'Extreme Makeover' house faces foreclosure

[TexasBushwhacker]

"More than 1,800 people showed up to help ABC's "Extreme Makeover" team demolish a family's decrepit home and replace it with a sparkling, four-bedroom mini-mansion in 2005.

Three years later, the reality TV show's most ambitious project at the time has become the latest victim of the foreclosure crisis.

After the Harper family used the two-story home as collateral for a $450,000 loan, it's set to go to auction on the steps of the Clayton County Courthouse Aug. 5. The couple did not return phone calls Monday, but told WSB-TV they received the loan for a construction business that failed."

http://tv.yahoo.com/extreme-makeover-home-edition/show/36736/news/urn:newsml:tv.ap.org:20080728:tv_extreme_makeover_foreclosure

Now my beef with all the "house porn" shows out there is that the build or remodel far beyond the families means. How would this family afford just the property taxes on this home without taking out a mortgage? Why spend $30K remodeling a kitchen in a house that's worth $100K. I know that these shows are all about product placement and free advertising for the builders and suppliers, but sheez, they're setting these families up for failure, especially when they build a home that is far bigger and fancier than the homes in the neighborhood. This family made some mistakes with their finances, but Extreme Makeover made some mistakes too.

[slackmaster]

1. Their property tax on the house last year was only $4,403.08

Before the makeover they had a conventional mortgage with a balance of roughly $110,000, so their monthly payments plus property tax and insurance then were substantially more than their housing costs immediately after the makeover.

They lost their shirts on a failed startup business, which they financed by mortgaging the new home for $300 K in September 2006. They refinanced that and took more cash out in May 2007, for a total of $450,000. That would be a "jumbo" loan and probably had a pretty high interest rate.

They had the house free and clear after the makeover. They tried to parlay their equity on a business that went bust. It was a construction company, at the worst possible time.

[phantom power]

4. Yeah, starting a construction company post-2005...

seems like an enormous blunder. I have to assume their were blinded by wishful thinking, cuz the housing market implosion was well under way by Q3 2006. I don't know what they did for a living, maybe construction was what they knew how to do. But man, read a newspaper.

[dipsydoodle]

2. Extreme Makeover Homeless Edition

might be more appropriate : http://www.youtube.com/watch?v=3LKDNcwZCmI

[trixie]

3. What idiots!

:banghead: Some people can't be helped.