$760,000 home for a 26 year old making $15.00 per hour.

[Liberal_in_LA]

http://www.detnews.com/apps/pbcs.dll/article?AID=/20071128/BIZ01/711280404

Wednesday, November 28, 2007

Foreclosures in Shelby Twp. neighborhood raise suspicions

Mike Wilkinson / The Detroit News

SHELBY TOWNSHIP -- Dan DeKubber was a construction worker making $15 an hour when he says his boss suggested he buy a home. Not just any home, but a 3,800-square-foot, four-bedroom house in the northern Macomb County suburbs.

Price: $760,000.

Just 26 years old and single, DeKubber had neither the money nor the need for a McMansion.

"How can I possibly get the loan?" he asked John H. Floyd. Floyd assured him that he'd help DeKubber prove he earned enough to warrant the loan and also suggested that he'd make a $30,000 profit when he resold the house, DeKubber claims.

A year after the deal was done, the home is in foreclosure, DeKubber's credit is destroyed and soon, he says, he'll be evicted.

[TwilightGardener]

1. Fiscal Darwinism in action. Go back to renting, you idiot.

[Uben]

50. The kid was stupid

He took an incredible and irresponsible risk. The real problem here is the fact that the lending institution did not "qualify" him for the loan. That is the whole problem of this crisis. Lenders should be "required by law" to qualify applicants for loans.
Nobody should be considered for a home loan unless they make enough that the loan payment is no more than 25% of their take home pay. I was taught this in real estate finance classes back in the mid eighties. What the hell happened?

Irresponsible lending practices caused this bust, and the managers of every institution who approved the extremely risky loans should be fired and fined heavily, if not imprisoned. These lending institutions should be liquidated, their assets seized, and licenses pulled permanently.

Make no mistake, this whole sub-prime debacle was the result of irresponsible lending practices. we need regulation of the industry because they have shown the inability to regulate themselves. But, since there is so much lobby money coming from this sector, it will never happen!

[1932]

54. Lenders acted irresponsibly, but, you have to assume, deliberately.

I think this bubble was deliberately created. It was a great way to shift a lot of wealth in a short period of time. With so much money changing hands, financial industry people who make money at the moment it changes hands, rather than when money grows over a long period of time, could get their high salaries, their christmas bonuses, and sell their stock options over a five year period, and cause an economic collapse that they'll still benefit from, because, so long as they time their exit from the real estate market just right, they'll have a ton of money to buy up all the devalued assets and further concentrate their wealth and power while others suffer.

[sendero]

63. I don't ...

... I think greedy mortgage companies realized that they could make these loans, make a few K in points and then walk away unscathed. Once a few figured it out, the rest followed suit.

Just like the S&L debacle of the 80s, people found a way to make profits with no risk.

[1932]

77. how is that not "deliberate"?

Also, check out the article linked in this post below: http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=2360549&mesg_id=2360712

[sendero]

132. Not a "deliberate" plan;..

... to transfer property wealth from one class to another. Merely a deliberate plan to make easy money no matter what.

[Telly Savalas]

138. A lot of those mortgage companies are failing

It's not folks finding a way to make profits with no risk, but rather folks who drastically underestimated the risk.

[sendero]

140. Well...

... what I should have said is that they THOUGHT there was no risk.

I believe in Karma, and this is one reason why.

[rucky]

85. They saw a nice racket, and ran with it.

ran it to the ground.

[annabanana]

96. Bingo! You can understand a clueless borrower, but there is no such

thing as a clueless lender.

[truth2power]

73. You've summed it up in a few paragraphs..

especially this: "Irresponsible lending practices caused this bust, and the managers of every institution who approved the extremely risky loans should be fired and fined heavily, if not imprisoned. These lending institutions should be liquidated, their assets seized, and licenses pulled permanently."

No one is accountable for anything anymore. The predations continue, in every area of our society, and no one in power has to answer for their crimes.

In my county paper this week there were four entire pages listing Sheriff's Sale of Real Estate. Wells Fargo Bank most often listed. Where is the accountability???

I hope, in their next life, Bush and his entire Crime Family have to spend their entire lives living under a bridge. In a cold climate.

[Clark2008]

89. I have a Wells Fargo loan.

And haven't noticed them being predatory.

Granted, I have a fixed-rate mortgage, but I think it varies by region. Regions and Countrywide also have been responsible for some of this poor lending.

[truth2power]

119. If any of these lending institutions

allowed people to take out mortgages and didn't qualify them, that's predatory, IMHO. I would think these lenders would have some sort of fiduciary duty to lend money responsibly.

No, it's not ONLY Wells Fargo. But I think they jumped on the bandwagon, along with others, to make a fast buck and weren't worried about the human cost. I don't know how long you've owned your home, but you're lucky you have a fixed rate and aren't being victimized by this insanity.

BTW -- also in my county paper, under Civil Suits, is almost an entire page of various banks filing against individuals. "Summons and copy of complaint issued." I guess these are the properties in the pipeline, so to speak, many of which will proceed, eventually, to the sheriff's auction block.

[DangerDave921]

148. NO NO NO

YOu want the law to say that two private entities can't enter into a voluntary contract?

As long as the lender is not using devious tactics or lying, then I don't see a problem with a person taking out a loan on whatever terms they want to negotiate. Personally, I think it's stupid to take out a loan you can't afford to pay back, but I won't interfere with a person's right to do that if the lender agrees. I put a lot of responsibility on the borrower. If you can't afford it, don't buy it! It's as simple as that.

