How Many Licks Does It Take?

[RedHairedandFriendly]

That's rubbish, actually. My credit score runs between 820 and 840, depending on what company takes it, and I don't run debt--not even a mortgage. This is the stuff that urban legends are made of. If you are rolling in money and paying cash for everything and piling up lots of things of value, your credit score is going to skyrocket.

I'd say this example was more the result of a combination of delayed reaction in information accumulation and not having built up meaningful equity/value in anything.

I don't believe it's rubbish. My In-laws are very wealthy, yet they saw their scores dropping because they had no debt, no loans, nothing. So the mother-in-law got a ton of new furniture, and a new car, up went their score. They pay it all on time, with a almost nil interest rate and her score is now back where she likes it. I also have a sister-in-law that works as a financial consultant, she's told me the same thing. Creditors aren't going to make money off of someone who pays their debt.

 

[SeaCat]

What exactly would you suggest they be prosecuted for? Providing a product to allow low/moderate income folks to get into a home? So some of those folks made bad decisions? Is that the sub-prime lender's fault? If someone buys a car that can't afford, is it the car salesman's fault? If someone runs up their credit cards and can't make their payments, is it the credit card company's fault? Where does personal responsibility fit into your declaration of criminal responsibility? Those sub prime borrowers were told the nature of the loan they were getting. Why is it the lender's fault that they are having issues now?

CosetLvr, (Love the handle by the way.)

I live in South Florida. I watched the bubble growing, I also watched the newspaper and the television where I saw all of the ads for Sub-Prime Loans. As the market slowed the ads increased to the point where they were advertising for people to come in and get a loan for a house. One of the most common quotes waas; "No Credit, Bad Credit? We can get you into a house for almost nothing."

Yes the people who took these loans are ultimately at fault, but are not these lenders also at fault? They gave these people loans for $200K+ places well knowing they wouldn't be able to make the payments when their loans came due.

Oh wait a minute, Buyer Beware and Free Market come into play here don't they?

In that case let us retract the laws dealing with the potential for lawsuits when a person moves into a house and then finds it has structural problems. They should have known better shouldn't they? How about the case down here recently where a couple bought a Condo. The bathroom didn't have a window to the outside. Because of this there was no exhaust and there was a build up of humidity. This caused a growth of Mold. They shouldn't be able to sue the original owner because they should have known and expected this.

Oh why in the hell am I argueing this? We disagree about a point of ethics and neither can win.

Cat

 

[RedHairedandFriendly]

We owned a home once. It was a nice house in town. We could afford it at the time we purchased it. Then we learned that our Medical Insurance company would not cover the birth of our second daughter, claiming it was a pre-existing condition, after we had been told it was covered by the person in charge of handling insurance in the company office.

Not only that, but... because my daughter was born 3 mths. premature, she had to stay in the ICU for several weeks. Her care topped several thousands of dollars, funds that our Insurance company claimed she'd overused "over extended her stay" I believe was the excuse they gave. We were left with over 20,000, for her bill, another 10,000 for mine for all the prenatal care, the emergency room visit at hospital one, the ambulance transfer, the emergency surgery at hospital two and the 4 days I was in the hospital.

We declared bankruptcy in 1995 with 91,000.00 in debt.

We'll get out of debt again, hopefully stay out, but there is no guarantee. I don't know what trials are going to push their way into my path.

 

[Le Jacquelope]

from The Myth of Middle-Class Job Loss
By Stephen J. Rose

Economic change is a messy process. New technologies open up many opportunities for those prepared to take advantage of them. At the same time, old firms and their workers are displaced and forced to start over. In 1900, for example, 40% of the U.S. work force was involved in agriculture. Today, that figure is less than 2%, and no serious observer would argue that we are worse off as a result of this transformation.

Okay, so with the jobs that are going away now, what's coming along to replace them?

What new phenomenom are we seeing that's looking to hire a ton of people?

What are we transitioning to?

