Facts & Figures - The Poor and the Credit Crash

[sandnsea]

US median household income $49133

Highest foreclosure locations:

Stockton CA
$44,729

Tarrant County Texas
$48,805, down from $57,400 in 2000

Adams County CO
$55,368

Las Vegas
$59195

Miami, is one of the few with a high foreclosure rate, but also one of the highest poverty rates with a median household income of $24,031

Shannon County SD, Pine Ridge Reservation, is the poorest county in America with an unemployment rate of 73%. Their median household income is $20878. Here is a list of the 100 poorest counties in the country. You won’t find many that are also in the top foreclosures.
http://en.wikipedia.org/wiki/Lowest-income_counties_in_the_United_States

Them, and people like them, DID NOT line up to lie their way into mortgages. I dare say they should have, considering the greedy fucks in this country, but they DIDN’T.

Neither did the rest of the low income people in this country. I will not let any of you blame this on the poor.

Not Happening.

[ThomWV]

1. People who knowingly made bad loans are blaming it on the people who they knew could not pay

[sandnsea]

3. Can you not read???

They made interest only loans to all kinds of people who wouldn't be able to pay the higher rate when they adjusted. Median and upper income people.

The foreclosures are not happening in low income counties. Helloooo??? thunk thunk thunk

Poor people had nothing to do with this. The 2% think EVERYBODY who isn't THEM is low income. That means YOU TOO.

In the real world, low income means poor which is why YOU think it's poor people and not YOUR NEIGHBORS.

[youngdem]

5. Yup.

I think homeowners should be able to remain in their homes during foreclosure until the home is sold for the balance.

Why in the world is it preferable to evict homeowners only to create vacancy problems, a deteriorating asset, a potential crime scene, and a homeless family, when before there was none of these things.

I used to work in the biz. These banks have ONLY themselves to blame. During the last few years of the boom before I switched careers, I saw loan after loan after loan get done with buyers who had ABSOLUTELY NO BUSINESS buying a house.

Additionally, lenders should be told to get fucked for approving loans for people based on the lowest payment, knowing full well the loan would adjust up 75% or more in many instances. There should be a law that says that a buyer must be qualified on the MAXIMUM payment possible under an ARM before they can be qualified, and if the lender approves someone below the ratio, the lender should be forced to honor and service the loan at the lower payment under which the buyer qualified.

All of this ARM manipulation should be criminal, and what it is doing to good families across this country is absolutely abhorrent.

[sandnsea]

8. Yeah, people earning $60,000 a year

and buying $250,000 houses. No business.

But that is not the poor.

[youngdem]

12. When I was in the biz, I saw hair dressers buying $220,000 condos on ARM's

THAT is patently insane.

And these weren't Paul Mitchell National Instructors or some such. These were just strip mall hairdressers, next to the radio shack or whatever.

And $60,000 is not rich, really. A family of four living on $60,000 in a major city is STRUGGLING.

There are MILLIONS of homeowners out there that are actual, working poor, and they are FUCKED because of the greed of the backers of these loan programs, creating loan programs that qualified people who could not make the payments.

[sandnsea]

13. Median Income - I posted the goddamn figures

Where do you think families with that income live?? Do you not know that rent is as much as a mortgage payment?

And many beauticians make very good money. $100 hair cuts, $200 dye and style.

But the problem is a mortgage industry that wasn't happy with conventional mortgages and long term dividends, like in the old days. Everybody has to be a millionaire tomorrow. That's why these mortgages were written and why people are bankrupting instead of building equity the way their blue collar parents did.

[HysteryDiagnosis]

14. It's economic terrorism what happens to people in this country and

it should be treated accordingly. The perps should do time at Guantanamo. Looky here at all the good things gw has brought to Amurka. Smashing developments, simply smashing.

[yella_dawg]

2. The anguish is about the poor who lined up to take advantage.

But anyone paying attention realizes that the poor were recruited to keep the mortgage orgy going. All you had to do was listen to local radio advertising a couple of years ago to realize that there was a huge push to get the working poor into the game.

[Name removed]

4. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Hydra]

6. It's a convenient one

notice that even here on DU:

"They shouldn't have gotten the loan in the first place!"

Watch money as debt, people! It's free on Google. The reason the economy is breaking down is that people aren't getting loans because people with money don't want to grant them now.

no loans = no money
no money = nobody getting paid
nobody getting paid = great depression
great depression = people die

why do you think Bush keeps telling us to shop and spend credit card money?

[yella_dawg]

10. It's a matter of defining poor.

Everything changed on 911, remember? The effort to pull working (blue collar) singles and young couples into the mortgage market in my area was shocking. You are absolutely correct that the homeless and inner city poor didn't get quarter-million dollar mortgages. But a lot of twenty-somethings with no credit history who had to scrape to manage apartment rent got sucked into interest-only loans and even worse. Starter homes became a dirty word. You "deserve" the home of your dreams, and we've got a loan program to get you there. It happened. Deal with it.

Calm down and get a grip.

[sandnsea]

11. Median income couples - MEDIAN

NOT POOR. Lots of blue collar people make good money, very good money. Many of them are doing just fine with their mortgages. Many aren't, including upper income boomers who decided they wanted to have that second home in Las Vegas or Miami too.

Let me add - every single one of my uncles was a blue collar worker who bought a home in the 60's. They didn't create a mortgage industry to fuck them out of their homes. They created one to build wealth for the middle class.

This was just one more get rich quick scheme cooked up by the 1% - just like the S&L debacle, Enron, etc.

You need to wake up and GET MAD.

[skids]

7. Mainly I blame it on poor financial education...

...and the pollyannaism promoted among the "sheep" to keep them from realizing how much debt is a tool of the class war.

Sure sometimes I go on a rant about how it isn't fair that us frugal folks are taking a hit due to a falling dollar, and those who do manage to make their mortgage payments and get out if even by the skin of their teeth have essentially robbed us. But I know it wasn't their intention, it was just that they were kept blissfully unaware of their status as disposable pawns in a rigged game.

So in the end I don't blame them, I just pity them a hair less than I would if this whole thing weren't a pain in my ass, too.

[sandnsea]

9. You mean blame the median and upper income folks?

Because they're the ones that did this.