Of course the lender has to be upfront and honest about all the terms, conditions, etc. That is a prerequisite to it being a voluntary transaction.

[Deja Q]

137. Oooh, being judgmental! How very human of you!

:D

The guy, naive or otherwise, was suckered by a fraud and the bank was more than happy to do its part too.

[bridgit]

2. sucker!!

[daninthemoon]

3. Bet he had some killer parties though.

[Bluebear]

4. And how many will coldly call him a sucker?

A very young adult, getting "advice" from an authority figure and presumably somebody older and wiser, yet I'm sure people will complain that it's ALL his fault and "boo hoo".

This story is being played out all over the place, and for better or worse, their fault or not, people are in misery over it.

[Breeze54]

6. He's 26 yrs old!! Not exactly a teenager...sorry but that's just dumb!

:eyes:

[Bluebear]

10. Pffff 26 is still a very impressionable young adult.

you're just mad 'cause you can't spank him. ;)

[Breeze54]

12. LOL! I'd kick his ass if he was my son!

Boot up ass! :P

[Bluebear]

15. LOL

I can see it too! :rofl:

Just as long as you boot his BOSS up the rear end too!

[bridgit]

17. pft, a young women so inclined could have 1/2 a dozen kids by 26...

since when do impressionable 'young' 26yr old males get a pass :spray:

[Bluebear]

22. Having 6 children and making sound credit decisions are different.

[Breeze54]

32. Actually, having 6 kids IS an UNSOUND credit decision!

They both deserve each other! ;)

[bridgit]

92. no props for Catholicism is see...

O8)

[bridgit]

93. yes dear...

[SteelPenguin]

55. Well according to the Bush yardstick

Anything you do before you're 40 doesn't count, becuase they were 'youthfull indiscretions'

[blondeatlast]

64. Good one! nt

[NewJeffCT]

68. The Republican yardstick is if it happened before today

it's a youthful indiscretion...

Remember, Henry Hyde said similar when his affair with a married woman was uncovered during the Clinton impeachment process. I think Hyde was in the mid to late 40s at the time of the affair.

Arnold Schwarzenegger wrote off the stories of his affairs and abuse of women by saying he was a bad man when he was younger - and one supposed affair had occurred only months earlier.

[bridgit]

94. by 'the bush yardstick' filthy old new england money trumps common sense...

[sendero]

65. Look at it this way.....

. he just paid some heavy tuition. He'll get his credit back in a few years and he won't make that mistake again.

[Name removed]

91. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Bluebear]

141. I don't know, in Bluebear-land we don't call people "retards" either.

:shrug:

[LeftyMom]

115. He's my age. And I would never- not in a million years- even consider buying a $700K house.

Even if I could afford the payment, because that's just crazy.

[Matariki]

25. Eh. In the real estate feeding frenzy it probably seemed like a good idea

especially for someone with construction skills.

[KansDem]

155. But haven't' we learned in recent years that "youthful indiscretions" can occur up to age 40?

Give 'em a break! This kid has another 14 years of "youthful indiscretions!"

[TwilightGardener]

7. No cure for stupid, except maybe a kick in the ass. He got his kick in the ass.

That's the way it goes. People get suckered into ridiculous schemes all the time. He'll recover--he's only 26 and he's single, and hopefully learned his lesson.

[cherokeeprogressive]

20. Coldly and gladly raising my hand.

At 26 I had been in the U.S. Navy for 5 years and had stood on five continents.

I was stupid, but not stupid enough to buy a 3/4 million dollar house on $15.00 an hour. Stupid enough to get married, but not stupid enough to buy a 3/4 million dollar house on $15.00 dollars an hour. Stupid enough to re-enlist but not stupid enough to buy a 3/4 million dollar house on $15.00 an hour.

Not even DRUNK or STONED have I ever been stupid enough to buy a 3/4 million dollar house on $15.00 an hour.

Not only SUCKER, but IDIOT.

Shows us a lot about the intelligence of our youngsters, huh? And these people are going to run the fucking world someday. Scary thought, that.

[silverojo]

37. What about the creep who got him the loan?

Are we forgetting that people like this are why we're facing a massive housing market crisis right now?

[Catchawave]

83. My first thought too....he lied to the lender?

My god, what are the mortgage payments on 3/4 million dollar house? There's the first red flag.

[Marrah_G]

107. I'm sure he never intended to pay the payments

The kid was expecting to turn the house quickly and pay back the mortgage right away while making a profit.

[Dorian Gray]

100. He was a jerk, for sure...

but it wasn't his credit. The 26 year old ADULT MALE needs to take personal responsibility for his financial condition. He's the one who will have to suffer through bankruptcy.

Perhaps he can sue those in a position of authority... the bank and his boss.... to recoup some of his losses, but at the end of the day, he made a bad financial decision.

When I was buying my home, I REFUSED a variable rate LIBOR loan because I knew it was a bad idea, and I'm no financial guru. Oh, and I was 28 at the time. Only two years older than this man.

[Skittles]

44. THANK YOU

SAME HERE CHEROKEE - at age 26 I had completed four years in the military and four years at a civilian job - good lord, the only reason people get away with these kind of ridicuous scams is the IDIOTIC PEOPLE WHO FALL FOR THEM

[sendero]

66. He wasn't stupid..

... he was gambling with other people's money. As were many of the folks caught up in this mess.