Yet many of today's most prominent politicians and pundits are making an updated version of precisely this argument. They claim that the decline in the number of manufacturing jobs has led to the replacement of good middle-class jobs by low-skill, low-pay "hamburger-flipping" service jobs.

This kind of populist dogma is bad politics and even worse economics. The assertion that the American middle-class is disappearing along with manufacturing jobs is, put simply, based on an outdated view of how the economy operates, and is empirically wrong. Nonetheless, the view that the economy has failed the middle class is widespread. The outsourcing of jobs to low-wage countries is, of course, the latest culprit. Polemicists from all sides find it irresistible to blame expanding trade for middle-class decline. But how widespread a problem is outsourcing, exactly?

This person may poo poo on the shrinking middle class issue, but the statistics say he is wrong.

2004:
http://www.factcheck.org/article249.html

2006:
http://retailtrafficmag.com/mag/retail_twilight_middle_class/

It is certainly true that many jobs in manufacturing clothing, steel, metal products and automobiles have gone overseas. Plant closures not only devastate the workers who are displaced, but they have also undermined the vitality of whole communities in North Carolina, Pennsylvania, New York, Michigan, Ohio and Wisconsin, to name just a few places. But while such communities are a clear sign of the decline in some sectors of the economy, there has been strong employment growth in many other sectors. In research just published by the Progressive Policy Institute, I show that incomes and employment have grown by substantial amounts in every state (even in the so-called Rust Belt) since the passage of the North American Free Trade Agreement in 1993.

Refuted:
http://money.cnn.com/2006/08/28/news/economy/real_wages/index.htm

In fact, there is no convincing, data-driven proof that trade has led to any overall job loss during the last 30 years. To the contrary, the economy has grown at a slow but steady rate (a few brief recessions notwithstanding) with trade and employment rising in tandem.

To prove that there has been substantial growth of middle-class jobs, I compare the situation that existed in 1979 with that of 2005. The base year is 1979 because it represents the last business-cycle peak before income inequality and the U.S. trade deficit began to grow quickly in the 1980s. To make the comparison fair, earnings in 1979 are increased by almost 150% to adjust for inflation.

. . . Here's the bottom line: For three-quarters of the workforce (women and the top half of male earners), economic growth translated into earnings gains. But for male workers in the bottom half of the earnings distribution, the decline of unionized manufacturing employment has led to the drying up of some middle-class jobs for those with no post-secondary education.

For the clear majority of the workforce, then, the job market has become more welcoming, not less so. But where are these jobs?

I find that most of the employment gains over the last 30 years have been in business-management activities (administration, sales, finance and business services) as well as in professional services such as health care and education. While the percentage of U.S. jobs derived from manual work in agriculture, mining, timber and manufacturing has declined, the share of jobs related to low-skilled retail and personal/food services has remained steady.

Undeniably, some people have been left out of this middle-class workforce expansion and need help in making the transition to the new economy. In particular, the last six years have seen very little wage growth for the bottom 80% of the workforce. But we should bear in mind that real gross domestic product per person is up over 60% since 1979, and our goal for the job market should not be simply to keep pace with where things stood nearly three decades ago.

- Stephen J. Rose, senior economic fellow at the Progressive Policy Institute, where he recently authored a report titled "The Truth About Middle Class Jobs." He has worked both for the Joint Economic Committee of Congress and as an adviser to former Secretary of Labor Robert Reich.

His essay runs in direct contradiction with measured numbers. I really don't need to say more than that.

It will be interesting to see how 2007's figures turn out.

 

[CorsetLvr]

Yes the people who took these loans are ultimately at fault, but are not these lenders also at fault? They gave these people loans for $200K+ places well knowing they wouldn't be able to make the payments when their loans came due.

