Steve Gilliard, 1964-2007
It is with tremendous sadness that we must convey
the news that Steve Gilliard, editor and publisher of The News Blog,
passed away June 2, 2007. He was 42.
To those who have come to trust
The News Blog and its insightful, brash and unapologetic editorial
tone, we have Steve to thank from the bottom of our hearts. Steve helped
lead many discussions that mattered to all of us, and he tackled subjects
and interest categories where others feared to tread.
Please keep Steve's friends and family in your
thoughts and prayers.
Steve meant so much to us.
We will miss him terribly.
photo by lindsay beyerstein
me: "NYT - Mortgage Trouble Clouds Homeownership Dream"
Bad times coming
Thanks to me for suggesting this article from the NYT - THANKS!
Mortgage Trouble Clouds Homeownership Dream
By EDUARDO PORTER and VIKAS BAJAJ
Perhaps the American dream of homeownership is not for everyone.
That may sound at odds with a bedrock notion of society promoted by presidents for decades. But many experts say it is a message that can be drawn from the rising troubles with mortgages provided to home buyers with weak credit.
Several large mortgage companies have stopped making new loans, and others have tightened lending standards.
Hundreds of thousands of families who bought houses in the last two years — using loans with low teaser interest rates and no down payments — are now losing them.
Their short tenure as homeowners calls into question whether the nation's long drive to increase homeownership — pushed by both public policy and financial innovations — has overstepped some boundary of demographic and economic sense.
"Clearly we went too far," said Joseph E. Gyourko, a professor of real estate and finance at the Wharton School of the University of Pennsylvania. "It's not the case that high homeownership is always good."
Consider Nathaniel Shields, who expects to lose his four-bedroom Cape Cod house in southwest Chicago to a foreclosure in May.
He cannot afford his mortgage payment, which jumped to $1,300 a month from about $1,000 after his loan reset to a higher interest rate last summer. A divorce and the loss of his county government clerical job, which paid $14.80 an hour, have also hurt.
In 2004, Mr. Shields took out a popular hybrid mortgage that carried a fixed interest rate for two years before becoming an adjustable-rate loan for the remaining 28 years. In August, his loan's interest rate rose from 6.6 percent to 8.1 percent, and to 9.6 percent now. "I love the house," said Mr. Shields, 47, who now works in a custodial job with the Chicago school district that pays $10.40 an hour. "I put a lot of money in the house — a deck and a new garage — and they are just going to take the house."
Kathleen Van Tiem, a counselor at Neighborhood Housing Services of Chicago, has been trying to help him, but says that his weak credit and low income make him ineligible to refinance or modify his loan. Mr. Shields has put his house up for sale, but in a market with many homes available, he has found no takers.
A couple of observations here.
We recently bought a place. We live very modestly and between the mortgage and the common charges and the school loan payments and the whole one income thing with the kid...let's just say that we have a cushion of a couple of hundred a month. With just the mortgage payments we make the recommended earnings to mortgage ratio comfortably...but with the common charge...well it's very very tight. So you'd think that the bank would have given us the type of mortgage product that Mr. Shields had gotten. After all, although our income is not his, proportionally speaking we're not rich, not by a long shot. And my credit is good but not spotless due to forgetting to pay the occaisional credit card bill. Yet we easily got a 30 year fixed at 6%.
I don't know why Mr. Shields was offered his loan or why he decided to go with it or how much he put down. But I do know one thing --- Mr. Shields is black and we're not. There's driving while black right? Well there's buying a house while black too.
- posted by me
Labels: housing, mortgages