captmike

Cramer's Stop Trading! Cheer up, Obama (9/14/09)

On what calendar was Monday 9/13?

Failed Short Sales Exacerbate Foreclosure Losses For All [Housing Tracker]

The Capiros' are, in a nutshell, the problem with America.

The purchase price on the house was $406,000 in 2003. In the not too distant past, that would have meant that Mr Capiro (ex- boat salesman and now motorcycle salesman) and Mrs. Capiro (no job) would have been required to put up $81,200 as a down payment. They would then get a mortgage for the difference, which is $324,800, as long as Mr. Capiro could prove that his income and job history, plus assets vs. debts, qualified them for the mortgage. In this scenario, even though the market had tanked, all they would stand to lose is $6,000 of their down payment, plus commission to the realtor (unless they sold the house themselves) of $12,000 to $24,000 because they've decided to move. No one likes to lose money, but they would have only lost a maximum of $30,000, and likely less and besides, they're the ones deciding to move.

That was in the good old days.

Instead, the Capiros' have a mortgage for $440,000, which is undoubtedly much more now because they are behind on payments! How could this be. Well they paid off credit card and other debt and went in with negative equity in a house that they couldn't afford the payments on in the first place. Now Mr. Capiro has tired of his commute (long but not unheard of) and decides he'd like to move. Surprise, because they had negative equity in the house from the start and are now even deeper because of missed payments, they can't sell the house for what they owe. So like any normal American with an over-sized expectation of entitlement, they expect the bank's shareholders (or at least the taxpayer) to bail them out because it might affect their credit worthiness otherwise!

They should be forced to file for bankruptcy and I'm starting to think that doing away with debtors prisons may have been a bad idea.