I agree with Chad. The “they duped us into buying” is 99% B.S. People hear what the want to hear. In the article it says “I had to stop making payments to get their attention”. Are you kidding me? The reason they don’t call you back is because they don’t have to. You made a deal with them that now you’re breaking. It sounds like “I’m going to punish them for borrowing me that money”. Grow up and take responsibility. You made the bad choices and should do whatever it takes to work your way out of it. Don’t come to me (the taxpayer) to help you out. I would only have time for those that are willing to take accountability for their actions.

The ease of getting a mortgage for people with questionable credit is now coming to a head.It made good renters into very bad home owners. 10 years ago if you had bad credit and wanted to buy a home, you had to improve your credit score, how? by changing your financial habbits, then you could get that home you wanted. Five years ago those same people with bad credit and their bad financial habits are getting mortgages in 7 days with 0 down and on top of that refinancing again and again to fuel their bad spending and credit habits. All the while believing the house they are in will keep going up in value. This is exactly what the Colvins did,started out with a 250k purchase refinanced not once but twice and now owe 330k. Now he wonders why he cant refi again for a third time. A house is not a cash machine you can keep going to. Eventually you have to pay that mortgage off, which seems pie in the sky to so many of these poeple. These folks want to blame the mortgage companies, the lenders and anyone else but themselves when they can’t pay. A home you live is not an investment you can generate income from, a home is an aquired asset, a place to hang your hat. You want an investment that brings you 70K in 3 years, save your money do some research and invest. Don’t put at risk the roof over your family.

I am in the real estate industry and absolutely appalled that you would interview someone like Paul Reese. His reputation in the industry is horrible and his business practices are questionable. To even have him comment is an insult to our industry. I would suggest that when you interview someone, you should make sure that it is someone with some integrity and creditbility. He is one of the fast talking slick loan officers that you always report about that take advantage of people. Do a google search on Paul Reese and his partners and you will find an interesting trail of victims.

This is the second bubble that we’ve had in the last decade (internet and housing), but in some ways this one seems worse to me, because of the damage that it’s done and will continue to do to the landscape. We saw some stupid, irrational behavior during the internet boom (of the type, paying $200M for a greeting card site that never had a viable business plan and was never close to making a profit), but the long-term effects weren’t so bad. Hundreds of web sites evaporated into the ether, lots of wasted man-hours of work, and billions changed hands, but that’s it. In fact, it did allow us to dominate the internet landscape with the surviving giants like Google, Ebay, Yahoo, etc. This article points out one of the tragedies of this bubble, which is that we’ve got housing build out in places where it makes absolutely no sense. We’ve now got empty housing tracts sitting 40 or 50 miles outside of the Cities. If you let them rot, you’ve got eye-sores out where we used to have farmland or prairie. If you encourage people to move there with price drops, you’ve got to build more infrastructure and encourage people to waste more time, money and gas on the interstates. An urban planning disaster. People are greedy and short-sighted by nature, so we’ll have more bubbles, but 1) I hope that they are less destructive than this one will be; and 2) we shouldn’t encourage them by bailing out the idiots that rushed into them. Gambling on bubbles should be risky business.

As I begin this reply, let me make it clear that I believe that the government should butt out of this messy meltdown, and just allow the industry to correct and reset itself. I do not, in any way, support government intervention or a borrower bailout. Still, the harsh heartlessness of some of the comments posted here is disturbing. Sure, there were crooks, and plenty of instances of fraud; but the majority of the people losing these homes weren’t trying to scam anyone, or to greedily take funding that wasn’t “smart”. They were average Joe Blows, who read the newspapers and listened to the daily news reports. They looked up to bankers and mortgage originators, and such, as educated people smarter than themselves. Many figured that these “money people” would not make these loans if they didn’t know that the borrower was sure to repay. People at every level bought into the hype, and now the chickens have come home to roost. It’s a sad time, and a sad statement of our society. We prey on one another, and those that escape crow about their good fortune, and berate the ones that fell along the way. Can’t those of us who were fortunate enough to have sidestepped this fiasco, exercise a bit of compassion? Many people are learning a valuable life lesson in the very hardest of ways. Only a coward kicks at them when they’re down. Our energies would be better spent pursuing and prosecuting the real crooks in the game.

When driving to the Cities I always said to my
husband, “How can people afford these large homes?” We come from “UpNorth”, have been
married a number of years, and have raised two
sons and both have worked full time but only have
a modest three bedroom rambler (which is paid for). Now I know these people couldn’t afford
these large homes, new car and all the luxuries
that go with it. I’m really happy we stuck to the
simple life and am having a hard time feeling sorry for the people who got sucked into this.
However, their mess is pulling us all down!

