Advisen: Subprime Writedowns Trigger Avalanche of Lawsuits
National News • January 15, 2008
More than $170 billion has evaporated from the balance sheets of companies around the world as the result of the meltdown of the U.S. subprime mortgage market, reports Advisen Ltd., a provider of ...
Insurance Journal is not responsible for the content of the message below.
Subject: RE: RE: RE: Subprime Lawsuits
Posted On: January 28, 2008, 1:50 am CST
Posted By: Mike
Comment:
I won't pretend to be able to answer all your questions, nor dismiss them as invalid. I think the simple answer is based around greed and short-sightedness.
I have a cousin who was foreclosed upon last September. 2 years ago, he sold his 1,500 square foot home for $480,000 (bought 5 years prior for $135,000), and bought a 2,000 square foot home for $550,000. One year later, the house was valued at $650,000. Greed inspired him to take out a second mortgage to buy toys, and invest into a few remodeling projects.
Now, the bank owns the house, and they forgave the balance of about $600,000 he owed against the house, and put it on the market for $499,995. The best offer they have received so far is $375,000.
Obviously, we live in northern California. It's not just the abundance of houses available, it's the declining market overall. Jobs are harder to find, and lay-offs are abundant. Home builders and developers are offering homes at little or no profit, and sometimes even at a loss, just to get out from under the loans they took out to build them.
One would assume my cousin would have over $300,000 in equity in the first house he sold. He would, had he not taken out many loans to buy all kinds of toys. He's got all the new cars and flashy electronics to compete with the neighbors in suburbia, but he and his wife moved their 2 kids into a rental just down the street from their foreclosure a few months ago. His former lending agent is out of business, along with thousands of his peers. Dozens of large home developments are sitting half-built, because the developers have no money to pay the subcontractors and banks they are past-due to, let alone pay for the materials and labor required to finish their projects.
Subject: RE: RE: RE: Subprime Lawsuits
I have a cousin who was foreclosed upon last September. 2 years ago, he sold his 1,500 square foot home for $480,000 (bought 5 years prior for $135,000), and bought a 2,000 square foot home for $550,000. One year later, the house was valued at $650,000. Greed inspired him to take out a second mortgage to buy toys, and invest into a few remodeling projects.
Now, the bank owns the house, and they forgave the balance of about $600,000 he owed against the house, and put it on the market for $499,995. The best offer they have received so far is $375,000.
Obviously, we live in northern California. It's not just the abundance of houses available, it's the declining market overall. Jobs are harder to find, and lay-offs are abundant. Home builders and developers are offering homes at little or no profit, and sometimes even at a loss, just to get out from under the loans they took out to build them.
One would assume my cousin would have over $300,000 in equity in the first house he sold. He would, had he not taken out many loans to buy all kinds of toys. He's got all the new cars and flashy electronics to compete with the neighbors in suburbia, but he and his wife moved their 2 kids into a rental just down the street from their foreclosure a few months ago. His former lending agent is out of business, along with thousands of his peers. Dozens of large home developments are sitting half-built, because the developers have no money to pay the subcontractors and banks they are past-due to, let alone pay for the materials and labor required to finish their projects.