Actually on that point you may be partially right. It just depends on how they qualified for the $200K loan in the first place. If there was fraud involved, someone will probably go to jail. All foreclosed loans get audited. Also a lot of loan officers did stated loans for people that didn't qualify. A stated loan is also kown as a "liar's loan" in some case. If the borrower didn't qualify based on their income, you just took them into a stated loan where you don't have to prove income. These loans can also be prosecuted as fraud now. There are legitimate reasons for stated loans, but doing them just because the borrower doesn't make money is not one of them. Stated loans are generally intended for self employed people that have a harder time documenting their true income (not what they tell the IRS )

Another one of the "exotic" loans that is causing a lot of problems are the option ARMS, also known as pick a pay loans. The borrower has 4 options on how they want to make payments. This decision can be made on a month to month basis. One of them is a reverse amortization, or minimum payment. This is an option that eventually goes away and leads the borrower to being upside down on their loan. Again, this is the borrower making the decision, not the loan officer or lender. But, human nature being what it is, a lot of less disciplined borrowers can get into trouble with this loan.

My real point is that you shouldn't cast a broad blanket based on what you are hearing in the media. The media, and to some degree Congress, is trying to find a bogeyman to use as the scape goat. There is plenty of blame to go around but some individuals make easier targets. In this case the brokers are a very easy target. Yes, a lot of sub-prime borrowers shouldn't have been given loans. No one seems to remember that 95% of sub prime loans that aren't in foreclosure. A lot of people have cars repo'ed too, but I don't see anyone trying to shut down the auto loan business.

 

[CorsetLvr]

People have always overestimated the "investment value" of home ownership for the simple reason that they invariably neglect to include the costs of insurance, maintenance, the time value of money, and taxes. Roxanne very correctly alluded to this in an earlier post. All those anecdotes that were abroad about John Q who bought a place for "x" in 1987 and sold it for "3x" or "4x" in 2005 had the effect of firing the imaginations of the gullible and the innumerate. Realtors have always promoted the false claim of the "tax shelter" that is purported to exist because of the deductibility of home mortgage interest. It's a completely bogus claim. Interest is still interest and, deductible or not, it's still an expense.

The point that a realtor should be trying to make is the tax advantages of home ownership over paying a comparable amount for rent. What if I am paying $1000 a month in rent and then buy a home and pay $1000 in mortgage, taxes and interest. Which scenario leaves me better off financially. Also, when was the last time you were able to build equity as a renter? Well, I suppose you are building equity... for your land lord that is. The real point is try to re-educate a renter to see the differences between paying rent and paying a mortgage.

 

[Misty_Morning]

Don't insult people you don't know.

I don't think corsetlver was try to insult anyone. He/she was merely talking in facts.


Unfortunately, facts sometimes are not very community friendly.

Now I am gonna talk from experience.....most folks invest for the sole purpose of increasing their wealth....in dollars. The friend of whom of spoke of wished to do the same. But he also knew that he was gonna havta live in the community that he invested his money.

He was face with losing half of his household income because his wife died very unexpexpecantly and at a very young age, leaving him with a very young child and only a working man's salary.

This individual teamed up with a buddy and put in HOURS upon HOURS of sweat equity. After working full time positions they went to work at fixin up their properties.

This wasn't big time corporations moving in and doing a little bit and then hauling ass.

He KNEW he was part of the the community and he knew that the folks in the community could only afford so much. So he took advantage of the fact that he could buy these properties, fix em up and make them available to other folks in his same or even less economical status.

He wasn't trying to win awards.....he was trying to secure a future for his daughter. AND.....it just so happened that he was able to provide GOOD HARD WORKIN folks a descent and safe place to live.




Kinda odd aint it? Joe Blow on the street makin a buck while improving life for others......and he did it without a handout from the federal government.



I guess the world aint as bad as I thought after all.

 

[Stella_Omega]

Kinda odd aint it? Joe Blow on the street makin a buck while improving life for others......and he did it without a handout from the federal government.



I guess the world aint as bad as I thought after all.

Not as odd as you think. Honest.

 

[Le Jacquelope]

The point that a realtor should be trying to make is the tax advantages of home ownership over paying a comparable amount for rent. What if I am paying $1000 a month in rent and then buy a home and pay $1000 in mortgage, taxes and interest. Which scenario leaves me better off financially. Also, when was the last time you were able to build equity as a renter? Well, I suppose you are building equity... for your land lord that is. The real point is try to re-educate a renter to see the differences between paying rent and paying a mortgage.