LaQuita

This was all forseeable as far back as ~2000 when house prices started going up each year 2x-3x faster than the general rate of inflation. We were cautious, stayed in our modest post-WWII rambler, and are raising our 3 kids in a modest (not “cool”) inner ring suburb. We refused to buy into the hype and we gave up a lot of cool stuff and locational “prestige” by being financially conservative. So, yes, I think it’s wrong to bail out irresponsible borrowers, but I also think it’s wrong to bail out the should-have-known-better Wall Street types who made the bubble possible (and who said that the old rules no longer applied and poo-poohed the naysayers who warned that it was unsustainable). But now that their ‘new paradigm’ has blown up in their face, the fat cats’ risks are being socialized by the Fed and the Govt. That’s why I really don’t care if the Govt throws the little people a bone too. Responsible people are going to pay to clean up the mess; anyone remember the S&L bailout of the late 1980s? That’s just the way life is so let’s move on.

Wow.

Do people ever want to take a step back and consider awful land use decisions being made that create these subdivisons in the middle of nowhere? How about trying to build neighborhoods and towns with a plan? We have a lot of land in Minnesota, I wonder if we’ll ever learn of how to responsibly use it to build communities that look beyond the next speculative development bubble.

Live within your means. If you borrow money to buy a fancy house with no money down and HOPE the house will appreciate every year, you are a financial idiot. The taxpayers (who probably have more modest houses they can afford) owe you nothing. I agree with Morg…have 6 kids, then wonder why they can’t make the payments on a brand new house once the payments go up on the mortgage they SIGNED?? You are idiots for buying it!! Take responsibility! Good thing you live in the WELFARE and high tax state of Minnesota where the hard working, responsible citizens will give you food stamp cards and a section 8 voucher for some free rental housing…you are welcome…hope you learned a lesson…

Please remember that not everyone who bought or built a house in Wright County did it to get rich. My wife and I had a house built (Under $220k) in 2004 and we love it out there. The nights are very quiet, we can see the stars, we feel completely safe, and we like living next to a cornfield. Yes, the commute to the cities sucks, but that’s the price we pay. We knew that going in that it could be expensive to live out there and we made sure we could afford our house. We have a 30 fixed mortgage, not subprime. In fact, we have less debt now than we did when we moved in (no we did not consolidate any bills). People just need to live within your means.

Six kids pretty much says it all. I worry for them, not their parents. And about my bank stocks! They HAVE taken a hit. Thanks for nothing.

Why does everyone who gambles and make a bad decision expect the taxpayers to bail them out. Take some responsibility for your decisions! I don’t feel bad because those are probably some of the same people who have the two new vehicles and one probably a gas hog SUV and one a big gas hog pickup truck and also sits with other toys unneeded and now they want a BAIL OUT by us responsible people who drive older gas efficient CARS and have few toys but yet know how to MANAGE OUR MONEY and live within our means!!!

No Sympathy to the majority of those who lose their houses.

Gary

I am a casualty of the debacle in financing, in a way, coming from another angle. I had a Mortgage business, and closed my company this fall, due to the changes in the law which I knew were coming and had prepared for that. Then our state legislature started to limit other aspects. Now it is very difficult to be a mortgage broker and loan originator in Minnesota because many national mortgage lenders who were our partners in funding will not do business in MN. I agreee with the writer who says government should stay out of the way and let this situation sort itself out. I have been a licensed real estate agent since 1979 and a licensed mortgage broker since 1997. I am now searching for an ethical mortgage group with which to affiliate. I considered affiliating with a bank as a net branch, but those also are reluctant to do business in MN due to our stringent law. I do not disagree with these laws in principle, but I think they should be re-examined to make certain the right targets are eliminated. I personally have talked many people out of borrowing money without retaining at least 20% of their equity. People who wanted to borrow 125% of their home value in the late 90’s were given the facts and I never had any part in such a loan, nor in some kind of straw man scheme or falsified documents. Now all brokers are looked upon as scam artists, unethical persons, etc. I have used as my guideline on pricing for purchases or loan refinance the idea that the closing costs should not exceed 2.s - 3%. That does not leave fat for the broker; it does, however cover actual cost and allow a fair income. If anyone wants to know how that works, I shall be glad to explain further or provide documents.

Being willing to work with people and their situation is always best; too many of our property transactions are now being disclaimed by the purchasers and the professionals. Because this state is a high profile consumerism state, we have not only HUD standards but our own to utilize. I cannot speak for all others, but I know that in full disclosure every real estate and mortgage client was given a complete explanation of every document that was part of the transaction at the beginning of the process, at the point where any documentation was required by the funder or the title or closing officers and again at the closing. All refinance loans in MN have the three-day right of recission. If the person changes his or her mind, whatever the reason, and quite a few do, all is cancelled. Usually I as a mortgage broker then became responsible for paying costs such as credit reports, appraisals, and the costs of all the copying, paper, transportation, mailing or more likely faxing and courier costs with no compensation from the client at all. In some cases, I also paid for the appraisal when the individual concerned would not. This is not a business for amateurs or sissies. If we cannot in good conscience identify and explain our activity in the best interests of our clients, and that includes saying “no” to being a party to flaky financing, we need to develop a new backbone and learn more about our own business. Mortage brokers and originators in MN were required to complete a 15 credit course. Prime in the lessons was a complete understanding of fair lending and ethical practices as prescribed by HUD and the state of MN. Let free enterprise flourish and correct injustice; use the tools of the law to make sure full disclosure and ethics are the warp of our lending tapestry.