[NewJeffCT]

86. There have been suckers since time began

With somebody offering to turn lead into gold, water into wine, a cure-all potion of snake oil, or telling us that the world was flat, or that Zeus led a bunch of deities that frequently interfered with the affairs of mortals, or that the earth is 6,000 years old, or that George W. Bush is a down-to-earth fella you'd like to have a beer with. It wasn't yesterday that the phrase "A sucker born every minute" was coined. They wouldn't send out those emails about money from Nigeria if they didn't work.

It's why we have things like the SEC, the FDIC, the Consumer Products Safety Commission, the EPA, the FTC, etc.

When you bought a home, did you check the licenses of everybody associated with the purchase to see if the licenses were legit? The banks, the title insurance company, the homeowner's insurance company, the lawyers, the realtors, the home inspector, etc. Did you review the lawyer's title search? Did you read every line of the sales contract and the homeowner's insurance policy, including the fine print? Did you check the home builder and their record?

Yes, the kid was stupid, but I think it's more naivity on his part. The primary fault lies with either the bank for approving the loan in the first place, or the person that sold him the mortgage and falsified the documents he gave to the bank. The kid was sold a bill of goods, and he bought it.

[Yupster]

21. How could he even begin to look at his

monthly budget and think he could afford that house?

The mortgage payment would be about $ 5,000 per month. He couldn't even pay the taxes and insurance on $ 15 an hour. What an insane purchase.

[ngant17]

45. he got suckered by an ARM

an ARM mortgage on a $750k house could have been barely affordable for the first two years, or until the ARM exploded.

But you can even get burned by a traditional 30-year fixed. My brother bought a house a few years back, it was a long-term investment so he thought, now after the real estate market hit rock bottom, he's stuck with a mortgage that is more than the house is worth. He figures he's losing at least $5k a year just to rent it out.

[Yupster]

80. Well I don't see it

Even just making interest only payments on 750 k would be over $ 2,000 a month. Don't know what taxes and insurance would run but maybe $ 1,000 a month at least?

A $ 15 hourly wage will make you about $ 2,500 per month before taxes and FICA and insurance.

I don't see it.

Plus, didn't he realize what the A stood for in ARM?

I guess if his math skills were that bad, it's reasonable to assume his reading skills are sub-par too. If that is the case, I have more sympathy.

[ngant17]

130. I'm getting those same numbers, too

assuming a super-low 1% ARM interest rate, no down on a $750k house, the initial repayment will be $2400/month. Until the ARM starts adjusting.

Maybe the guy who set the kid up, he was trying to bail his own self out financially, perhaps even in cohoots with the mortgage broker so the paperwork could be rushed. You do have 48 hours to cancel a contract you signed, I think this is Florida state law.

The poor dupe was scammed from the get-go. He should have gotten some advice before or immediately after the contract.

[Marrah_G]

108. He wasn't planning to live there

He got caught in the flipping houses trend. He bought an expensive house, thought he could resell for a profit and when that didn't happen he was stuck with a mortgage he could not afford.

[soothsayer]

48. astrology doesn't consider you an adult until you're 28 (or whenever

Saturn returns to where it was when you were born---28, 29, 30). If you miss it, next oppty is age 56! The Romans considered you a juvenile until age 28, too.

[Yupster]

76. Many Romans were grandparents by age 28

Talk about weird. Juvenile grandparents. And we think we have problems today?

[Xithras]

136. Yep, and most were dead by 40.

Even 100 years ago a 25 year old would have been expected to have established a home, family, and career. This whole "25 is young" thing is only the product of the past few decades.

[Tesha]

49. Here's the *MOST IMPORTANT* piece of advice for everyone in every circumstance:

Here's the MOST IMPORTANT piece of advice
for everyone in every circumstance:

"If it seems too good to be true, it is."

Secondly:

"You can't sucker an honest person."

This clown thought he was getting away with something.
He wasn't, and now he's caught in the trap he willingly
entered.

Tesha

[Maine-ah]

87. oh, come on. We were his age when we bought our house.

and made more money. We knew what kind of payment we could afford and what we couldn't. He's an adult, who made a very poor decision.

[Gormy Cuss]

104. Yes, he made a bad decision, took a giant risk, and lost.

What bothers me though is the lenders who approved of the risk are going to go crying to the Feds for relief and we'll all pay for the bad lending practices. Sometimes there's a gray area on risk and I'm in favor of lenders using discretion there, but sometimes it's pretty black and white the the person will never be able to afford the loan if the rate increases and can't qualify for a fixed rate 30 or 40 yr, and is in a profession where there is no expectation of rapid wage growth. It sounds like it was just pure greed driving the decision to buy AND lend in this case.

[Ikonoklast]

110. I had bought and sold two houses by that age

I had my first mortgage when I was 21.

Not all decisions need be bad ones; if the market hadn't turned against him that guy just may have made a profit in the short-term. He gambled (with other peoples' money, I might add) and lost.

[CreekDog]

133. But we had to compete with this guy and paid inflated prices

And for his bad decision (and millions like it), the place I bought and felt I needed to buy was overpriced in 2004 and before that in 2000.

That's what bugged me then was that to the irresponsible, price was no object and to get a house then, I had to bid more than the irresponsible. And I chose my house based on making a 20% downpayment and being able to afford, really afford, a 30-year fixed payment and principle.

So I feel like these gamblers gambled with all of our financial stability.

They gamble --we pay.

[MLFerrell]

90. Hey, I'm the same age...

And I'd never be stupid enough to sign on to a mortgage I could never afford.

"...people will complain that it's ALL his fault..."

It IS all his fault! This asshole wanted to live above his means. Maybe lay the line on the ladies "Yeah, baby, I got a four bedroom deluxe!" just so he could get laid. Or for whatever reason. Fuck him.