[skids]

15. Hell yes...

...I even blame some of my very own friends. I was raised to be fiscally conservative and put money way for the future. All around me I watch people my same age a decade ahead of me on the whole house/family thing doing it all on credit. Layers and layers of credit. Some of them have loans that after taxes and would-be-rent are taken out are at a lower rate than I can get on a CD in the bank to this day.

Being what the majority of people here would incorrectly call middle class the lion's share of my expenses are food, housing, and energy, not boats, vacations, and household servants. That means for me the rate of inflation is 8 to 10%. So those with loans under that interest rate essentially got given free cash when they took out the loan, and they are effectively making 1% to 5% on it. Meanwhile even on the cash where I earn halfway decent interest, I lose 3% to 5% per year of hours that I worked which I will essentially not be payed for. The only thing that makes it a bit less of a jip is that those people all payed way too much for their houses.

I could buy stocks to try to up the yield to keep pace with inflation, and it is fully within my ethics to do so as I view that as investing in the future of society, but the stock market is a casino at this point -- you cannot trust the brokers, you can't trust the company filings, and you can't trust the aggregate to behave according to the fundamentals.

As for the poor that are also in the game, I don't blame them, I just temper my pity for them with a little self pity, because at this point I deserve it.

And as to the paper-shuffling MBA parasites that built this whole house of cards and profit from it, I hope they lose their shirts and end up living under a bridge. In fact I hope they are curled up sleeping underneath next to a burning trash can when the gusset plate gives out.

[sandnsea]

17. That's how I see it

except for the part about the poor who are also in the game, because there aren't any. Unless something happened to their median income job or small business - AFTER they got their mortgage. Honestly, minimum wage households did not get these loans. The best some of them might have gotten was something through Habitat, and that has income requirements as well.

[skids]

19. I'm sure there are a few...

...but you're right, in that it would be a very small minority of the poor that actually managed to get into this. Even a smaller minority if you were to weight by the dollar amounts involved.

[Tansy_Gold]

18. Personal story

In March 2006, I was looking to buy a house. I had sold one and was sitting on a nice pile of cash, or would be as soon as we actually closed. I found one I wanted to buy, but it was a bit more than the cash I had on hand, and it needed some repairs. To make it into what I wanted it to be, I needed $100K on top of my very hefty downpayment.

Problem was, I was unemployed. And my credit wasn't stellar. And the house I was looking to buy was a bit out of the ordinary. Traditional lender wouldn't lend on it. Real estate agent, who really wanted that fat commission, started shopping around for lenders. He asked me if I could get a job, even a temporary job, so I could "qualify" for the loan. I said, "Are you kidding me????"

I literally went out the next day and got a $12/hour temp job. It would vanish as soon as I moved, because it was too far from the "new" house. I had no guarantee of finding work in the new neighborhood. None. I said to the lender WHO ACTUALLY FOUND THE MONEY AND WAS GOING TO LEND ME $120K that he was nuts. I wasn't going to sign for that loan because I was pretty darn sure I couldn't pay it back. I had other bills, I had utilities, I had insurance, I had groceries to buy for fuck's sake! The mortgage payment, with taxes and insurance, would take 78% of my take-home pay based on $12/hour, 40 hours a week, no time off, no emergency expenditures, no entertainment, no clothes, ramen noodles for the next 30 years. And I was 57 at the time.

They yelled at me when I turned it down. THEY YELLED AT ME!!! I said, "For crying out loud, you know damn well I can't pay this back! Do you think I'm fucking crazy to spend my life's savings, wrapped up in the equity in the house I just sold, and put it into something I'm doomed to lose in six months or a year? DO YOU THINK I'M FUCKING CRAZY???????????"

I didn't take the loan, I didn't buy the house. I bought something else, something on which I have no mortgage and which, in the long run, suits my unusual needs better.

Yes, it's true that there are lots of foreclosures in counties with higher median incomes, but that does NOT mean that poor people, working poor people, didn't get suckered into creative mortgages. Many of them lost their homes, and their equity, years ago. Many were able to sell, and even make a little profit, when the market went up and they couldn't pay and they sold out. Some of them refinanced and have postponed what may still be inevitable. Some of them managed to make the American dream actually come true -- they worked hard at whatever jobs they could find and pooled resources and will come out at the end of this with something to show for their struggle.

But to say that "poor people" and "minimum wage people" didn't get suckered into mortgages they couldn't afford is not true. They did. And if they don't account for all the foreclosures, they still account for a lot of the grief. They also have the most fragile safety net.

The middle-income people, the ones who "qualified" for loans that were maybe more than they should bitten off, they, too, were suckered. The real estate market was going through the ceiling, and if they couldn't afford the payments, they had equity they could pull out or they could sell and downsize. They had higher paying jobs, too, and they had far more financial security than those first-time homebuyers who gobbled up the little boxes made of ticky-tacky in El Mirage and Surprise and Buckeye and and Laveen, or similar suburbs of other cities besides Phoenix. I know of more than one bankruptcy that was filed to wipe the credit card slate clean so the family could hang onto the house. For those who had little or no credit card debt -- because they couldn't get credit cards on their barely above minimum wage income -- there was no hope for bankruptcy, and no fatted budget to trim.

The ones I really don't feel sorry for, especially here in Arizona, are those who bought houses ten or fifteen years ago and with the mortgage paid down and the equity skyrocketing, refinanced and pulled out the equity to speculate on rental property. They drove prices up, out of the reach of the lower-income people. I watched two acquaintances do it, and it made me sick. At least one of them is reaping the rewards of greed and over-extension. She falls into that higher median income but higher foreclosure rate, too. I have no sympathy.

But sales to lower-income and riskier-credit borrowers fueled the boom. Those of us who saw it coming three or four or six years ago knew that this was part of it, and it was going to be the first broken wheel on that runaway train. Much of what's going on in the middle to upper incomes is collapse of refinancing schemes, whereas for the lower income folks its the original mortgage. They were buying into the American dream; the higher income folks just wanted a bigger slice.

And the sellers and the lenders were persuasive. Too persuasive. But it is the persuasion of sellers that keeps the whole market economy going, isn't it?



Tansy Gold

[sandnsea]

20. $9800 is poverty vs your $25,000 MEDIAN INCOME

$120,000 with a 5.5% interest, 30 year fixed mortgage, $680 a month. 45% debt income ratio allows up to $950 for monthly payments.

News Flash. Lots and lots of people have to pay over $700 a month rent on a $2000 a month income. Not single, people WITH families.