I wish there was a way people could learn to live on what they make. A $500,000 house takes $35,000 per year just to pay interest. If your job doesn’t pay at least twice that, you can’t afford the house and other living expenses. When I built a new home, I figured out the size of payments my job could make and built accordingly. Why don’t schools teach that kind of math? This reminds me of a striking worker who was quoted saying between his house, boat, pickup, car and camper payments he just couldn’t make it on his wage. Know what you make, and don’t spend more. Period.

I feel that everyone is focusing on ‘irresponsible’ people making ‘irresponsible’ decisions. What is unfair and not being addressed is that yes there are many idiots in this world, however, the people suffering are not just idiots. They are hard working people who purchased homes well within their budgets who now cannot sell their home because of what the ‘irresponsible’ people did. Regular families experience unfortunate tragedies causing them to need to sell (ie injuries that force them out of work, divorces, family deaths, illness, layoffs). Things like this CAN happen to YOU. So these people try to do the RESPONSIBLE thing and sell their home because they cannot pay for them even though when they purchased it, it was well within their means. These people are hurting because due to the current conditions in Wright County these people are forced to sell there homes for significantly lower than what they paid. I know someone with a home that was purchased for $160,000 that needs to be sold due to a divorce. The realitor says they will be LUCKY to sell that home for $145. Add realitor and closing costs to that we are looking at -$20,000 easy. Not to mention because the market is slow who knows when the home will be sold due to the economic situation, so they throw away mortgage payment after mortgage payment because they ARE responsible and will not allow it to go into forclosure. Unfortunately the story printed in the newspaper focused on the idiots instead of the real people getting hurt by this. If the government does not help those idiots - then regular people are the ones stuck suffering the consequences. How can we ignore them?

Quoting Laurie from above: “Buffalo is not a desolate community so far from Minneapolis that it should be considered uninhabitable. It is a thriving, growing community just beyond the outermost ring of ’suburbs’ in Minneapolis, and it will eventually weather the mess and continue to grow.”

As a resident, I agree that Buffalo as a whole is far from desolate (although the downtown is sadly becoming that way, aside from the crappy “antique” stores). However, much of the new development on the outskirts was ill-planned and is now sitting vacant. See the Centex townhomes south of downtown on CR-147 for a prime example. The point of the series of articles is that many of the new subdivisions resemble ghost towns, not necessarily the cities as a whole.

I agree with the last post from Lefty. I do believe the real tragedy here is for people like my husband and I. We purchased a very nice split level home in Wright County (certainly no mansion). We both work and can afford it. However, if we ever wanted to sell our home now for whatever reason (job opportunity, etc.), we would be hard pressed to get what we paid for it. We have several modest homes near us that are empty because of divorce, and because the home could not sell, is now in foreclosure. We have at least 3 buliders homes that are empty, and have decreased their asking price so much they advertising Rent To Own signs in the yard, and finally we have a few people who bit off more than they could chew, and resulted in foreclosure, or working out some type of mortgage deal with the county. So, I guess my point is that there’s several aspects/reason to this current situation with housing. There are people out there who are affected by this housing bust that did everything right when purchasing their home. I truly do believe that there was a false market out there that inflated home prices. This post doesn’t discount that some people did buy more than they should have, but I think it’s a sad situation when there are responsible people out there who can’t even get what they paid for in a house, if they had to sell it.

“we bought a house and now we can’t sell it for what we paid.” Even 12 yr olds realize they can’t get more for their baseball glove than they paid for it. Let’s hope your contact center job isn’t outsourced.

This is a rough spot. However, this downturn really creates opportunity for people that are dillegent with thier finances to capitalize on all the mistakes that were made. One could probably pick up a bank owned property for 50% of what it sold for 2 years ago. If you want to gain wealth, you need to have the courage to go in the opposite direction that the pendulum is swinging. Don’t be a sheep. When everyone else is buying you should sell and when everyone else is selling, you should buy! The only person to blame in a foreclosure is the one that signed the note and mortgage. You wanna play, you gotta pay. Thats it and thats all.

Poorly composed indeed! STrib, why did you exclude the words of those who you interviewed but neglected to use in order to spin the story in such a negative light??

Let’s look ACROSS THE BOARD at ALL counties and talk about abandoned homes, bankrupcy and foreclosed mortgages across the board … that might paint a more true picture of what has happened over the last 24-36 months. Let’s also report out on those of us that bought in Wright county during this time on a 30-year fixed mortgage and let the data — not scare tactics — tell the true story.

Yea, it’s slowed down out here as far as building goes but I don’t regret for one moment my hike of a commute to work and the sound of sweet serenity on a Saturday morning.