Some of us are fiscally responsible. And then there are grade-A tards like this guy. Cry me a fucking river.

I rent. Millions of others do. This guy should have known better. It's not as if he's a fucking sixteen year old kid who doesn't know the ways of the world. He fucked up, big time, and now he's going to pay for it.

Oh, and that bogus "authority figure" argument? If I had some middle-aged asshole tell me to invest in pumpkins, because they've been going up the whole month of October, and to sell in January when they'll hit their peak, well then I get what I deserve, don't I?

If you're too goddamned stupid to understand fiduciary concerns, then stay the fuck out of the game.

:nopity:

[harun]

113. It isn't all his fault but c'mon, do the math (n/t)

[truth2power]

120. Yes, Bluebear, you're correct...

That young man deserves very little of the blame in this situation. Buying a home is one of the most important decisions one makes in his or her life. It's also, legally, a minefield, IMO, and I don't think anyone should enter into a real estate contract without the assistance of an attorney.

Most people can't begin to understand the legalities of these situations, never mind someone who is 26 years old.

[Mike Daniels]

150. He most certainly deserves the majority of the blame

I don't recall him being forced to sign anything or take on this loan. If his boss has told him it would be a great idea to jump off a 60 foot precipice into a pond no more than 2 feet deep would you say he's not to blame for his injuries.

Jesus, this mentality that people who fuck up their lives through irresponsible conduct don't deserve blame for their decisions is why this country is in the shape it's in

[Mike Daniels]

149. I won't call him a sucker but he's responsible for the fix he's in

Sorry, but once you're 26 years old you are an adult. You are capable of making informed judgements, refusing advice that others offer, and facing the consequences of your decision.

Ultimately, no-one forced him to take a loan that any reasonable person would have realized was beyond his or her means no matter how much someone else may have implied otherwise.

It's a pity that he's in this fix but he did it to himself.

[Breeze54]

5. Dumb Fuck! - $15.00 an hr for a $800K house?

:wtf:

[Liberal_in_LA]

9. This was going on everywhere for the past two years. Anyone could get a mortgage of any size.

[Breeze54]

16. So that means we should all get one?

I didn't! But then again, I only earn $14.00 an hour! :P

"Stupid is as stupid does" ...the poor guy. Gheesh! :(

[1932]

56. If you could time your purchase and sale right, you could have made $100,000 or more.

[Occulus]

124. A lot of people on this thread who are blaming this guy are forgetting that part

This whole "flipping" frenzy has been going on for a while now. Even I, in my financially dubious circumstances, looked at a few properties in the newspaper and online that I thought I could afford and then sell after simply giving the place a facelift. I never did it because I realized this practice had the overall effect of driving hounsing prices upward, which was a bad thing for pretty much everyone in the market. That giant sucking sound you hear is the edge of the bubble ripping open as it starts to pop.

This guy made a very stupid decision to buy as large and expensive a home as he did, but as you said, the practice of doing so and timing the close and then the sale in order to make a tidy profit is nothing new.

I'm wondering if the boss in this situation had a relationship of some sort with the seller. Here's one iteresting item from the article in the OP:

Floyd is in no position to drain the pool or improve his property. He's in eastern Kentucky serving a 78-month federal prison term for conspiracy to sell hundreds of pounds of marijuana. He was indicted two days before he borrowed $825,000 for the 4,300-square-foot home in the Woodlands subdivision. Through contact with the prison's administration, Floyd declined to be interviewed for this story.

I guess he's not the sharpest tack either, is he?

[Gormy Cuss]

109. More like the past ten years.

When I was shopping for a mortgage in 1999 the crazy lending practices were already pretty easy to find here. We were offered ARMs and zero-downs repeatedly even though we qualified for a traditional 15 yr. loan with 20 % down.

[provis99]

8. this guy was just bloody stupid

And "youth" is no excuse for ignorance or stupidity. He was 26.

[napi21]

11. I feel bad for the guy, but at least part of this was HIS fault!

I bought 5 houses in my lifetime and except for the first one when we were in our early 20's, every lender tried to convince me to buy a bigger and more expensive house! Yes, I could have afforded a bigger house, but as I told all those lenders, I wanted to be able to still sleep at night if I lost my job, or some unforseen expense happened. I didn't want to be contemplating suicide because I couldn't survive even one month and still pay the mortgage. BTW, I did lose my job when I still had the mortgage on the 4th house.

I blame the brokers for handing a lot of people a golden promise, and that interest rates would never go up, and you'd make a fortune when you sold that home in 2-3 years, but I also blame the borrowers for simply not thinking!

[Bluebear]

13. Thank you for your kindness, napi.

It WAS at least part his fault, but you are exactly right on the golden peromises. Someone of 26 probably doesn't even remember the last time there was a real estate downturn.

I have long thought there should be a MANDATORY class in high school called "Life 101", which teached you about credit, how to manage a checking account, etc.

[napi21]

18. I asked a HS teacher friend of mine that too. I didn't actually go as far as

talking about mortgages, but I asked her why there isn't a class that teaches the really standard stuff like how to write a check, how to use credit cards to your advantage, what goals you should set for saving at least SOMETHING! She told me she does teach her students how to write checks, and a brief overview of credit, but she inserts that herself, it's not in the std. curriculum.

I was astonshed one day when I saw 3 HS grads who were pondering over a check book. They were all trying to figure out how to fill it out! They work at the local supermarket which is how I knew they were HS grads. I couldn't believe they could have reached 18+ and SOMEONE hadn't taught them how to do that!