However, there are NO $120,000 homes in 90% of the country, consequently next to nobody making even $12.00 an hour were qualifying for mortgages.

Minimum wage was $5.15. Remember?

Poor people DID NOT CAUSE THIS PROBLEM.

[Gormy Cuss]

21. Minimum wage workers in CA are paid $7.50 an hour.

That means that a full time minimum wage worker makes about $15,000 a year, so comparing that to the national median poverty level, one could conclude that no one working full time in the state is poor.

For that matter, anyone working full time for the Federal minimum wage makes more than $9800 per year and isn't poor either so therefore they are to blame for the over-extending mortgage products used to get them into home ownership.

Right?

[sandnsea]

22. Did you read the debt/income ratio??

Do you know how much a house in California costs?

They don't qualify for loans.

This is bullshit concocted by rich fat fucks who don't want to take the blame for their equity loans and flipping and creating this entire fiasco themselves.

[Gormy Cuss]

27. Are you familiar with Fair Market Rents?

They are the localized standards used by HUD to determine relative rates of Section 8 reimbursements for rentals because if a national median rent were used a great many low income people would have no prospect of finding a rental in their metro or county area. A two bedroom rental in Buffalo County South Dakota has an FMR of $513 per month. In Stockton, it's $914.

You are using the Federal poverty level line as a metric to gauge who owns housing in the areas with high foreclosure rates and I am trying to point out that the Federal poverty level is perhaps the WORST standard to use for this purpose.

Debt/income ratios are a relevant indicator of what's wrong with the mortgage market but it isn't an indicator of whether some low and relatively low income people are affected by the bad lending practices.

And yes, I know what housing costs in California. I live two hours south of the Stockton MSA. I also know that many poorly qualified individuals were approved for mortgages just as Tansy Gold described and their only fault is that they thought "qualified" meant they could afford it, which is what it meant in the old days of conservative mortgage lending.

[sandnsea]

29. That's one of the highest minimum wages

in the country, with homes selling for $250,000 or so in Stockton, one of the highest foreclosure locations. That minimum wage STILL didn't qualify to buy a house in Stockton. You cannot get a loan if your income doesn't meet the debt/income ratio. You just can't. Minimum wage people did not qualify for these loans. It's a lie.

Homeownership is STILL at 68% and the 32% who did not qualify for mortgages are the ones YOU are blaming for this fiasco.

You ought to be ashamed.

[Gormy Cuss]

34. You are the one blaming people.

You are blaming those who were convinced that they COULD swing a ridiculous mortgage when any prudent loan officer would have told them that they could not. Let me refer you back to Tansy_Gold. That example is not uncommon.

You held out Stockton, I provided Stockton data. Two minimum wage worker households WERE being qualified for mortgage loans in Stockton. I know this because anecdotes like that have been published in the news here repeatedly.

I have no reason to be ashamed. I deal with housing and poverty statistics for a living. I've been poor and many in my family are still too poor to own where they live unless they are qualified for governmental mortgage writedown programs.

[sandnsea]

35. Yeah, antecdotes to blame the poor

Pulled out of thin air.

So how is it that your family is too poor to own, but everybody else was lined up lying their way into these mortgages?? All across the country.

It's bullshit and you know better.

[Gormy Cuss]

41. Again, you are the only one blaming the poor for the mortgage crisis.

Assert it until you're blue in the face and it still won't make it true.
I relayed anecdotes as anecdotes. Can you cite any empirical data pointing the blame at the lowest income people? The only blame being placed on lower income people is on those who were approved for loans that they can't afford by mortgage lenders who knew better and blame is placed there only by those who don't want to put it where the blame belongs.

No one is blaming low income renters for the mortgage crisis and renters comprise the bulk of the lowest income households in the country.

[sandnsea]

45. double speak

insane double speak. read the thread. people IN this thread blamed the poor.

I put double speak on ignore. Good bye.

[Gormy Cuss]

46. Don't like the message, kill the messenger. n/t

[sandnsea]

38. $500,000; interest only, doctor & journalist

THIS is what happened:

"But that wasn't really on our minds two years ago. For us, and I suppose others who signed such deals, the lower payments afforded by an interest-only loan helped us buy a house in an expensive county -- Montgomery -- where we wanted to live and eventually send our children to school. Our payments were significantly lower than what they would have been with a 30-year fixed-rate mortgage, meaning we could buy a nicer, larger home. Also, with the real estate market then booming, we planned to sell the house within five years anyway -- for a big profit, just like the previous owners got from us -- so why pay principal on what was essentially a starter home?"

http://www.washingtonpost.com/wp-dyn/content/article/2007/08/18/AR2007081800089.html?referrer=digg

[Gormy Cuss]

43. Non sequitor.

The WaPo link is an interesting anecdote but it does not prove your contention that the poor are being blamed.

[Tansy_Gold]

28. I never said poor people caused this problem, okay?

And I did not have a "$25,000 MEDIAN INCOME" as you so politely shouted at me.

What I had was a two-week job that paid $12/hour. My previous job paid $7/hour and was limited to no more than 24 hours per week. I had been unemployed for four months and had been unable to find anything approaching steady employment. My husband had died, leaving me with substantial medical bills unpaid by his health insurance; his life insurance was meager, barely enough to cover the remaining medical bills and allow me to pay off the mortgage (only two years remained, so we're not talking about a whole bunch of money) on our house.

Had I had any prospects for continuing to make $12/hour for a year, I would have eventually had an "ANNUAL" income of approx. $25,000, but that has nothing to do with "MEDIAN."

My payments, with taxes and insurance, would have been just about $1000/month. Even though I told the lender I had to pay my own health insurance, that I had other debts to pay, that my car insurance was $X a month and my utilities in the new house would be $Y a month and the total of everything would come to something over $2600 a month, the loan agent told me flat out, "We don't care what your other debts are, we only care about how much income you can show us on paper. It's up to you to figure out if you need to make more to cover your other debts. We'll lend for a principal and interest payment of up to 80% of your net income."

My point to you is that I know first hand that lenders were willing, even eager, to foist loans on people they KNEW could not pay them back. From my experience working with two different municipalities in the Phoenix metro area, I know that many people with family incomes under $40K were being "persuaded" to buy $185K homes in new developments in 2002 and 2003, no money down or "creative" down-payments that amounted to boosting the asking price and the appraisal 10% or 20% higher than the selling price. IT'S THE FUCKING LENDERS' FAULT, and many of them were making six- and seven-figure incomes while they were doing it. That puts them squarely in the middle- to upper-income range that you seem to want to blame, and frankly, my dear, I'm not disagreeing with you on that point.

