I was screwing around in the public records of a sprawl community in Homestead (formerly an open land/agriculture area) just looking for something to jump out at me and something did! Jean Claude bought a 1,360 sq. ft. townhouse in June 2007 For $260,000 ($191 a square foot). In July 2004 his neighbor paid $131,386 for the same unit. At the height of the real estate frenzy, in February 2005 a unit a few doors down sold for $208,000 and in June 2005 another sold for $210,856.I said to myself, why in mid 2007, well into the real estate downturn (there was a foreclosure on the next block in October 2007), would Jean Claude pay such a high price? And even more surprising then the price paid, was the financing he was able to get:
Jean Claude actually got 100% of his purchase price financed, this is in June 2007 mind you! Incredibly, buyers in South Florida were still getting 100% loans months after all the bad press on foreclosures!
His mortgage was at 8.375%, prepared by Aurora Mortgage out of Vienna, Virginia. His adjustable rate would cap at 14.375%. By December 2007 Keys Gate Community Association slapped a lien on his property. A Lis pendens was filed by Aurora Mortgage in March 2008. Like we couldn't have predicted that was going to happen!!
I found another sale in June 2007 to Angielee for $260,000 for a larger 1,498 sq. ft. townhouse ($173 a square foot). Angielee got a mortgage for $208,000 dated June 2007 and a secondary lien (ballooon rider) for $52,000. Both were from First Franklin Financial Corp. out of San Jose, California. Again, this is 100% financed! Her interest rate for the first mortgage was 8.25% and could not go higher than 14.25%. Angielee is not in foreclosure according to public records, but I would bet a foreclosure could be coming.
A few months earlier, in March 2007, Antonio purchased a 1,498 sq. ft. home in the same development for $335,000 (a whopping $223 a square foot). Remember Angielee paid $173 a sq. ft. for the same unit and another similar unit sold January 2007 at $170 a sq. ft. In 2005 near the top of the market, this unit was selling for about $133 a sq. ft.
Antonio got a mortgage for $268,000 in April 2007 from Sunshine Financial Group out of Miami and it was immediately signed over to JP Morgan Chase Custody Services. He also got a home equity line of credit mortgage from JP Morgan Chase Bank for $67,000 in November 2007. Again that adds up to 100% financing! His adjustable initial interest rate is 6.375%, capped at 12.275%.
So, in an hour of searching public records on a few blocks in one neighborhood, I found three 100% financed loans on what I would consider three above market value properties which is a recipe for foreclosure. Eye on Miami had been reporting foreclosure abuses in early 2007-- with every other news outlet in the United States. Lenders certainly should have known better as 2007 marched on! And, what is wrong with the appraisers? That is another post.
More from: Eye On Miami's Housing Crash File
3 comments:
I was reading about the bond problems for the county because of the sub-prime mess. This goes beyond foreclosures it seems to touch everywhere How can banks be so cavalier with loans and expect to be bailed out of the problem when they caused a cascade of new problems?
The question is not "what is wrong with the appraisers.." the question is where is the Justice Department, the Florida Bureau of Investigation, etc. We in FL are going to be paying for this mess for years to come and it is only going to be worse if our fabulous government doesn't make a whole slew of arrests in this. This abuse is going to end up costing us more in future mortgages because the lenders will have to build in a FL risk premium.
Keep climbing higher in your search of agents to blame for the mortgage debacle and destruction of the American banking system.
The system is going to have to figure in a much higher level of risk coast-to-coast. Downtown Chicago is Foreclosure Central- REOs hitting the market every day. Seems like flippers were buying 20,30, 40 condos at a time in new downtown high rises.
At least, in Miami, many lenders have shut down the gambling mill and simply won't lend until the air clears and they can put a price. So maybe you will get past the worst of it sooner.
Go clear up to the Federal level-the Federal Reserve, the lender of last resort, and the agencies that bought all the garbage mortgages as fast as the boiler rooms could churn them out- Fannie Mae and Ginnie Mae. The FHA, too.
The FHA is still offering loans for 5X the buyer's income; anything to keep the housing Ponzi scheme going. No down payment is still available.
You can see the greed and mendacity and total lack of regard for the destruction being wrought on the American public by this little comparison, of two loans.
One young local woman, who earns $27K a year, was able to qualify for a FHA-backed loan of $150K. THAT IS 5X HER INCOME!!!
However, in the same article, a couple with a combined income of slightly over $200K was able to qualify for only $417K- only slightly more than 2X their income, even though they have a much healthier margin for overpay than the other, much poorer, borrower?
How come?
And why $417K? Why not $420K or $410K? Because $417 is the upper limit for conforming loans, that's why. Otherwise, I'm sure this couple would've been approved for north of $1MM.
Given that the Federal government is bending itself into pretzels trying to think up some way to bail out Wall St and is already putting Billions of $$$ of our money behind Chase on the purchase of Bear Stearn's worthless assets, and given that the lenders are STILL making bad loans for overpriced dwellings to people who cannot pay for them, you can see that this debacle is going to deepen and extend for many years, not just to 2009 or 2010. Wait till the mortgages written in 2005-2007 reset- you will not be able to believe the rampage of defaults and bankruptcy that will be.
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