[Bluebear]

24. It's a complete disgrace.

To top it off, college freshman get "free" Visa and MasterCards in the mail. It starts by ordering a pizza when you are hungry, and with interest that pizza will probably end up costing 70 bucks after three years.

[annabanana]

97. If they receive their statements online, they are probably watching

the purchases clock in that way too. My son doesn't really see the point of a checkbook. He never writes checks.

[napi21]

116. That's fine. I rarely write checks anymore either, but does he

balance his checking ACCOUNT once a month? Even with auto bill pay, you still have to have an account! You have no idea how many people I've met who NEVER balance their account! Not only young people either! Some of the older ones are worse, because they have enough $$ that they just assume there's enough $$ in the account to pay all the bills, so they just schedule the darn payments. One friend from Ohio NEVER balanced his account. He would just open a new account every year, let the old one self reconcile, and close it out after several months.

[JCMach1]

14. There were even shows pimping house churning on cable

As the bubble was filled to popping...

Yes, he was stupid to follow along.

[bridgit]

19. yep, there's a 24yr old here in town that had some 7+ properties all up in the air...

churning away, waiting to flip, looking for that brass ring via 'paperless' loans...then they all came tumbling down :cry:

[Liberal_in_LA]

26. 'Nightline' featured a young guy with 1 million in debt... bought about 15 homes with 'liar' loans

[JCMach1]

35. That's what happens when 'credit reporting' takes the place of 'due diligence'

Time to kill credit reporting that invades privacy and make banks do 'due diligence' on most of their activities.

[Gormy Cuss]

156. Oh snap!

Absolutely true. Credit scores have trumped due diligience on loan origination, even though credit scores as intended are only supposed to be an indicator, not the dealmaker. It's rare that lenders even look at the credit reports anymore -- they'll take the score only if it meets underwriting standards.
IMHO a credit score alone is all they deserve to see as long as these private companies are allowed to amass dossiers on each of us. A credit score indicates that I pay my bills. The lender doesn't need to know if I shop at Sear's or Nordstroms, or whether I have an Amex or Mastercard.

[tammywammy]

23. Okay, I don't really have a lot of sympathy for him

first there's this:
"He's in eastern Kentucky serving a 78-month federal prison term for conspiracy to sell hundreds of pounds of marijuana. He was indicted two days before he borrowed $825,000 for the 4,300-square-foot home in the Woodlands subdivision."

Okay, I'd think I'd wait out the whole trial before making a bid decision like buying a house.

And also this part:
"Just 26 years old and single, DeKubber had neither the money nor the need for a McMansion.

"How can I possibly get the loan?" he asked John H. Floyd. Floyd assured him that he'd help DeKubber prove he earned enough to warrant the loan and also suggested that he'd make a $30,000 profit when he resold the house, DeKubber claims. "

Okay, so the guy was going to lie and say he made more money. That should have been the tip off right then to not do it.

[Bluebear]

27. It was the boss who counseled him who is in prison for marijuana sales, not him

'At one now-vacant home, once owned by Floyd, the pool sits full, fallen leaves staining the water. A makeshift chicken-wire fence surrounds it. For neighbor Sharon Nazione, it's a potential danger.

"We have so many little kids around here," she said.

Floyd is in no position to drain the pool or improve his property. He's in eastern Kentucky serving a 78-month federal prison term for conspiracy to sell hundreds of pounds of marijuana. He was indicted two days before he borrowed $825,000 for the 4,300-square-foot home in the Woodlands subdivision. Through contact with the prison's administration, Floyd declined to be interviewed for this story.'

[tammywammy]

30. You're right

I take back part of what I said then. 26 isn't a child.

This is partly his fault. And I'm suspicious to know how Floyd made it so it appeared that DeKubber made more money than he really did. That should have been a big tip-off to DeKubber that it's not a good move if you have to fake your income.

[sendero]

67. It's called a "stated income" loan..

... you don't have to make anything appear any way. You simply lie.

[BadgerLaw2010]

52. Sounds like they were both using too much of the guy's product.

This is probably one of the dumbest real estate ideas I've ever read.

[ConsAreLiars]

28. Those blaming the victim (as usual) might want to wonder how much the boss got

as his kickback from the mortgage broker and how much the scammer made. Obviously, the sucker got fucked, as usual. But who would a sane person blame, the criminals who screwed him or the guy who got reamed? Well in Saudi Arabia, they have a peculiar sense of justice. Seems some here in capitalist Amerika also enjoy victimizing the victim.

[tammywammy]

33. It's not all blaming the victim

His boss was wrong and obviously shady. But doesn't DeKubber have some responsibility in the matter. He could have said no. No one forced him to get the mortgage.

[ConsAreLiars]

36. Well, cons are not only liars, they are often very good liars.

A fast-talking swindler who takes advantage of the gullibility, ignorance, or basic decency of the victim they choose is always, in my view, 200% responsible or more. The guy was chewed up by sharks.

[sinkingfeeling]

81. There you said it. "...gullibility, ignorance, or basic decency of the victim". I think

what most of us are saying is that a 26 yr-old male shouldn't be that gullible or ignorant. I can't judge his decency by the story, but would believe that he was 'lured' by greed to 'turn' a $30K profit.

Where were his parents? Did they not teach him about money and that houses are long-term investments? Why wouldn't a young person seek guidance from his parents or another trusted, experienced person?