Where I am disagreeing is with your blanket statement that people making minimum wage or a little above never get mortgages. In fact, they do. Maybe they shouldn't, but they do. And one of the reasons they do is because they see that $680/month mortgage payment as stated in your example as LESS THAN their $700/month rent payment, again as stated in your example, and they think they're getting a good deal. They don't know that in 18 months their property tax is going to triple because the developer paid on undeveloped farm land and now it's an improved residential lot with a house on it, and their payment is going to go from $900 (with taxes and insurance that weren't figured into the $680) to $1100. And when they go back to the lender in shock, the lender just shrugs and said, "It's all there in the fine print. You should have known. After all, I'm not in the business of educating borrowers, I'm in the business of lending them all the money I can."

Twenty years ago, when the farm credit crunch was putting a lot of small farmers out of business (and benefiting a lot of developers, by the way), I worked in the farm credit system, and I listened to every loan officer whine and whine and whine about his borrowers who couldn't make their payments and blame them for borrowing too much money. Well, duh, boys, you also sat in there with those borrowers and told them they could get $100K for a new combine if they'd just put up another 1000 acres as collateral. And if they said they didn't NEED a new combine, you'd sell them one. I won't mention any names, but I clearly recall one of those PCA loan officers telling me, "Look, my family is in farming and we know enough not to borrow more than we need or more than we can pay back. It's not my fault if these other people are too stupid or too greedy; it's my job to lend them as much money as I can get them to borrow, because the more they take, the more I make, and that's all I care about."

A lot of the middle- and upper-income people who are in foreclosure now may have lost decent jobs because of the crash in the housing sector. They may be just as "innocent" as the poor people you say aren't getting mortgages anyway. A lot of those middle- and upper-income foreclosures may also be on second homes, purchased with refi money for vacations or rental income. I've got an acquaintance right now who is about to lose four rental properties to foreclosure because she gambled on the continuing rise in real estate values. I don't feel too sorry for her, or for the others who are losing vacation condos or income property.

But what I think you're losing sight of in your insistence that minimum wage people don't get mortgages is that the failure to raise the minimum wage for over ten years meant that even when people are making a subsistence wage of $8/hour, a two-income family COULD qualify for a mortgage with creative financing. And many did. Unfortunately, they were the ones who lost big time.

Does that mean they "caused" the housing crisis? Of course not! They were its first victims! But the loans that were made to them by greedy lenders DID contribute to the crisis, and I think that's all that anyone is saying. Well, except for a few assholes who will remain nameless.


Tansy Gold

[sandnsea]

30. You owned a home??

with 2 years to pay off - and wonder how you got a mortgage?? That's quite a bit of a different story than what you started with. So now you made $12 hr AND owned a home. And wonder how you got offered a mortgage. Like people are lined up with that kind of collateral. Geesh.

And now you're up to $40,000 income households, who can't remotely be considered the poor. Buying a $185,000 home with $1,000 mortgage, plus an average $200 taxes and insurance. Yep. They qualify for up to $1400 in monthly debt.

This is reality for working people. This is what it costs for families to live.

And this has nothing to do with the farm loans of the 80's, where they kept changing the farm/lending practices and how they wanted the farmers to farm.

[Tansy_Gold]

39. Sandnsea, you need to curb your anger and read more

closely.

I said in my initial post about my personal experience that I had sold a home and was sitting on a tidy pile of cash. I never lied about that, never hid it from anyone on this board who was reading carefully.

My comments were directed at the proposition that lenders were lending NOT on the basis of whether or not the borrower could pay it back -- they were just lending. In my case, the lender knew (or had good reason to suspect) that if I defaulted on the loan, they would get more than their $120K back, and I'd be out my substantial downpayment. They would have taken advantage of me if I hadn't stopped them. Just as they have taken advantage of many, many, many low-income people.

It's been five years since I worked in the community development department, but we had guidelines based on federal poverty levels, and even then, "low income" was calculated to be considerably higher than taking federal minimum wage x 40 hours x 52 weeks and subtracting estimated taxes. In 2002, IIRC, "low income" for a family of four in the northwest suburbs of Phoenix (Peoria, El Mirage, Surprise, Sun Cities, Waddell, etc.) was about $25K. Don't quote me on this, because I could be way, way off, but I'm pretty sure that's about where it was.

While there were many families in the community where I worked who rented and lived hand to mouth, there were also many low-income families who owned small houses. Sometimes the property had been in the family for a long time, purchased when these were tiny rural towns and property was cheap. In many cases, they didn't even want to apply for housing rehab grants because such grants required the owner to occupy the house for a minimum of five years afterward or have to pay back the grant. What they wanted to do was sell the tiny properties to investors who would turn them into rentals; then use the cash as a down payment on one of the new houses in the new developments.

Just because they owned a house worth $40K didn't mean they weren't poor. But when the developers came in and the mortgage brokers came in, people got caught up in the fantasy of the nice new house with central air and a dishwasher and two bathrooms and a garage. Hell, wouldn't you, if all you'd ever known was two tiny bedrooms, a kitchen so small the fridge was on the back porch, a leaky swamp cooler outside the bedroom window that didn't do crap when the temperature got to 115 and the humidity hit 60%?

Are the mortgage lenders handing out loans to inner city welfare recipients? No, of course not. But neither are they lending in Apache County, AZ, which is almost completely on the Navajo reservation. I'm not saying the people on the rez aren't poor or that they don't deserve loans. I'm stating a fact -- there isn't a whole lot of residential housing development there, and thus there aren't a lot of mortgages.

But then, Arizona is a strange state when it comes to counties, because as big as we are in area, we only have 15 counties. Maricopa County contains just about all of the Phoenix metro area: Phoenix, Mesa, Tempe, Scottsdale, Gilbert, Chandler, Glendale, Peoria, Buckeye, Goodyear, Avondale, Litchfield Park, Sun City, Sun City West, Sun City Grand, Gila Bend, Wickenburg -- all that and more is within one county. How does a "median" income or a foreclosure rate there have any relevance when compared to one of Texas' hundreds of little counties? You're comparing apples to walruses. There may be parts of Maricopa County that are the same size and the same population and the same income as a whole county in Texas or Indiana or Missouri, but there's no way to break that part out because it's all lumped in with the rest of the county.

