Extreme Makeover House Faces Foreclosure

[Gawain 0]

http://tv.yahoo.com/extreme-makeover-home-edition/show/36736/news/urn:newsml:tv.ap.org:20080728:tv_extreme_makeover_foreclosure
http://www.nationalledger.com/artman/publish/article_272621800.shtml
http://www.wsbtv.com/news/16980412/detail.html

The last link has a video in it.

I haven't watched this show, but let me get this straight:

--Promising family's current home is in shambles -- the result of a bad home purchase outside Atlanta
--Volunteers and nationwide TV program tear down old house
--Volunteers and nationwide TV program build a new, four-bed, three-car garage home
--Family get's new house FREE AND CLEAR, and are given enough cash to cover taxes on the property for 25 years
--Family takes a f**king $450,000 loan on house
--Family loses home

I feel bad for the kids in the family. For the parents, I'd say that they've pretty much proven their neglect to the family.

Un-f**k**g-believable...

So I try and I scream and I beg and I sigh
Just to prove I'm alive, and it's alright
'Cause tonight there's a way I'll make light of my treacherous life
Make light!

[CanuckInUSA 0]

Some people are just not smart enough to know how to handle debt. This for sure is your classic "icing on the cake" scenario.

Try not to worry about the things you have no control over

[downwardspiral 0]

what did they do with the $450k?

www.FourWheelerHB.com

[Gawain 0]

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Some people are just not smart enough to know how to handle debt. This for sure is your classic "icing on the cake" scenario.

What debt? They had no debt.

I was listening to Dave Ramsey remark about this too, it's not uncommon for windfall-lottery-type winnings to cause big problems, but jeez....

So I try and I scream and I beg and I sigh
Just to prove I'm alive, and it's alright
'Cause tonight there's a way I'll make light of my treacherous life
Make light!

[vortexring 0]

But then again, what if the loan for the business had turned out to be a runaway success? And they were then able to move into a $900 000 home?

Still, maybe they'll win the Lottery on Saturday.

'for it's Tommy this, an' Tommy that, an' "chuck 'im out, the brute!" But it's "saviour of 'is country" when the guns begin to shoot.'

[PhreeZone 20]

Its not the first time that the new owners have faced financial issues after recieving a new home. In past issues the owners were not prepared for their utility bills to triple or worse because of the larger house. They had property taxes that jumped and were set to eat up the money sat aside for them and other similar issues.

This is the same issue that occurs to a lot of lottery winners, they just can not handel the instant wealth.

Yesterday is history
And tomorrow is a mystery

Parachutemanuals.com

[Gawain 0]

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Its not the first time that the new owners have faced financial issues after recieving a new home. In past issues the owners were not prepared for their utility bills to triple or worse because of the larger house. They had property taxes that jumped and were set to eat up the money sat aside for them and other similar issues.

This is the same issue that occurs to a lot of lottery winners, they just can not handel the instant wealth.

Granted, but the community around this family foresaw that. They raised $250K for scholarships for the three kids, plus a fund to handle the property taxes (plus they paid their old mortgage too).

All this family had to do was build a nest egg with their current income. There isn't a business consultant on this planet that would have advised them to put half-a-million at risk on their home to start a new business.

So I try and I scream and I beg and I sigh
Just to prove I'm alive, and it's alright
'Cause tonight there's a way I'll make light of my treacherous life
Make light!

[kelpdiver 2]

i read that they also raised another 6 figures in money for the kids schooling, etc.

The loan was to start a real estate oriented venture...yeah, these people are the type that should only invest in index funds.

[labrys 0]

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All this family had to do was build a nest egg with their current income. There isn't a business consultant on this planet that would have advised them to put half-a-million at risk on their home to start a new business.

There isn't an ethical consultant who would, but there are plenty more who arent ethical.

And seriously. This remark speaks a lot to the attitide of the home owner:

“What’s going to happen is instead of keep paying my mortgage, I’m going to take my money and not pay my mortgage because I’m being harassed,” said Harper."

Owned by Remi #?

[airdvr 210]

I'm sorry to sound harsh but what you've got here is a classic case of the do-gooders helping someone who really didn't deserve it or appreciate it.

I'd like to see what those Habitat homes look like 4-5 years down the road.

Please don't dent the planet.

Destinations by Roxanne

[NWFlyer 2]

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I'm sorry to sound harsh but what you've got here is a classic case of the do-gooders helping someone who really didn't deserve it or appreciate it.

I'd like to see what those Habitat homes look like 4-5 years down the road.

I don't know a lot about the process that Extreme Makeover goes through to choose the families since I've never really watched the program, but one of the things I've always liked about Habitat's model is the concept of "sweat equity." Habitat families are required to put in hundreds of hours of work into their own houses. Homeowners make a mortgage payment on their home - it's not a gift. Also, the Habitat houses are fairly modest - we're not talking mansions here, and that's by design. I think it's really apples and oranges to compare the two programs.