I bought my first house at age 22. By that time I had been married, had a 1 yr. old son, divorced, worked as the only means of support, and had established credit. Granted, the house only cost $18,900 dollars in 1973, but I only made about $6500 a year! My dad sat down with the realtor, banker, and they all explained how the financing worked.

[Skittles]

38. mostly they are saying he bears some responsibility

a 26 year old is not a child

[ConsAreLiars]

42. A 40-year old who gets scammed by some operative is also not a child.

The age is irrelevant. Especially when it comes to bankers, not just door-to-door magazine swindlers or Nigerians, people tend to trust those in positions of power. Big mistake, of course. But the system is set up to train people to believe that those in power are legitimate and trustworthy. Bosses and bankers. I don't blame the naive for being victimized by those in power. It happens every day that we acquiesce to the status quo. It's not much different than the great majority of us accepting the fact that the top 0.1% have as much to spend for feeding and stroking themselves as the "bottom" 50% of the people combined. (Numbers guessed, but not far off)

[Skittles]

43. I am 50

at no time in my LIFE would I have ever CONSIDERED such a silly proposition - sure the guy was scammed but he was STUPID enough to be scammed by something F***ING RIDICULOUS

[aquart]

40. Exactly what I was thinking.

The kid didn't suggest the deal. The crooked creep he worked for did. AND HE PICKED OUT THE HOUSE. Now, how odd does that seem to the rest of you? Because it's damned peculiar to me.

[1932]

57. Me too.

[Dorian Gray]

101. It is so peculiar to me

that I would have said "Absolutely not" to the deal.

[Recovered Repug]

46. The victim?

From my calculations $760,000, 30yr loan EVEN at 1% is $2444. The guy made $15/hr = $2400 mon (before taxes). I'm curious how he kept up the payments as long as he did. Newsflash: Agreeing to payments at or above one's income is the act of a fool, not a "victim".

[JHB]

58. And another point to keep in mind...

...is that he wasn't buying the house as a home, but as an investment to be flipped.

Which is still dumb because he was the one left holding the bag when things didn't stay bubbly, but it's easier to see how he could convince himself that it was worth the risk in order to clear an entire year's salary in one shot. Especially with his boss encouraging this and a business culture that tells people they have to be bold and take risks in order to get ahead (but soft pedals the attendant risks).

What's mainly to blame here is another financial "product" that circumvents safe and sane banking practices, making it just another swindler's tool.

[StrongBad]

117. Sorry

I kind of like the fact that in America if you act like an idiot or don't research what you're getting yourself into that you'll get fleeced like a sucker.

[NuttyFluffers]

142. funny thing you mention Saudi...

over there the boss and the lender would've been punished for the crime of usury. they'd likely have been either 1) executed, if this scheme was huge 2) jailed & starved for many decades, or 3) divested of their money an equivalent amount (to remunerate the young man's family and good name) and then exiled. and then they'd give the young man several lashes for being a dumbass. i must say it might hold some appeal in america considering only the young man'll get reamed here, possibly even jailed w/ the new bankrupcy laws. people are starting to get starved for any sense of justice... not a good social sign.

[Vickers]

29. Greed is snagging a whole shitload of people here in Florida, too.

And this sort of dumbassery seems to be spread across all age groups.

[NashVegas]

59. "The Devil Is a Busy Man"

..

[CountAllVotes]

95. I know a guy in Florida w/wife

He just bought a new Infiniti for his wife to drive on credit of course. Same with the house he recently bought. He rarely has a job but his wife does have a job. I don't think between the two of them they bring in much more than 30K a year.

Good luck idiots is what I always think. They'll be in their necks in debt for years if they don't go broke first.

[DFW]

31. It's scary how much impossible credit is being shoved down our throats

I get dozens of credit card applications for my daughters (they already have one each, supervised by me,
and luckily, never yet abused) every month. "You are pre-approved to get your ass in hock to us for the
rest of your life!" Well, they don't quite spell it out like that, but that is what they mean.

If Mr. DeKubber had bothered to use a pocket calculator or common sense (or a combination of the two), he
might have saved himself a lot of grief.

And $760,000 for a 3800 square foot home? In these parts, $760,000 might buy you a studio apartment on the
outskirts of town, if you don't mind doing the repairs yourself (most people rent here in Germany).

[Virginia Dare]

126. There is going to be several generations of people..

in this country who will be totally lost when the credit spigot suddenly goes dry, and that day is coming upon us very quickly.

[B Calm]

34. His objective was to get rich quick. But there are risks! LOL

[aquart]

39. How much did his boss make on this deal?

And why did he suggest it and push it?

[1932]

53. That is the unasked/unanswered question in this article.

Why was this Floyd guy going around trying to talk everyone into getting huge mortgages?

Was he a true believer in the importance of home ownership? Did he think that driving up the prices at the back end would increase his construction profits?

Or were construction company owners getting money from banks if they talked people into getting lawns over a specified limit?

[shireen]

41. unbelievable!

I forwarded this story and another related story I found at that website to Dr. Housing Bubble. That other story was about how drug dealers switched to mortgage fraud because it was more profitable. http://www.detnews.com/apps/pbcs.dll/article?AID=/20071128/BIZ01/711280402

What a mess ....

[Broadslidin]

60. Thank You Shireen, for Providing the Detroit News mortgage fraud report.

Only "Scratching the Surface" in the Mortgage Fraud biz.

[1932]

62. Key sentence: "Unscrupulous lenders, sometimes with the cooperation of borrowers and sometimes ....

without, knowing they would collect commission and likely be safe from legal blame."