I say the fault lies not with realtors, but rather:

The appraisers, some of whom illegally inflated values;
The flippers, who drove home prices way beyond the average income's ability to afford them;
The refinancers, who used their equity as an ATM;
The people who failed to take into account the future dangers of ARMs.




RedHairedandFriendly: Damn, the medical insurance industry is criminally responsible for a lot of crap that goes on in this country. There is a reason why other nations avoid them like the plague: your example is one. I'm sorry you had to go through that.

 

[RedHairedandFriendly]

RedHairedandFriendly: Damn, the medical insurance industry is criminally responsible for a lot of crap that goes on in this country. There is a reason why other nations avoid them like the plague: your example is one. I'm sorry you had to go through that.

Thanks LovingTongue.

Yes, they suck sometimes, but I also know I couldn't be where I am health wise if I didn't have med. insurance. It's that catch 22 thing. Damned if you do and damned if you don't.

The debt we have now is strictly medical. It is small and I know we'll pull ourselves out. I also know there are future medical issues on the horizon. I just hope this time we are able to get ourselves further above water before they hit.

 

[CorsetLvr]

The appraisers, some of whom illegally inflated values;

Like any profession there are always a few bad apples. The same is true of appraisers. I don't know what happend in the southwest and Fla., but I have known several appraisers here and hae never seen any of them do a bogus appraisal. They, like most loan officers I know, take the attitude that no single deal is worth losing their license and livelihood.

Here's the deal though. Appraisals do not exist in a vacuum. They have to be based on appraisal standards and practices. Every appriasal I have seen was reviewed at least by an underwriter, and in some cases another appraiser. These reviews can be very exhaustive and its not unusual to have an appraisal sent back and require some degree of modification, additional comparables, or just plain re-worked. If appraisals are bogus, then someone is allowing them to go through.

I have seen some appraisers willing to "stretch a little" to make a deal happen. In general this is only a couple of thousand dollars and can largely be justified by appreciating values. If the appraisers is using a 6 month old comp and you are in a market that is appreciating at 6%, then it follows that the comp is worth 3% more then when it sold 6 months ago. Those are the kind of numbers that are typical in my market. In no way is this a fraudulent appraisal. generally the stretch is done to help factor in seller contributions to closing costs to help the buyer keep their out of pocket costs to a minimum.

 

[trysail]

The point that a realtor should be trying to make is the tax advantages of home ownership over paying a comparable amount for rent. What if I am paying $1000 a month in rent and then buy a home and pay $1000 in mortgage, taxes and interest. Which scenario leaves me better off financially. Also, when was the last time you were able to build equity as a renter? Well, I suppose you are building equity... for your land lord that is. The real point is try to re-educate a renter to see the differences between paying rent and paying a mortgage.

I bought a house in an upscale neighborhood in 1998 for "x" and sold it in 2003 for 1.43 x the purchase price. The property was purchased with a mortgage equal to 55.5% of the initial purchase price. After all expenses, do you think I made money? (for the answer, see the bottom of this post)

People have always overestimated the "investment value" of home ownership for the simple reason that they invariably neglect to include the costs of insurance, maintenance, the time value of money, and taxes. Roxanne very correctly alluded to this in an earlier post. All those anecdotes that were abroad about John Q who bought a place for "x" in 1987 and sold it for "3x" or "4x" in 2005 had the effect of firing the imaginations of the gullible and the innumerate. Realtors have always promoted the false claim of the "tax shelter" that is purported to exist because of the deductibility of home mortgage interest. It's a completely bogus claim. Interest is still interest and, deductible or not, it's still an expense.

ANSWER: No- it wasn't even close. In fact, the total expense turned out to be roughly equivalent to what I would have paid to rent a comparable property over the same time period.

 

[sr71plt]

I bought a house in an upscale neighborhood in 1998 for "x" and sold it in 2003 for 1.43 x the purchase price. The property was purchased with a mortgage equal to 55.5% of the initial purchase price. After all expenses, do you think I made money? (for the answer, see the bottom of this post)





ANSWER: No- it wasn't even close. In fact, the total expense turned out to be roughly equivalent to what I would have paid to rent a comparable property over the same time period.