"There is only one basic human right, the right to do as you damn well please. And with it comes the only basic human duty, the duty to take the consequences." -P.J. O'Rourke

[nerdgirl 0]

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I'd like to see what those Habitat homes look like 4-5 years down the road.

I don't know a lot about the process that Extreme Makeover goes through to choose the families since I've never really watched the program, but one of the things I've always liked about Habitat's model is the concept of "sweat equity." Habitat families are required to put in hundreds of hours of work into their own houses. Homeowners make a mortgage payment on their home - it's not a gift. Also, the Habitat houses are fairly modest - we're not talking mansions here, and that's by design. I think it's really apples and oranges to compare the two programs.

It’s a valid question – what is the mortgage default or foreclosure rate for Habitat for Humanity efforts?

While “Extreme Makeover” may be inspired by the best of intentions, at the close of the day it is a for-profit commercial endeavor. Which is another way of saying I agree with you that comparing HfH w/"Extreme Makeover" is highly problematic.

Nonetheless, the underlying query is fair.

Some city and state HfHs claim 1% mortgage default rates, which are lower than the general population (just over 2%).
One 3rd party assessment noted “The default rate on Habitat mortgages is less than 2% nationwide.” Still better than general population.
Here’s a State Bar Association asserting a 1.48% default rate (5 out of 336).

Like any other expenditure of private capital, as long as it’s not illegal, people can do whatever they want with their money. Investing in one’s community with a 98%+ success rate doesn’t sound like a bad choice to me.

VR/Marg

Act as if everything you do matters, while laughing at yourself for thinking anything you do matters.
Tibetan Buddhist saying

[NWFlyer 2]

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It’s a valid question – what is the mortgage default or foreclosure rate for Habitat for Humanity efforts?

Thanks for digging deeper - I didn't like what the question implied - that HFH and Extreme Makeover were cut from the same cloth, and I really don't think they are at all. The statistics you've shown seem to indicate that Habitat has the track record to back up their investment in the community.

Extreme Makeover is probably going to wind up more in the "lottery" success vs. failure column, I fear.

"There is only one basic human right, the right to do as you damn well please. And with it comes the only basic human duty, the duty to take the consequences." -P.J. O'Rourke

[nanook 1]

There should be a show. . ."Extreme Finance Makeovers". A show that educates financially inept people to make wise choices and how to build capital. I would find this more exiting seeing the success through months of training bearing fruit. It sure beats giving assets to someone in the "poorhouse" It's very rare that someone is poor due to outside circumstances.

_____________________________

"The trouble with quotes on the internet is that you can never know if they are genuine" - Abraham Lincoln

[nerdgirl 0]

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It's very rare that someone is poor due to outside circumstances.

There's a great question ... and probably deserves it's own thread in those 11 words. On what do you base that assertion?

Because my speculation would not be the same (not quite the inverse either): that the biggest challenges to individuals trying to escape poverty/poor arise from outside circumstances. That is primarily based on having lived in South Central Los Angeles, including during the 1991 riots.

To be explicit, the capacity to arise from poverty in the US is *not* independent from one's choices, behaviors, and actions. Rather those choices are necessary, perhaps vital, but not sufficient.

VR/Marg

Act as if everything you do matters, while laughing at yourself for thinking anything you do matters.
Tibetan Buddhist saying

[Gawain 0]

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There should be a show. . ."Extreme Finance Makeovers". A show that educates financially inept people to make wise choices and how to build capital. I would find this more exiting seeing the success through months of training bearing fruit. It sure beats giving assets to someone in the "poorhouse" It's very rare that someone is poor due to outside circumstances.

There is, it's called "The Dave Ramsey" show, with his Financial Peace University. He's on the radio and on FBN.

It's not for everyone, but his is the clearest, simplest, step-by-step I've seen.

I like listening to his radio show, because invariably, you hear some caller in this vein: "...well, you know, life just sort of happened to us, we bought a house for $300K, have a HELOC for $50K, then we bought two new cars, owe $40K, and then we cycled credit card debt, and owe $17K."

Dave: "what's your household income?"

Caller: "oh, about $42K per year."



Can't make the sh*t up...

So I try and I scream and I beg and I sigh
Just to prove I'm alive, and it's alright
'Cause tonight there's a way I'll make light of my treacherous life
Make light!

[Armour666 0]

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Quote

I'm sorry to sound harsh but what you've got here is a classic case of the do-gooders helping someone who really didn't deserve it or appreciate it.

I'd like to see what those Habitat homes look like 4-5 years down the road.