[nightrider767]

47. I sort of admire the guy

What's the difference between aggressive investing and stupidity?

The end result. SOmething that can be very hard to predict.

If the housing bubble would have been delayed a couple years, he amy have been very well off, and probably admired.

But in this case he's attacked and criticized. And justly so. It's part of the game. Bold moves, can bring big returns, or disastrous, ego-destroying failures. Don't play the game if you don't have the guts to lose all and then make a comeback with a vengeance.

Look at Donald Trump or some of the mega-rich.

You think they let a bankruptcy of two keep them down?

Heck no. Remorse is for chumps.

Good story though...

[sendero]

69. but...

... this is a prime example of what the investment community calls "dumb money".

"Dumb money" are the folks who buy at the market top. When profits have been made, the easy money already earned, "dumb money" gets in when it looks like a sure thing.

Once the "dumb money" gets in, the party is over by definition.

This guy was simply gambling with other people's money. He leveraged zero to a couple thousand dollars into controlling a 700K asset. Had prices gone up, he could have walked away with a nice profit with almost no investment on his part. but, being dumb money he waited too long and got burned.

Frankly, the REASON we have a housing bubble at all is that America is FULL of these folks who are willing to gamble with other people's money, and the financial institutions are all too willing to help them do so.

Let me restate that: financial institutions USED TO BE ALL TOO WILLING to help. That's over for a decade or two.

[AlertLurker]

51. Old Rules - 3.5 X annual income = max. loan

New rulez - you want it, you got it.

The kid should have known better, but a mortgage company has no business loaning anyone in the kid's circumstances TWENTY FIVE TIMES his annual incone...

Just
Fucking
Incredible.

[NewJeffCT]

70. When I bought my first house, it was 2.5 times your annual income

and, I have stuck with that rule in buying my next two homes. So, if you made $40,000 per year, you could afford a $100,000 mortgage.

the only difference is that I bought my first home when I was single and 2nd home when my wife was just starting her career. Now, we both have established careers.

[AlertLurker]

78. Understood - same here.

bought a waterfront 1200 sq ft home (cottage, then) with 2 acres 12 years ago for $67,500. I was making $28,000 at the time. Reroofed, Resided, reinsulated, new furnace/central air, did some landscaping, misc repairs, etc. Probably put an additional $10,000 into the house, all told, and my tax assessor has it down for $135,000. Paid it off in 10 years.

The boom was good for me, but I certainly didn't feel the need to speculate on additional properties... I couldn't afford it, and I remember the 1980s too much - 20% interest!!!

[baldguy]

61. I wonder how much of a kickback the boss got.

[alcibiades_mystery]

71. This is either bank stupidity or fraud

If the boss "proved" to the bank his income worthiness, and it wasn't true, that's just plain old fraud.

Otherwise, the bank made a loan it shouldn't have.

Those are the two options.

I'm always surprised by the number of people on these boards who side with the credit card companies and the banks. there are two sides to a lending transaction, and they are both "responsible" for it. If you lend money to somebody who can't pay, you are just as much a sucker as this kid. Or, you are an irresponsible, gambling hack. One of the two. The banks and credit card companies scream about the personal responsibility of the borrower, but there also has to be personal responsibility of the lender: you make good faith risk assessments, and lend only when people meet your criteria. To do otherwise is unethical and practically stupid. But that is what the banks and credit card companies have been doing for the last decade or more. They deserve what they get.

[NewJeffCT]

72. The kid was dumb and naive, but he was certainly taken advantage of

I'm in accounting and financial reporting by trade, and even I get a bit dizzy when somebody tries to explain ARMs and how the rates adjust to me.

The kid trusted somebody that he probably saw as an authority figure. However, he should have gotten advice from somebody else besides this one guy. Did he have an attorney at the closing, or did he use this broker's recommended attorney? What sort of underwriter approved this loan? What sort of documentation did the mortgage broker provide to the bank?

Didn't the kid have any family members to speak with? Even though neither of my parents went to college, I still asked for their input in selecting my first house and how to pay for it.

[Name removed]

74. Deleted message

Message removed by moderator. Click here to review the message board rules.

[JHB]

112. That would be "Retards-&#042f;-Us"

"Retards-Я-Us"

Feel free to cut an paste. (It's actually Unicode for a Cyrillic upper case "ya", and doesn't always show, but it'll do here: Я)

[Name removed]

123. Deleted message

Message removed by moderator. Click here to review the message board rules.

[LostinVA]

147. I REALLY dislike that word being used -- I think it should be against DU rules

[MetaTrope]

75. I've got a dozen or so family members living in those same suburbs

Each with a McMansion, whether they're working as welders or military hardware engineers...it's simply what they're expected to live in. And all I heard about on my last visit there was how much it was costing them, up and down the money spectrum. For some, the utility costs alone are more than I'm paying in monthly rent on my apartment.

Oh yes, and they're all staunch Republicans who resent the taxes being sucked from their paychecks, but can't seem to connect that with the $5 billion a month wars. The only bright side is that they love Al Gore's global warming picture book...it would be interesting to see which way they swung if he were running again.

[TwilightGardener]

79. This is what stuns me too: I know SO MANY people who can't possibly

make much more than my family does, who live in these brand-new McMansion subdivision homes that cost 2, 3, or 4 times as much as my house. Now, we don't live totally paycheck-to-paycheck, but we're on a fairly tight budget even with our cheapo home--how do these people do it? Do they not have student loans, and car payments, and insurance premiums, and winter gas bills?