This is sort of a useless posting, as you give no reference to what went into expenses. Your liquor bill? A trip on the Queen Mary? You'd have to be pretty bad at handling your finances--or you engaged a scam lawyer--to lose (in reality, rather than urban myth assertion on an Internet chat site) on this real estate deal. Although it wasn't real smart to turn it over in just five years (or in running up unnecessary expenses if you intended to turn it over that quickly). Suggest a personal finance course.

This seems yet another thread of recutting reality to meet "oh woe is me" expectations of a bunch of folks more comfortable with worst casing than in getting their acutal (as opposed to cyber) lives in order.

 

[trysail]

... as you give no reference to what went into expenses...

What do you think I included in expenses other than directly attributable items such as insurance, interest, maintenance, property taxes, and utilities, Einstein? The whole point of the post is that the vast majority of people seem to believe that buying for "x" and selling for "1.43x" in five years would return a profit- 'tain't so.

Whaddya want, my spreadsheet? Sheesh!

I bought a house in an upscale neighborhood in 1998 for "x" and sold it in 2003 for 1.43 x the purchase price. The property was purchased with a mortgage equal to 55.5% of the initial purchase price. After all expenses, do you think I made money? (for the answer, see the bottom of this post)





ANSWER: No- it wasn't even close. In fact, the total expense turned out to be roughly equivalent to what I would have paid to rent a comparable property over the same time period.

 

[sr71plt]

What do you think I included in expenses other than directly attributable items such as insurance, interest, maintenance, property taxes, and utilities, Einstein? The whole point of the post is that the vast majority of people seem to believe that buying for "x" and selling for "1.43x" in five years would return a profit- 'tain't so.

Whaddya want, my spreadsheet? Sheesh!

I don't know what you included as expenses--you didn't say--which made everything else you said pretty meaningless. If this was also your residential property, are you sure you took into account all of the expenses you'd have had during that five years of living somewhere else? If it wasn't your residential property and you were doing this for an investment, you'd probably best do some more study of real estate investment before doing this again--because you shouldn't have lost money on that deal. (And probably didn't--woe-is-meing chat room discussion usually is more about fitting the "facts" to match the complaint than it is about anything else.)

Sorry, but all this bellyaching is just that. If your lot is bad, get out from behind the computer and go do something "real life" about it.

 

[CorsetLvr]

Another general rule of thumb in real estate is that 5 years is the break even for owning a home. I think you just proved that.

Did you bother to include the difference in what you would have paid in income taxes as a renter into your calculations? Like SR71plt said, you didn't include what you fitted into your calculations so we have no way of checking your math. 90-95% of your PITI in the first 5 years of the loan should have been tax deductible.

You made a 43% gross profit and lost money? Was it a money pit?

 

[trysail]

Did you bother to include the difference in what you would have paid in income taxes as a renter into your calculations? ...90-95% of your PITI in the first 5 years of the loan should have been tax deductible.

You made a 43% gross profit and lost money? Was it a money pit?

Of course I tax-effected the interest payments. Annual expenses (property taxes, P+I, maintenance, insurance and utilities) were fairly steady at roughly 9.5% of the purchase price.

I didn't say that I "lost" money- only that the net expenditure (and it was a net expenditure) was roughly equivalent to what one would have paid to rent a comparable property over the same time period. All of us have to pay for shelter; the only point that I am making is that the "investment" aspect of residential real estate is highly overestimated.

The whole reason I related all this was to serve as an explanation of why most people overestimate the "investment value" of residential real estate: they fail to include expenses in their "analysis." 99% of the population would (incorrectly) conclude that a 43% "gross profit" over a five year period would represent a good result (if not an actual killing) when, in fact, the precise opposite is true.

 

[sr71plt]

Of course I tax-effected the interest payments. Annual expenses (property taxes, P+I, maintenance, insurance and utilities) were fairly steady at roughly 9.5% of the purchase price.