Calling us stupid and liars and everything else isn't doing you or us any good. I can't vouch for the others, and no one is going to vouch for me because they don't know me, but I do know that my experiences have value in this discussion. I've seen "poor" people -- not destitute, not starving, not third world, but still poor -- move from a tiny shack of a house into a new tract home on the basis of two low-income wage-earners. I know that some of them were stunned when the first payment coupon book arrived and the payment was $920 instead of $750 as they'd expected when they signed the papers, because they hadn't understood the part about taxes and insurance. I know that my own property tax rose 50% based on the difference between what the previous owner paid for the property in 2002 and what I paid in 2006 -- and I also know that the real estate agent made a big deal about the "low" property taxes when I bought it, even though I pointed out to him that I discounted that information because I knew the taxes would rise.

There are damn few people on DU "blaming" the poor for lying their way into the bad mortgages that are now fueling the current crisis. Yes, there are a few. And yes, it's true that many of the failing loans went to people making $40K and $60K and up. And yes, it's true that there are a lot of people out there in the big wide world who were greedy and stupid and believed the lenders' lies and thought they could have it all. And yes, it's true that someone making $60K probably shouldn't be buying a $250K house. I don't know; I'm not a mortgage broker or loan officer or anything else, and I don't have the payment figures at my fingertips. I'm sure you do, however.

But remember that most generalizations are going to be wrong once in a while if applied to all given situations. If they buy that $250K house with a $100K downpayment, that changes the whole scenario, doesn't it. If the $250K house has a rental apartment over the garage that will bring in $350/month, that changes the picture, too, doesn't it? If the husband and wife are only making $20/hour between them, but they're going to provide a home for Grandma, who has a social security income of $600/month and who will care for the grandkids while Mom and Dad work, doesn't that change the picture, too?

The overall picture, imho, is that the lenders and their backers were greedy to the max, and it's their fault we're in the pickle we're in. Even the guy who made millions managing a hedge fund and BETTING ON THE COLLAPSE is as guilty as anyone else. (It's discussed on another DU thread.) But yelling at DUers who are agreeing with your overall opinion while disagreeing with the details is really, imho again, counter productive.

My late husband and I worked damn hard to buy and pay for that house. We bought it in 1988 and had to scrounge up the 10% downpayment. We even refinanced three years later to go from a 30-year to a 15-year mortgage so we could pay it off sooner, and it was a real hardship to meet the higher payment, especially when I got laid off just a few months after the refi went through. When his company hit hard times and cut his hours and didn't give him a raise for almost ten years but our taxes and insurance kept going up and up and up every year on the mortgage payment, we had a few late payments and almost thought we'd lose it entirely. Then he was diagnosed with cancer and died six weeks later, and my $7/hour job was never going to be enough to allow me to continue to live there.

I understand the poster who has made comments about being frugal and kind of resenting those who have been more profligate, because in many ways I'm that way, too. But I've also been where the less fortunate have been. I've lain awake many a night wondering how I was going to scrape together the mortgage payment, the electric bill, buy groceries, and give the kids enough money for their lunches at school. I've also always known that I have certain advantages many poor people don't have and never will have: I'm white, I speak English, I'm educated. I can't unload those privileges, but I can be aware of them and aware of the leg-up they give me, so that maybe I can at least try to be a little more understanding of the plight of those who don't have those advantages.

My experience with the lender was that they were more than willing to give me money whether I could repay it or not. They knew they would have the collateral of the property, just as they would have the collateral of the property they lent against to a lower-income buyer. In that sense, the situations were not so very different. While properties bought in the past year have not appreciated in value very much and may even have depreciated, those homes purchased with ARMs and interest-only loans five years ago DID go up in value, and the lenders who put $225K mortgages on $240K houses in 2002 are sitting on $220K loans against houses now worth $350, down from $400 a year ago. That's still a profit, and a tidy one -- and it's the low-income homeowner who loses.

And I never blame the victim.


Tansy Gold

[sandnsea]

42. You are mixing all sorts of different circumstances

in order to make it correlate to your belief that lenders were handing out money to poor people with no jobs and no credit. That's what people have been saying around here. You clearly were not in that category, so your story has got nothing to do with what has been claimed. The statistics are clear, homeownership is at 68%. Who do you think that 32% who don't own homes are?

I am sure there are people who are surprised at their taxes and insurance. It happens. But that isn't the same as saying minimum wage people were lying their way into these mortgages. It IS a flat out lie. People SHOULD be outraged that it's being said.

The post above, the doctor and journalist and their no interest loan, is much more in line with what I've seen happen.

Further, you were able to buy your house with a straight mortgage, no games, no shenanigans. These exact same people who have been duped out of their homes because of these escalating ARMs, have been cheated out of one of the basic economic benefits in this country. You damn right I am angry. It never should have been allowed to happen, it was always set up to benefit the richest at the expense of working people.

I am also genuinely sorry for your loss and difficulties. I hope you have a support system to help you through.

[Tansy_Gold]

49. And you are ignoring what everyone is telling you.

NO ONE ON THIS THREAD has claimed that poor people or low-income people deliberately lied to get mortgage loans. NO ONE.

EVERYONE is defending the poor and low-income people who got taken to the cleaners by unscrupulous lenders.

NO ONE is saying that millions upon millions of minimum-wage families suddenly moved out of renter status and into home ownership, at least no one on this thread and maybe only boooooosh in the whole world still believes it.

NO ONE is saying that all poor people qualified for these slimy, creative loans, like ARMs, interest-only, negative amortization.

WE ALL KNOW that most poor people don't own their own homes; they rent and they struggle to get from one day to the next, with neither time nor energy nor cash to put into the concept of saving for a downpayment.

YOU are the only one posting anecdotes about $500K professionals whining about their mortgage payments (and I confess I didn't even read the WaPo article after reading your snippet because you seemed more upset about these rich people whining than about these non-existent claims that poor people lie.)

You have lashed out at nearly every other poster on this thread. You have called people liars and told them they are wrong and in denial. You seem not to know the difference between "median" income and "annual" income. You've been rude to some of the posters and you have apparently not even read some of the posts very closely.

NO ONE has been rude back to you. I think everyone on this thread has offered thoughtful, well-supported arguments that almost universally support your outrage, yet you have repeatedly snapped back at almost every one of us.

