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The Math Never Matched
Posted by Raven on October 8th, 2007
I read an article in yesterday’s Boston Globe that made my mouth drop open.
Mario DeJesus had long dreamed of owning a home, and two mortgages covering the $375,000 purchase of a three-family Victorian on Tower Hill let him live it. DeJesus, however, earns about $23,000 a year. It didn’t take long for the math to catch up with him.
Uhh I don’t know about anyone else, but the math NEVER added up. And NO one can tell me Mr. DeJesus didn’t know he could NOT afford this property. Even a pre school child would know better. Don’t people have contingency plans anymore? Does it not make sense to be able to PAY your own bills without help of unreliable income? What a damn fool.
But tenants proved hard to find, and the third floor remained vacant most of the time. The other apartment rented for $1,000 a month, meaning rental income was less than half of what he planned.
DeJesus soon was late on his payments, scrambling to find money. He drove a cab when he could, to supplement his earnings as a delivery truck driver for the Eagle-Tribune newspaper. His wife, Ruth, picked up a paper route. By the spring of 2006, however, DeJesus knew it wouldn’t work. He put the home up for sale.
Only one prospective buyer looked DeJesus’s home over the next year, even as he slashed the listing price, which is now $85,000 less than he paid. Meanwhile, his mortgage had an adjustable rate that reset to a higher level, increasing his payments to $3,200 a month. He couldn’t refinance and he couldn’t sell. And he couldn’t pay the mortgage.
DeJesus will lose his home to foreclosure at the end of this month. The sheriff ’s letter came last week. With three children at home, he needs at least a three-bedroom apartment. He’s not sure where he’ll find the money for moving expenses.
‘‘In the beginning it was a dream for us, and now it’s a bad dream,’’ he said. ‘‘I lost the house.’’
Exactly why people need to make sure they CAN afford to make the payments…how do we blame the mortgage companies here? If anything, I guess I would say they certainly must have known borrowers such as Mr. DeJesus were a HUGE risk. No matter. Since when do people take on SO MUCH more than they can handle? Did this man read the fine print with regards to the rates?
ANYWAY onto an Op/Ed in todays NYT:
When President Bush took office in 2001, homeownership stood at 67.6 percent. It rose as the mortgage bubble inflated but is projected to fall to 67 percent by early 2009, which would come to 700,000 fewer homeowners than when Mr. Bush started. The decline, calculated by Moody’s Economy.com, is inexorable unless the government launches a heroic effort to help hundreds of thousands of defaulting borrowers stay in their homes.
These days, modest relief efforts are in short supply, let alone heroic ones. Some officials seem to think that assistance would violate the tenet of personal responsibility that borrowers should not take out loans they cannot afford. That is simplistic.
The foreclosure crisis is rooted in reckless — and shamefully underregulated — mortgage lending. Many homeowners — mainly subprime borrowers with low incomes and poor credit — are now stuck in adjustable-rate loans that have become unaffordable as monthly payments have spiked upward. Their predicament is not entirely of their own making, and even if it were they would need to be bailed out because mass foreclosures would wreak unacceptable damage on the economic and social life of the nation.
Of course let’s place the blame on George Bush. And the shamefully underregulated industry. Let’s not allow people to take responsibility for their own actions. After all they’re too dumb- and indeed some are. But not most. People like Mr. DeJesus KNOW they cannot afford these homes. But they come up with all sorts of ideas and dreams that enable them to convince themselves THEY CAN afford…hoping it all works out. When it doesn’t- why should WE PAY? Why should the federal government bail these people out? Please tell me. I do think the sub prime mortgage market needs some better loan approval standards, and probably some better ethics. But it’s still up to the individual to take responsibility to pay their bills, and to NOT over extend themselves.
October 8th, 2007 at 1:58 am
we see cases like these all the time
October 8th, 2007 at 3:59 am
In our new development we have neighbors that are living above their means so badly that their grass is 16″ tall, and they’re knocking on doors and asking if they can even wash your cars! Nobody will do anything about this because we live in a pathetic blue state, so we’re out of here in four more years! How did they qualify for a mortgage if they can’t even afford an apartment???
October 8th, 2007 at 8:27 am
Standard liberal ideology. Don’t worry about personal responibility… it is someone else’s fault…. always… and then the Federal Government can come in and save the day… bah…
October 8th, 2007 at 9:10 am
darth-
I suspect that two things made the mortgage a reality: DeJesus inflated his income OR, more likely the mortgage company had low standards. Either way, DeJesus should and I am SURE did know he could not afford this. So I place blame squarely on him.
October 8th, 2007 at 4:05 pm
The article does not make DeJesus look very intelligent. He may well be a bit stupid. His “dream” was a wild fantasy.
However, I think the mortgage company is the real problem, and it does not look very intelligent, either. The bozo was a bad risk, or a liar. But, if he lied, the company should have found that out.
Both parties probably thought the taxpayers would bail them out. Gimme, gimme, gimme – the American Liberal Dream…
October 8th, 2007 at 4:49 pm
terrence I agree that the lending companies should have held higher standards.
Remember one thing in all this: The nanniest state of them all- MA- is where Mr. DeJesus lives and where his loss took place. IF MA cannot stop these so called “abuses” from taking place, WHO CAN?? Do we think the Federal Government should take this on?
A lot of people in MA dropped the ball on this one, as in many if not all states. We Americans never learn. This is not the first time this has happened. But it should be the last time we are made to pay for it- simply because if the Feds stop bailing people out- history won’t repeat itself. It’s like rewarding bad behavior.
October 8th, 2007 at 5:37 pm
DeJesus inflated his income OR, more likely the mortgage company had low standards.
I wonder if the mortgage company was afraid of being accused of racism if they denied a loan to a Hispanic couple.