I don't know a lot about the process that Extreme Makeover goes through to choose the families since I've never really watched the program, but one of the things I've always liked about Habitat's model is the concept of "sweat equity." Habitat families are required to put in hundreds of hours of work into their own houses. Homeowners make a mortgage payment on their home - it's not a gift. Also, the Habitat houses are fairly modest - we're not talking mansions here, and that's by design. I think it's really apples and oranges to compare the two programs.

I have worked on several Habitat For Humanity House here in Toronto over the years and even after people get their opportunity for their house I still see some come out to work on other homes. They have to work 500 hours of "sweat equity" and work on building their own home.

The Mortgage is interest free and only reflects the final cost of building the home but they do apply a second Mortgage for a considerable sum on the property leaving no equity on the property so people can't just flip a place to make a profit or take a large equity loan. HFH also keeps first right to buy the property in sales. Once the first mortgage is paid off then the second one is forgiven.

If families have a change of situation job loss illness ect they assist them by keeping payments at 30% of their income during the period. But they will foreclose its pretty rare and because HFH is the mortgage holder the foreclosure goes back in to the program and not lost to some bank.

over all they have less then a 1% default rate on mortgages also because it's not a lottery win for the families it something they have work on themselves and get the proper assistance to make it a long term move for them in the right direction of being financially stable and independent. Lots of the properties are in great shape because they have a lot more pride in what they have earned and the opportunity they have been given.

I really enjoy working on the builds for these house because it not a hand out that get abused. It’s also been a great opportunity for students in school learning trades to get hands on involvement

SO this one time at band camp.....

"Of all the things I've lost I miss my mind the most."

[nerdgirl 0]

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It sure beats giving assets to someone in the "poorhouse" It's very rare that someone is poor due to outside circumstances.

... you hear some caller in this vein: "...well, you know, life just sort of happened to us, we bought a house for $300K, have a HELOC for $50K, then we bought two new cars, owe $40K, and then we cycled credit card debt, and owe $17K."

Dave: "what's your household income?"

Caller: "oh, about $42K per year."

Glad that you posted that anecdotal scenario.

The situation in which you describe -- while it may not reflect choices I would prefer -- does not indicate folks who were "poor".

$42k/year is not poor. (And given, it's not wealthy either, especially for urban coastal communities.) The poverty line for a family of 2, one definition of "poor", is $14k/y. The bottom 20% of US household incomes is less than $19.2k (per 2007 Dept of Commerce quatriles), another definition of "poor." Median US household income for 2006 was just over $48k/y.

The scenario related above may more represent 'average' people, in fact.

What do you (general, rather than specific, "you") do about it?
Nothing is one option. (What countries' economies most look like that course of action?)
How did the 'average'-esque household get to this situation? Less to blame and more to learn so as to try to decrease liklihood of repetition.

As we all know pointing out problems is easy. Coming up with and implementing executable solutions is a whole 'nother endeavor.

VR/Marg

Act as if everything you do matters, while laughing at yourself for thinking anything you do matters.
Tibetan Buddhist saying

[VTmotoMike08 0]

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As we all know pointing out problems is easy. Coming up with and implementing executable solutions is a whole 'nother endeavor.
VR/Marg

Maybe I'm overly simplfying this but I see a pretty obvious solution to this "average" situation: SPEND LESS!

Don't buy the 300K house, I bet they could still be comfortable in a 200K house or less. Drive your old cars for a little longer instead of buying two new ones. Ease up on the credit cards and don't take that vacation until next year when you have saved up for it. Put in a few more hours per week at work and get that income up to 50K/ year now then 60K in a couple years. Don't go on a skydiving binge using credit cards (can't say I lead by example here)

It's not that hard...

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What do you (general, rather than specific, "you") do about it?
Nothing is one option. (What countries' economies most look like that course of action?)

Duh! That would be the USA

[shropshire 0]

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It's not that hard...

Unfortunately taking responsability for your own finances IS that hard (Clearly, otherwise so many people wouldn't be is such a state). Some of these people just plain EXPECT to live in a life style that they simply can't afford.

I guess it's just the way that I was raised... if you can't afford it... you can't have it (yet) - I don't do loans (excepty for the mortgages). I save untill I can afford, before I buy. For me, it's way less stressfull.

(.)Y(.)
Chivalry is not dead; it only sleeps for want of work to do. - Jerome K Jerome

[nerdgirl 0]

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Maybe I'm overly simplfying this but I see a pretty obvious solution to this "average" situation: SPEND LESS!

Concur. That's re-stating the problem tho', i.e., that average consumers are spending too much. (And saving too little.)