None of us deserve that kind of treatment.



Tansy Gold.

[Name removed]

50. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Tansy_Gold]

55. What are you talking about?

First of all, the poster in #2 DEFENDED "the poor" and BLAMED the lenders. Did you not read the post, or were you blinded by the subject line?

Second of all, *I* am probably the one you're referring to with the "grandma's social security" and the "baby-sitting" money -- because I SAW THIS HAPPEN. And if I remember correctly, when I posted that, it was not to BLAME the poor -- by which I mean the working poor, the low-income but not destitute/homeless/welfare-dependent -- but to BLAME THE LENDERS who begged the potential borrowers to come up with any potential earnings so they could "qualify" for the loan. Did people "lie" to get the loans? yes, they did, but they lied because they were encouraged to lie and told HOW to lie by the unscrupulous lenders!

When I was applying for my mortgage, I did have other sources of income, but they were not reliable and I refused to give them to the lender just as I refused to rely on them to pay a mortgage. The lender never asked to see a tax return, which would have disclosed that other income, and it was never mentioned. The lender DID, however, repeatedly ask me if I had any other sources of income beyond the $12/hour temp job, and I repeatedly said I did not. Had he demanded a tax return, he would have seen that I did. In a sense then, I lied by UNDERSTATING my income rather than overstating it.

Because I had no other source of income and because I did not have great credit -- primarily because of late mortgage payments -- I did not get a very good interest rate; I think it was about 7%, but I'm not sure. Because this was all done over the phone and I never even saw the lender, I don't have a lot of paperwork on it. And again, I never signed anything, never accepted the offer. One of the reasons the lender kept asking me about other sources of income was to get a lower interest rate. Because of what I had seen while working for the community development department, I knew I was being suckered. I had seen people be suckered into a loan by a lender who said, "Oh, come on, you're so close to qualifying that if you just had another $100 a month, I could get you into this house. And you can probably find another $100 to make that wife of yours happy in that beautiful new kitchen, can't you?" and then they remember that the daughter baby-sits after school three days a week and brings home $30 every Friday and can they count that and the lender says SURE! and they sign the papers. . . . .

I don't blame the people who do this -- I blame the people who make it possible for them to do it, the people who encourage them to do it, the people who profit by it.

So do you, don't you?


Tansy Gold

[sandnsea]

56. The poor did not get loans

As long as there are people who even believe poor people got loans, then the poor are being blamed.

Minimum wage workers do not get mortgages.

YOU, as a single person making $12.00 hr, and with a previous job and homeowner record and admitted pile of cash - were not poor. That stuff is all in your tax records, you can't understate your finances.

The poor did not get pushed "into the game", per post #2.

The poor had nothing to do with this. Absolutely nothing. No way. No how.

The median income working people who got loans are the exact same median income working people who have been getting homes for decades - fixed rate mortgages. There was nothing risky about the borrowers. The risk was in the mortgages - and they were ALL that many people could get now, when they would have gotten a fixed rate 20 or 30 years ago.

But they weren't the poor. The poor didn't get mortgages in the 60's or 70's or 80's or now. Does not happen, never did, never well.

[jmowreader]

37. P&I of 80 percent of your net income?

I've figured this out. And yes, it's ugly beyond belief.

They obviously know you can't pay 80 percent of your income as P&I. (I note you didn't say PITI--principal, interest, taxes and insurance. Meaning you have to cover taxes and insurance yourself.) Assuming you're stupid enough to sign up for this mortgage, within a year (assuming you live on ramen noodles and don't have the electricity turned on) the house will be seized for nonpayment of taxes and sold at a sheriff's sale...to one of the lender's buddies. That is, if the lender doesn't find you in default for not having insurance on the house and forecloses for that, because you can't insure a house that's leveraged that badly.

Next thing you know, the purchaser has flipped the house up 40 percent in value and sold it to someone else on an 80-percent-of-your-income loan.

Of course, you're still on the hook for the P&I because of the way the mortgage laws are written. And so will that guy. And the guy after that.

[Tansy_Gold]

47. Yes, P & I, not PITI

At the time the loan negotiations were going on, they didn't even know where the property was. This was strictly on the $$$$ being lent vs. my virtually non-existent income.

Again, I had the distinct advantage of NOT being a first-time homeowner. I knew this was far more risk than I wanted to take. But I was stunned that they were ANGRY at me for not taking it.

Of course, then I realized what they stood to make off it. . . . . .



assholes.

[enid602]

52. yes

"The ones I really don't feel sorry for, especially here in Arizona, are those who bought houses ten or fifteen years ago and with the mortgage paid down and the equity skyrocketing, refinanced and pulled out the equity to speculate on rental property." I used to work with a guy who has bought over 100 such rental properties in PHX-Mesa. Wonder what will happen to him. But more important, what will happen to us, given what the speculators have done to the real estate market and communities as well.

[sendero]

16. Who blamed the poor?

I blame, and have always blamed, the greedy mortgage companies AND people trying to live caviar lives on tuna incomes.

The country is AWASH in both.

[hfojvt]

23. there are not alot of poor people in those poor counties

at least not the South Dakota Counties
Buffalo - 1,994
Shannon - 13, 209
Ziebach - 2,551
Todd - 9,468
Corson - 4,288
Dewey - 6,133
and
Sioux, ND - 4,070

Wade Hampton, Alaska had 4,800 people in 1988

Places like Starr, Tx 57,678 and Apache, Az 68,129 are pretty sizeable counties. I just think a list of the 100 poorest counties would make more sense if it only included counties with over 25,000 people.

I think those over-paid talking heads on TV probably just look down from the stratosphere and think people making $5,000 more than the median household income are dirt poor, certainly part of the canaille.

[mntleo2]

26. Percentage is percentage though ...

...50% of 100 is 50, 50% of 1000 is 500, it should not make any difference if the percentage is what is counted. So if 75% of the people in a county is poor, that is 3 quarters the population, see?

Cat In Seattle

[hfojvt]

31. yeah, but it's still nothing

If you add up all the poor people in those Dakota counties, the total is probably 1/10 the number of poor people in just the city of Baltimore.
70% of 2,000 is 1400, maybe 500 households. 2% of 5 million is 100,000.

[sandnsea]

32. Your last sentence - bingo

Not just the talking heads, a lot of people on DU too.

