are bankrupt, related servicers of the real estate industry are hurting (like lawyers, brokers, cleaners, construction and repair, home depots etc) the condos sit empty, crime is up. This is not just about a few ‘greedy’ homeowners looking to flip — oy.

“And Michael — I know it doesn’t have the cachet of a DC address, but some of the older, inside-the-Beltway ‘burbs in Prince George’s County (Hyattsville, Mount Ranier) are not only cheaper but funkier –in a good way. And we have an excellent local brewpub.”
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Um, Joy-o, I know you’re a nice white lady, but you realize you flirting with danger–the prospect of having MS as your neighbor doesn’t unnerve you? At all?
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In my so-called adult life, I’ve owned for just over 3 years and rented for about 14. I’m so much happier renting. Though peripatetic doesn’t begin to describe this English tinker. Two kinds of people and all that jazz, but I get that the American dream should be achievable for those who work hard and play by the rules.

Once again the Swampland commenter’s are better informed and more thoughtful than Time’s crackerjack staff.

I particularly liked this part of Stein’s piece, “Meanwhile, mortgages held by the responsible people Obama says he is trying to help only go into foreclosure when the owners lose their jobs. But the best way to help them is through increased unemployment benefits and job creation.” Being in the enviable position of owning a house that is not upside down and does not have second or third mortgages, I anxiously await the not too distant day when it makes more economic sense for me to be on unemployment than to come to work everyday.

20 years ago, the mortgage holders who are now under water could have gone to the bank that held their mortgages, and describe the circumstances, and a bank officer could have a frank discussion about what could be done. Partial payments might work. A new mortgage paid over more years might work. A frank bank admission that the bank would not recover full value might allow an agreement to settle for the borrower paying 90¢ on the dollar: the bank might decide that was a better deal than paying lawyers to hound the borrower for money the borrower would never have.

All of that would be possible because the mortgage hadn’t been securitized, sliced, diced, tranched, retranched, and tossed into the hands of a mortgage collection operation at the other end of the country that only earns by charging a monthly fee and can’t earn by renegotiating.

For today’s borrowers in trouble, that option is missing. There’s no one, anywhere, who can sit down and talk through an honest solution to the loss.

That part isn’t the borrowers’ fault. It’s the lenders’ fault, the regulators’ fault, the ex-President’s fault, and Americans’ fault. The borrowers have lost plenty and will hurt plenty even if WE do our part to fix OUR mistake, but it’s time to clean up OUR share of the mess, and that means carrying a part of the cost of the lunacy that took over our country.

@jcapan — not an issue for me. I’d even buy him a beer.

I bought a nice 10 room, 2 bath home 13 years ago at a reasonable price. I bought a place that equaled twice my yearly gross. Home prices soared where I live soon after. Three years ago my house was appraised at two and a half times what I paid for it. I couldn’t afford it now if I was looking to buy a home. It’s dropped now to twice what I paid for it. I went for a fixed rate even though I was pressured to take out an ARM. I put 20% down. It’s almost paid for now but a neighbor wasn’t as lucky. They bought at the peak, the wife lost her job soon after and they had put almost NOTHING down. The house has been empty for over a year. The bank doesn’t want to rent it and hasn’t maintained it. Water pipes froze and burst in it last winter and it sustained severe water damage inside. It was a beautiful home but I can’t imagine anyone wanting it now for the price the bank is asking. I don’t blame the people who had to leave. They never expected to lose half their income and the bank loan seemed almost too good to be true. It was.

“@jcapan — not an issue for me. I’d even buy him a beer.”
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Good on ya! But as a MD native myself, and one who’ll be visiting soon, I prefer that he remains in DC in his courtier’s n-hood. I’m accustomed to seeing bottom feeders downtown but not so close to home (i.e. the parts of MD where Time writers would not live, but could afford).

Also I’ve heard (maybe on NPR) that banks really don’t like holding onto real estate, so when homes are foreclosed, the banks dump them on the market ASAP. That can’t be good for the market.
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sacredh: They tried to sell us an ARM too (because in two years you can refinance! whee!). We got a fixed rate. But that’s not because I know anything about finance, I just don’t trust a deal the terms of which I can’t understand. And thank god for that.

jcapan — if you are inside the Beltway when you visit MD, look me up (directions to my bar stool at Franklins in MS’s 99 links post) and I’ll buy YOU a beer!