We've (more of a global "we") long identified the problem. And for the last 25 or so years, consumerism and demand for new services has driven the US economy - the average consumers have spent largely without negative consequences for the overall economy. (Due to globalization, it's actually been good for the US economy & average consumers.) The crescendo of that 25 years of spending, in which barriers were progressively lifted (used to be called regulatory influences), is the subprime mortage crisis.

The US will survive this mess ... perhaps not in the same economic prominence that we've previously had, but the US will survive and most likely prosper relative to most of the planet. It's just likely to be tougher for the average & poor.

So how do you get people to spend less? (That's the tough part.) There are two extreme choices along a spectrum of possible policy solutions: control all consumer choices or do nothing. Doubt that you espouse controlling all of people's consumer choices. As long as the number of "average" households being irresponsible was some low number, it was absorbable by the economy. The "do nothing" scenario has the potential to lead to a tipping point in which the entire economy is negatively impacted, along with a lot of average people who didn't make poor decisions.

So what's the policy solution?

VR/Marg

Act as if everything you do matters, while laughing at yourself for thinking anything you do matters.
Tibetan Buddhist saying

[nanook 1]

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That is primarily based on having lived in South Central Los Angeles, including during the 1991 riots.

My assertions come from growing up and being surrounded in a below poverty neighborhood.

My definition of "outside" is hurricane destroying your vinyard which takes a minimum of seven years from planting to produce at best, substandard grapes. Earthquakes. Floods. But if you know the rules, you will bounce back in time anyway. Until that time, you are poor starting over.
I would have to do more research (which is hard due to the extreme slowness on the Internet on these FOB's) but those in that type of neighborhood are still exposed to television and other media sources. They see "differences". Many leave to persue. It's still a choice. What they lack is education and possibly witnessing end results of that said education(role model?). Also, walls created by local expectations and norms may prevent ability to comprehend one's capability to achieve what they see.

In the end, I believe that these are more inside circumstances versus outside. You have to want, then research by any means necessary, and be willing to be the "black sheep" and break away from the mold life has thrown your way. (ever gone back and see some relative glare daggers at you for succeeding?)

_____________________________

"The trouble with quotes on the internet is that you can never know if they are genuine" - Abraham Lincoln

[tigra 0]

Habitat and other similar programs have procedures in place to educate homeowners and also prevent or make it extremely difficult for them to pull all the equity out. They usually involve credit counseling, forgivable mortgages on the property and owner occupancy provisions. The idea behind these programs is to re-invest within the community and encourage homeownership in econimically depressed areas. The homeowners/buyers don't get "free and clear" half a million dollar homes in neighborhoods full of $90,000.00 homes.

[Gawain 0]

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It sure beats giving assets to someone in the "poorhouse" It's very rare that someone is poor due to outside circumstances.

... you hear some caller in this vein: "...well, you know, life just sort of happened to us, we bought a house for $300K, have a HELOC for $50K, then we bought two new cars, owe $40K, and then we cycled credit card debt, and owe $17K."

Dave: "what's your household income?"

Caller: "oh, about $42K per year."

Glad that you posted that anecdotal scenario.

The situation in which you describe -- while it may not reflect choices I would prefer -- does not indicate folks who were "poor".

$42k/year is not poor. (And given, it's not wealthy either, especially for urban coastal communities.) The poverty line for a family of 2, one definition of "poor", is $14k/y. The bottom 20% of US household incomes is less than $19.2k (per 2007 Dept of Commerce quatriles), another definition of "poor." Median US household income for 2006 was just over $48k/y.

The scenario related above may more represent 'average' people, in fact.

What do you (general, rather than specific, "you") do about it?
Nothing is one option. (What countries' economies most look like that course of action?)
How did the 'average'-esque household get to this situation? Less to blame and more to learn so as to try to decrease liklihood of repetition.

As we all know pointing out problems is easy. Coming up with and implementing executable solutions is a whole 'nother endeavor.

VR/Marg

Well, there are several solutions:

First: Don't buy a house that doesn't fit one or all of these parameters--total house value not exceeding 3. income (with 20% down), or mortgage payments not exceeding 25% of take-home pay, on a 15 year fixed (after 20% down).

Second: Don't squander gifts (like this family did).

Third: Get more than one opinion in making major purchases/life decisions.

The scenario I parodied from the Dave Ramsey radio program is not uncommon, and it often does not reflect "poor" people, as you noted.

It does show that great marketing, coupled with bad, stupid decisions does amazing things. In the end, it's the consumer that signs their name.

Individual responsibility.

So I try and I scream and I beg and I sigh
Just to prove I'm alive, and it's alright
'Cause tonight there's a way I'll make light of my treacherous life
Make light!

[hungarianchick 0]

According to the Boston Herald they took the loan out to invest in a construction business and used the house as a collateral...

"I love cooking with wine. Sometimes I even put it in the food."