I didn't say that I "lost" money- only that the net expenditure (and it was a net expenditure) was roughly equivalent to what one would have paid to rent a comparable property over the same time period. All of us have to pay for shelter; the only point that I am making is that the "investment" aspect of residential real estate is highly overestimated.

The whole reason I related all this was to serve as an explanation of why most people overestimate the "investment value" of residential real estate: they fail to include expenses in their "analysis." 99% of the population would (incorrectly) conclude that a 43% "gross profit" over a five year period would represent a good result (if not an actual killing) when, in fact, the precise opposite is true.

Naw, I don't see it--and, of course, the "precise opposite" wasn't true if the house didn't burn down uninsured and you lost the whole ball of wax.

You miss the point on "we all have to pay rent," I think. If you got back what you paid for shelter during that five years (which you'd do on a 143% resale), you paid zero in "rent" for that period--it was all profit--it came back to you when you resold the house. On what would have been $1,000 in rent (all a total loss--more than a total loss, actually, because there's no tax deduction) per month, that would be $60,000 right there for a five-year period.

Can only see a combination of two reasons you didn't come out well on the deal--if you haven't just miscalculated and failed to take everything into account--you sold too quickly to amoratize the paperwork costs and/or you put too much money into fixing up and upgrading for the time you held the investmnt--an area you haven't addressed in your posts.

But--whatever. if you didn't make a substantial gain, that doesn't mean it can't be done by proper planning. I didn't have any trouble trading up and winding up mortgage free.

 

[Le Jacquelope]

Like any profession there are always a few bad apples. The same is true of appraisers. I don't know what happend in the southwest and Fla., but I have known several appraisers here and hae never seen any of them do a bogus appraisal. They, like most loan officers I know, take the attitude that no single deal is worth losing their license and livelihood.

Here's the deal though. Appraisals do not exist in a vacuum. They have to be based on appraisal standards and practices. Every appriasal I have seen was reviewed at least by an underwriter, and in some cases another appraiser. These reviews can be very exhaustive and its not unusual to have an appraisal sent back and require some degree of modification, additional comparables, or just plain re-worked. If appraisals are bogus, then someone is allowing them to go through.

I have seen some appraisers willing to "stretch a little" to make a deal happen. In general this is only a couple of thousand dollars and can largely be justified by appreciating values. If the appraisers is using a 6 month old comp and you are in a market that is appreciating at 6%, then it follows that the comp is worth 3% more then when it sold 6 months ago. Those are the kind of numbers that are typical in my market. In no way is this a fraudulent appraisal. generally the stretch is done to help factor in seller contributions to closing costs to help the buyer keep their out of pocket costs to a minimum.

It appears that there are far more than just a few bad apples now. And the appraiser inflation that's happening appears to be far more dramatic than just someone "stretching things a little".

http://www.latimes.com/classified/realestate/news/la-re-harney11nov11,0,2586130.story?track=rss

A suit filed Nov. 1 in New York suggests that puffed-up appraisals not only may be commonplace in softening markets, but also could be the result of collusion by some of the largest companies in American real estate.

There's much juicier stuff than that in this article.

The FBI has a page on mortgage fraud in general, and appraiser fraud is a part of what they're focusing in on:
http://www.fbi.gov/page2/dec05/operationquickflip121405.htm

and then there's this article, that considered this a crisis situation back in 2005:
http://realtytimes.com/rtapages/20050202_appraisalcrisis.htm

I'm not trying to get into exactly what constitutes a fraudulent appraisal, but the ones that attract law enforcement's attention involve a very large number, and a whole lot of money... billions of dollars.

 

[CorsetLvr]

It appears that there are far more than just a few bad apples now. And the appraiser inflation that's happening appears to be far more dramatic than just someone "stretching things a little".

How many of the millions of "non-puffed up" appraisals that are done every get newspaper articles written about them. For that matter, how many legitmate, fair, and honest mortgage brokers end up with articles in the Wall Street Journal? The same for the realtors.