[Tansy_Gold]

53. Apache County, AZ -- oh, it's "sizeable" all right

It's almost entirely on the Navajo Reservation and is 11,200+ square miles in area.

Starr County, TX, is 1229 square miles

Without looking them up, I'd guess the SD counties mentioned are also either on reservations or are very, very rural -- as is virtually the entire state.

Dealing with numbers out of context is always dangerous.

[mntleo2]

24. Uhhhh ~ sandnsea is right

...as a low income person with little to my name and an activist for the poor in my area, no poor person I know owns their own home. It just wouldn't happen not even with these so-called subprime loans, etc.

Low income people pay for everything with cash, they have no credit cards and so if they can't afford it, they don't buy it ~ including toilet paper if they don't have the money. They rent they do not buy their homes because not only would they barely be accepted as renters, they would never qualify, they do not have the down payment nor the credit history. If they do have credit history it is bad because they are constantly having to make choices between stuff like "Do I pay the electric company this month or do I fix my car so I can get to work because there isn't any transportation from where I live?" Or "Do I pay the medical bill I owe or do I get gas so I can get to work?" Or "Do I pay half of my wage for childcare or do I buy groceries for the family?"

Do not blame the poor for the mess we are in with the housing thing. Every single home owner I know is also a landlord ~ those homes went to people with more than one house already, not to the poor. They used their original home for collateral and then bought more homes. I know people with three and four houses they rent out.

I always wondered why people with more than one home needed them except they thought it would be easy money ~ rent goes up and up, but a mortgage stays the same or so they thought. Except now where I live the rent most people can afford will never catch up with the mortgage because the median cost for a home in my area is $450,000 ~ and the housing market is still booming. An ugly old shack costs $300,00 and that is a good buy.


Cat In Seattle <---where over half the city are renters and the other half own the rest of the homes and where there are some of the most expensive home prices in the nation, thanks to people who thought they could live off the backs of the ones too poor to own a home of their own.

[Tatiana]

25. FREAKING A!

There are 7 houses up for sale in the immediate vicinity of my house. I've checked, and at least 2 of those houses are foreclosures. I know one of the families, and the situation is awkward to say the least. I feel awful for them, as they have two small children, but these are not poor people. They probably pull in at least $100,000 between the husband and wife. These people are not hard up. They have/had two cars and an SUV (Avalon, Camry, & Equinox). I don't understand why a couple making that kind of money cannot pay their mortgage unless there is some sort of huge medical expense or they have severely overextended their credit.

The poor people are barely making it, but they are not trying to lie their way into mortgages. More like they are on a long ass list for Section 8 or are trying to make monthly rental payments.

[DU GrovelBot]

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[Jed Dilligan]

36. Poor people rent

and suffer disproportionately from the overvaluation of housing.

Show me a county with expensive homes and I'll show you a county with lots of homeless people.

[truedelphi]

40. Brand new ad infor Coldwell Banker realty in my local paper

DO you have a job? Do you have $ 500 cash?

We can put you in a house tomorrow.

Why be a renter when you can be an owner?


End of ad
The cheapest actual house in this county is something like $ 175K and that would involve a lot of sprucing up. Unless you count the available mobile homes - but somehow i don't think that the Coldwell Banker agent plans on selling a person a $ 45 K mobile home.

[sandnsea]

44. And they won't get a home either, it's a LIE

A big fat lie. You believe all those cheap mortgage payments posted all over the internet too? They are only available for the richest of the rich.

[Hawaii Hiker]

48. A lot of red states in the poorest counties which

should put to rest the MYTH that Republicans are all rich....I never bought that anyway....Most living in the big cites (is the term yuppies ever used anymore, it's a 1980's term, for you youngsters on DU, LOL) are Democrats making good incomes, hell, you have to, to live in LA, NY, SF, Boston, Chicago, etc. etc.....

[sandnsea]

51. Even within a given state

You can almost calculate which way the county votes by its income level. The poorest are the reddest, until you get to minority counties which usually get poorer and bluer. It's a peculiar thing about those poor red counties though, I don't get what they're voting for.

[Greyhound]

54. It seems to me that this thread, especially the replies & sub-threads, are indicitive

of the issue recently referred to as "the two Americas". We have a situation here where people that just a few years ago were considered to be "upwardly mobile professionals" are now priced out of the life they feel they deserve, and they don't like it and want to blame somebody.

They can't very well blame the people that sold them on the "dream" of getting that degree and going to work for the corporation that will take care of them, putting in their 25 years and retiring to the golf resort community.

But shit, somebody has to be to blame, after all, $75K is not going to buy $750K of real estate if you plan on eating and making car payments and paying for health care, and the taxes are eating them alive, not to mention the fact that the price of every day necessities goes up daily and they haven't seen a significant raise in salary for the last six years (even though the bosses at the top seem to take more and more out of the company every month) and it costs almost a day's wages to fill the Hummer and it has to be filled almost twice a week and the insurance just went up again, and on and on and on...

So it has to be those poor people that are causing all this trouble, yeah, that's the ticket, those fucking poor people they're screwing it up for everybody!

[sandnsea]

57. Funny thing about that $75K

To the pundits writing these articles, and the Greenspans and Bernacke's of the world, the $75K folks are the risky moderate income people that are being spoken of. But those median income earners hear "low income" and "moderate", and they think poor.

Well I'm not having it. It was not the poor. Nobody on this board is going to get away with saying it was.

[Greyhound]

58. That "moderate income" is almost $30K above median. Just shows the truth

of the disparity.

[InkAddict]

59. Then there are places like Cleveland & Dayton, OH

These cities have lost both manufacturing jobs and service jobs - employers just up and left. It really didn't matter if one was Middle Class or Low-Income -- the jobs dried up! Those that were able to move elsewhere did so, often leaving empty homes behind. These cities are also very racially polarized with hugh disparities in neighborhood incomes -- East Side versus West Side in Cleveland; Northwest and South in Dayton, and I've lived in 3 of the 4. The young people have left, leaving many struggling fixed-incomers who have expensive chronic medical conditions whose ultimate choice is housing or medicine. Every avenue of lifestyle improvement in this state is a joke--education rackets, housing rackets, employment rackets. Gov. Strickland has major work to do, so he better not be thinking of scampering off to DC as a VP.

Tansky is somewhat correct about the brokers/lenders. Let me tell you how awful, embarrassed, and humiliated I feel when I read some of these discussions because we've just lost our home and the derision is heartless!

