Harvey, You Have Only Yourself To Blame

[don]

The Wall Street Journal told me so. this is one of the guys the Journal wants to fall into lifetime debt servitude, as laid out in their recent editorial, Power to the FIRE. Hey, why not, that’s what FIRE is all about. Non-productive fees and interests that would ultimately strip the middleclass down to a subsistence level of usable income, the rest going straight to the BURN pile.

Is it time to FIRE up the Bastille, baby!

Loans That Looked Easy Pose Threats to Recovery

By JOHN LELAND



When Harvey Clavon took out an exotic mortgage to refinance his home in Santa Clarita, Calif., three years ago, he thought he knew what he was doing.

Mr. Clavon, 63, was planning to sell the home in a few years and retire to Palm Springs. So he got a loan called an option adjustable rate mortgage, or option ARM, which allowed him to pay less than the interest for the first five years.

On his annual salary of $100,000 as a television camera operator, he could afford the $2,200 initial mortgage payments. And he planned to sell the home before the mortgage reset.

Now Mr. Clavon is part of what many economists say is a looming threat to a housing recovery: more than a half-million option ARMs scheduled to reset in the next four years, at rates many homeowners cannot afford. His mortgage payments have risen to $2,700 a month because of a clause he did not notice on his contract, and are scheduled to rise above $4,000 in two years.

Since February, default and foreclosure rates on option ARMs have passed those of subprime mortgages, according to the research firm First American CoreLogic, in part because so many subprime mortgages have already failed.

Because Mr. Clavon made only minimum payments on his mortgage, his balance has risen to $680,000 from $618,000, on a house worth closer to $400,000.

“I don’t know what I’m going to do, ” he said. “I got duped into the loan, and I consider myself an educated man.”

In June, he filed for bankruptcy protection and stopped making house payments.

Harvey has no children, but nevertheless he did the right thing, in case he did.

http://www.nytimes.com/2009/08/27/us/27arms.html?ref=us

[flintlock]

Re: Harvey, You Have Only Yourself To Blame

Why does a 60 year old cameraman take out a 600k mortgage on his home anyway? Seems to me, that would be the first hint something was wrong. Failing to "notice" a clause in the contract that could double his payments was another.

Sounds like Harvey fell for the line " Real Estate always goes up" and was trying to make a quick buck . Usually by that age people start to get some common sense about money. :rolleyes:

I know a guy who lives in my neighborhood. We went to college together. He built a mansion on 20 acres for $2 million. Appraisal said it was worth $4 million. So of course he borrows $4 million on the home. Now he'd be lucky to get $1.5 million for it. And the $4 million is spent. So yes, bankruptcy.

[SuitablyIronic]

Re: Harvey, You Have Only Yourself To Blame

Harvey is 60 years old, has earned $100,000 a year for several years, has no children and he has savings of zilch?

If you spend 100%+ of your income, and then expect to make your fortune on speculation / gambling it is not surprising that the system is totally haywire.

[BuckarooBanzai]

Re: Harvey, You Have Only Yourself To Blame

Harvey is 60 years old, has earned $100,000 a year for several years, has no children and he has savings of zilch?

If you spend 100%+ of your income, and then expect to make your fortune on speculation / gambling it is not surprising that the system is totally haywire.

Another crap reporting job by the NYT. I can't wait until that newspaper folds.

[don]

Re: Harvey, You Have Only Yourself To Blame

In talking about the NYTimes, one of the few flagship papers left in the country, whose articles will be reprinted in many other papers, the interesting question here is, why did they choose this guy's situation from all the others they could have chosen? De-constructing the Neo-Liberal media is the main reason for paying attention to the NYTimes.

[aaron]

Re: Harvey, You Have Only Yourself To Blame

In talking about the NYTimes, one of the few flagship papers left in the country, whose articles will be reprinted in many other papers, the interesting question here is, why did they choose this guy's situation from all the others they could have chosen? De-constructing the Neo-Liberal media is the main reason for paying attention to the NYTimes.

They are appealing to their audience. The people who read NYT are more likely to relate to this story. The poor masses do not read the NYT/op-eds.

[don]

Re: Harvey, You Have Only Yourself To Blame

They are appealing to their audience. The people who read NYT are more likely to relate to this story. The poor masses do not read the NYT/op-eds.

Aaron, I think its more akin to massaging their audience, shaping the argument, setting the parameters. Like a PBS "debate" about another military adventure. The so-called conservative argues we should have gone in six months ago, the so-called liberal, let's give it a couple of more weeks, then go. The local paper here, typical for what most of the poor masses read, carries syndicated NYTime stories like this one all the time. Like background radiation, a world view is disseminated. :cool:

[audrey_girl]

Re: Harvey, You Have Only Yourself To Blame

maybe one of the real culprits (in addition to Harvey) is the NYT itself

the media could have helped a lot of people avoid a situation like this if they printed articles about the trap they were walking into

If someone like myself and on my own could find out about Dr. Kurt Rickenbachter, Dr. Marc Faber, Peter Schiff, Doug Casey, James Turk, Jim Pulplava, EJ, etc. etc. etc. - then surely a NYT newsreporter could have

what this article and others like it is about is blame-avoidance

the media is this country is beyond awful

[skidder]

Re: Harvey, You Have Only Yourself To Blame

[quote=audrey_girl;119322]maybe one of the real culprits (in addition to Harvey) is the NYT itself

the media could have helped a lot of people avoid a situation like this if they printed articles about the trap they were walking into

If someone like myself and on my own could find out about Dr. Kurt Rickenbachter, Dr. Marc Faber, Peter Schiff, Doug Casey, James Turk, Jim Pulplava, EJ, etc. etc. etc. - then surely a NYT newsreporter could have

what this article and others like it is about is blame-avoidance

the media is this country is beyond awful[/quote

Exactly! As an aside, couldn't at least one major news outlet at least attempt a business model that included telling the truth, instead of the pablum spouted by 100% of the MSM?

[don]

Re: Harvey, You Have Only Yourself To Blame

Follow the Money. Follow the Ownership.

[Master Shake]

Re: Harvey, You Have Only Yourself To Blame

In talking about the NYTimes, one of the few flagship papers left in the country, whose articles will be reprinted in many other papers, the interesting question here is, why did they choose this guy's situation from all the others they could have chosen? De-constructing the Neo-Liberal media is the main reason for paying attention to the NYTimes.

What exactly is a "neo-liberal?"

[Quincy K]

Re: Harvey, You Have Only Yourself To Blame

Why does a 60 year old cameraman take out a 600k mortgage on his home anyway? Seems to me, that would be the first hint something was wrong. Failing to "notice" a clause in the contract that could double his payments was another.

Sounds like Harvey fell for the line " Real Estate always goes up" and was trying to make a quick buck . Usually by that age people start to get some common sense about money. :rolleyes:

I know a guy who lives in my neighborhood. We went to college together. He built a mansion on 20 acres for $2 million. Appraisal said it was worth $4 million. So of course he borrows $4 million on the home. Now he'd be lucky to get $1.5 million for it. And the $4 million is spent. So yes, bankruptcy.

And to think that people actually still used guns to rob banks when all you needed was a pen and a 700 FICO.

$2 million dollars is a sh_tload of money and can last generations, if not forever, in a Third World Country.

[flintlock]

Re: Harvey, You Have Only Yourself To Blame

What exactly is a "neo-liberal?"

I've been wondering about that also.

So I looked it up

http://en.wikipedia.org/wiki/Neoliberal