I think you made my point in a way. Everyone reads those types of articles and just assumes the entire real estate industry is full of con men. Its not so. I, like most people in the industry, have built my business on customer referrals. You don't get referrals by ripping people off. In many cases I'm on the 4th and 5th generation of referral.

Unfortunately there are people in any industry that are focused on the fast buck. I have always said the worst thing I have to deal with is a starving realtor. 70% of them don't make it in the business past 2 years and the real estate schools just keep turning them out. Every deal is a life or death proposition for them. The same can be said for a lot of loan officers.

Why an appraiser would risk his license for a $350 fee is beyond me. I know there have been some payoffs in some cases. I've heard the stories. I know of one appraiser in my area that went to jail as part of a conspiracy to commit loan fraud racket.

However, my point is that you shouldn't assume an entire industry is characterized by the bad apples you read about. This is no different then any other profession. There are good and bad cops, lawyers, and doctors too. You rarely hear about the good ones and the media makes a living by sensationalizing the bad .

 

[TheEarl]

Reading this thread is giving me a whole new appreciation for the NHS. There are so many people talking about hospital bills and medical debts bringing down their house of cards.

Glad all I have to worry about is £11,000 worth of student loans.

The Earl

 

[sr71plt]

Reading this thread is giving me a whole new appreciation for the NHS. There are so many people talking about hospital bills and medical debts bringing down their house of cards.

Right. There you go.

 

[CorsetLvr]

Reading this thread is giving me a whole new appreciation for the NHS. There are so many people talking about hospital bills and medical debts bringing down their house of cards.

I can't tell you how many credit reports I have seen on people that cannot qualify to buy a house because of medical debt collections that have destroyed their credit. Their consumer debt may be OK, but they may have a long list of medical collections. These have a tendency to surface time after time as the collection is repeatedly sold to one collection agency after another, even after the original debt has reached the 7 year expiration for reporting. They just seem to hang on forever and act as an anchor to these folks. They are often for relatively small amounts of money and I think trips to the emergency room with sick kids may be a large part of the problem. Whatever the cause, the lack of an effective medical care system in the US for folks that do not have insurance has a major impact on the credit system as well.

 

[Stella_Omega]

I live in a lower class part of L.A. I just drove past a big, black on orange, sign on a house;
FORECLOSURE SALE!

The house is a hovel. It looks to be two bedrooms at most, it's covered in cracked stucco, on a lot that might be ten feet wider than it is-- at the bottom of a hill (that has slid in years past, I rememebr it) and on a busy, noisy, traffic-heavy street. (eta; gang and crime heavy as well)

We are not talking about a lovely fresh-built dream home, here. Of course I have no idea what the circumstances are-- maybe someone thought they could purchase it while they were on welfare.

I know that I have difficulty with the Big Picture-- I tend to look at individuals, and what's happened to one person at a time. But it seemed to me that house should have been affordable by any middle-class couple ready to start out-- and probably someone less funded than that.

But- what do I know?

 

[Le Jacquelope]

I live in a lower class part of L.A. I just drove past a big, black on orange, sign on a house;
FORECLOSURE SALE!

The house is a hovel. It looks to be two bedrooms at most, it's covered in cracked stucco, on a lot that might be ten feet wider than it is-- at the bottom of a hill (that has slid in years past, I rememebr it) and on a busy, noisy, traffic-heavy street. (eta; gang and crime heavy as well)

We are not talking about a lovely fresh-built dream home, here. Of course I have no idea what the circumstances are-- maybe someone thought they could purchase it while they were on welfare.

I know that I have difficulty with the Big Picture-- I tend to look at individuals, and what's happened to one person at a time. But it seemed to me that house should have been affordable by any middle-class couple ready to start out-- and probably someone less funded than that.

But- what do I know?

Speculators. They're driving up the demand for houses.

Instead of there being just one person looking to live in the house, there's now also 10 speculators trying to buy the house and flip it for a profit in the tens of thousands.

Each speculator means an artificial jump in demand for every house in a given region.