Yup, one of those forced out not by lending practices to poor folks, not by "creative financing"for the Middle Class yuppies. We were done in by lack of stable employment at the same time that my only-child husband and I were called upon to care for his elderly parent.

Dad, who had an 8th grade education, bought one of those GI cottages in 1949 for $18,000; he didn't seek it out; a friend told him about the good deal and they went to look at the development. They bought it and NEVER MOVED! In 2001, it was sold for a whopping $52,000. He went from pushing broom in the shop to Asst. Plant Manager. He had a single employer his entire life. The shiny new development deteriorated, the schools deteriorated, the neighborhood deteriorated, and fortunately, he was able to retire before manufacturing completely deteriorated. His pension and SS guaranteed he'd never be eligible for MEDI-CAID without relinquishing same. His portfolio was a small holding of his employer's low-priced stock, and he carried only a retirement benefit of $25K decreasing term life insurance policy. Mom died first, but you might well appreciate at how he expected her to live should he pass first, since she had never worked the required quarters for SS. He had no plans for his healthcare as he figured he'd die before his wife. He had no plans for his funeral as he figured his family would do something "nice". Guess what? He didn't just drop over--he got bladder cancer, went septic twice requiring ICU care, developed ESRD with the dialysis, he was 80% deaf as a result of 48 years before OSHA required muffs on the job. He did not understand he wasn't going to get well, and his only son and I along w/the kids bore the task of monitoring it all. We were glad to do it for such a terrific dad who was sometimes childishly generous to us, and as we were shocked to find out, especially to his church.

We, on the other hand, married in 1970. Our first apt. was $156. We stayed a year and bought a new condo complete w/appliances for $18,000. Payment: $159 plus a $50 maintenance fee. We stayed 6 years, selling it for $31,400. Purchased single-family home for $37,000 and stayed 10 years, selling it for $43,900--not much appreciation in old NE Ohio in late 80s. I worked for five years before having kids and took six years off during their toddlerhood; spouse was a vested employee at a major healthcare insurance company that merged with another in 1984, the first time this IT person got RIFFED. The next job didn't pan out quite right, so he looked for another at a publisher who has long-since closed down shop in Cleveland, and was hired by a small consultancy where he was RIFFED again. Another job hunt landed a short-lived spot in county government--the DEM lost! After a year of unemployment, he found a new job in Dayton and all went well for 2 years. We rented an apartment, sold the house near Cleveland, and bought one in NW Dayton for $74,000. This was the exact median price of housing at the time, and there was little choice in our price range at the time, cost of housing being somewhat higher in Dayton and nobody moving. I can remember how non-confident I was that we should even be doing it, but persons told me I was crazy for worrying so. The payments started at $775, not unworkable, and over the 18 years we lived there, it appreciated to $114,000. We re-fid it once in 1991 to clear some debts, but were confident that we'd be able to get our fixed-rate loan back, and be well on our way to college educating our kids, thinking we'd move near retirement age and repay the student loans from the house sale. Boy, were we in for a surprise.

I went to school, on my own dime and on a portion of the NE Ohio home sale (NO DEBT), working full-time second-shift to forego childcare costs. Things went well for 2 years. OOPS, spouse's IT contract ended and the first of many RIFFs began. What followed was a continuous string of mergers, downsizings, re-organizations, corporate moves out-of-town and contract failures, combined with Mom's death and Dad's deteriorating health - a complete nightmare, as IT jobs went to India, China, and other US States, but our home was there and Dad was now there too.

During those years, we escaped foreclosure twice, but the last RIFF in Dayton lasted two years during which Dad rapidly deteriorated. He insisted he be on his own, so we rented him an apartment, but he had imbalances that made him incoherent, very much like an Alzheimer's patient, non-communicative and unable to take his myriad of meds on his own. He needed daily care if we were to work. We hired a nurse, but he fired her. He needed daily monitoring, so it was off to Assisted Living at a cost of $2,500 a month, a deal in Ohio. He outlived his resources and we didn't have anything stable coming in either. Finally, he passed, and another job was located out-of-town. BTW, he's never had a bad review; they don't keep a body around long enough to be reviewed.

The last RIFF, after Dad passed, found us in another Ohio city, renting our home short just to have a tenant, the house being in the best part of the worst part of the city. I rented an apartment one block from where I worked and spouse would live w/the kids during the week and come home weekends, until the gas crunch, and where two jobs in a row went south within a year--that did it--we lost the house and filed bankruptcy. We'll undoubtedly never have another home of our own, and it's killing me. Rentals are dear and hard to find for those with pets. When it's our time to leave the working world, roughly 5-7 years from now (LOL), we'll probably have a pathetically low SS-only income with housing and healthcare costs that will eat it up, burdening our children with our maintenance and care until death us do part. I hope and pray for a quick end.

I'm not very good at coping. My joys now are gardening in my postage stamp flowerbed on the patio, loving my people and pets, and participating in the DU community. For now, we're both working. We're only beginning to meet people, but the shame is great, and it's difficult to know who to trust, who will not say: "Hey, you made bad choices-tough luck sucker! or "Hey, you're just lazy, pr "Hey, no one told you to have kids, pets, dessert." Perhaps I will even volunteer a little for a campaign this coming year. If the other shoe doesn't drop yet again.

I don't want you to think I'm whining -- I'm just stuck in that certain phase of grief over wasted efforts. I also know we're not the only family that has faced the results of these years of horrible government policies and decisions of players that have been draining ALL OF US, one way or another, FOR YEARS!

Oh, sorry it's so long!

[sandnsea]

60. I intentionally left out Ohio & Michigan

Precisely because I knew there was a whole different set of economic circumstances going on. It has gotten harder and harder for median income folks, and scarier and scarier to think about how you're going to pay the ever increasing monthly expenses. I know that's a sizeable chunk of the foreclosure situations in those states, which is completely different from these other high income locations. And we have to work until we're 70 to get our full social security. Lots of people are going to be shocked to find that little wrinkle in ten years.

Still, the problems in Ohio aren't minimum wage workers lying their way into loans by claiming babysitting money and grandma's ssi either. It's insulting to say so.

Hardworking people, like your dad, like mine and my uncles, didn't used to have no alternative except one of these scam loans. Work was respected, homeownership was cultivated. The exact same people who went to buy a house now shouldn't have been met with disdain and this crappy loans that only serve to make rich people money.