[gatorboy]

82. Do they even build homes fo the middle class anymore?

All I ever see are new neighborhoods of mansions being built. And on average, the only homes our paper ever advertises are lake homes at a cost of at least $500,000.

[spanone]

84. mortgages gone wild....hey, profit while you can and fuck the future

after Enron et. al. you'd think........

[Blue_Tires]

88. very sad

ttt

[Dorian Gray]

98. Why would his boss

push him to do this, and why would anybody go ahead and purchase something he coudln't afford.

I know that there are shady practices in the mortgage industry, and people are coerced to get loans they can't afford or that aren't in their best financial interest, but this is ridiculous.

[Marrah_G]

105. It goes something like this:

A)Hey I know this great house you could flip if you wanted to make a quick 30 grand!

B) I don't think I could get a loan for that much!

a)It's expensive but I know a guy that can get you the financing by fudging the income numbers.

B) Don't I have to show proof?

A) Not these days. You just sign and say you make X amount and they accept it. Then you flip the house and since you never make a payment it doesn't really matter what the payment amount is.

[Dorian Gray]

139. I see that,

but it still shows that he's not asking the questions that anybody making that huge of a purchase SHOULD ask. It's short-sighted and very stupid. I do feel badly for him, as I know it's easy to get caught up in the buying frenzy, but it's really really stupid.

[ecstatic]

99. what was his monthly mortgage? was it an arm or interest only?

More details? I know that $15/hr definitely wasn't enough but I'm curious on why he even thought it could be possible. :shrug:

[Tierra_y_Libertad]

102. The P.T. Barnum method of home ownership.

"Young man, how'd you like to make $30,000 real easy? Sign here."

[Marrah_G]

103. He is not a kid

He is an adult who knew what he was doing was not right. Even if it was not his idea he still agreed to fraud by agreeing to fake income claims. They thought that he could flip the house, make some cash and no one would be the wiser. The mortgage payment wouldn't matter because he never expected to have to pay it.

He lied, he commited fraud, he got caught. If the house had sold as he expected no one would be any the wiser.

I make more then 15 an hour. I can't afford a house half that price. I know it, he knew it.

He is not a victim. Someone put a criminal idea in his head. With the help of others he committed that crime and then he got caught.

I don't pity him at all.

[Dorian Gray]

152. Exactly!

What he did was unethical, and criminal. He may have been too stupid to know it, but he lied in order to get funding for something he couldn't afford. Who in their RIGHT mind would think that's a good idea?

(Though I do pity the fool!)

[knitter4democracy]

106. I worked for a construction company once and had the same experience.

The owner had bought a house to fix up and flip. Then it didn't sell. And didn't sell. He was getting desperate to unload it, and he tried to talk me into buying it. We were getting married the next summer, so he tried to tell me that it would be a great house to own, that I could transfer colleges (as a senior, no less) to the state university nearby, Hubby could transfer med schools, and it would all work out.

I said no--I didn't have the job, the money, or anything to make buying that house make sense. Then he started in on the guys that worked there, too. He figured he could sell it to someone he could bully, I guess.

Keep in mind the power dynamic: boss the guy has to keep happy tells him to buy this house. Chances are, the boss owns it and is trying to sell it (either as a spec home or as something he's tried to flip himself and failed). If he wants to keep his job and his boss happy, he does it, figuring that his boss wouldn't ask him to do something that would hurt him. Yes, he should've seen through all of it and said no, but I think the boss should have some repercussions, too.

[Romulox]

111. What's clear is that the taxpayer can't be expected to bail out reckless buyers and lenders

This kid can't afford that house with or without government assistance. In this case, foreclosure (or surrendering the deed in lieu of foreclosure) truly is this kid's best option.

[AlCzervik]

114. you don't have to be a financial wizard to figure out thats a really, really bad idea.

My husband and I were thinking of moving a few years ago because his job relocated about 120 miles away from were we currently live so we decide just to get pre-approved and maybe look around a bit, we got out approval back from Wells Fargo and they said we could buy a house for about $950,000. Well we just looked at each other and said "Oh hell no" and right then we decided we'd stay and he'd commute and while he's not here very much neither of us regret that choice.

[taught_me_patience]

118. Doesn't Feingold want to bail this guy out?

It would have been ok if he made 30k, but as soon as he loses the home, the gov't is ready to bail him out?

:eyes:

[SyntaxError]

121. sounds like something I would do...

I'm such a freaking idiot.

[JVS]

122. what a fucking dumbass!

[Virginia Dare]

125. There's a sucker born every minute...

there are plenty of other cases just like this one out there. Greed will be the downfall of our society.

[slackmaster]

127. I see this as a failure of our education system to teach basic personal finance

It's easy enough for me to see the cash flow problem in this situation, but I do remember a time when things were not so clear.

The arithmetic is simple enough but you need to be able to abstract and synthesize many disparate and not always predictable things to actually work out a realistic budget.

[CRF450]

128. What a dumbass, he should'v known full well he cant afford that with that kind of income

And he doesn't need that big of a house. I just recently bought my own home, financed it for $220,000 and its plenty big for me, 1800 square foot house on 2 acres. I live by myself, Making $900 every week at almost 21 years old.

[Jersey Devil]

129. Whattya wanna bet his boss had an interest in the housing development?

I wonder if the newspaper is going to dig that deep. His boss giving him that kind of advice doesn't pass the smell test to me.

[Mike03]

131. This is the crux of the crisis

At least this buyer is making money. I've heard of men younger than him, who had NO credit and NO income, buying homes here in Arizona.

Thanks for posting this.

[Hawaii Hiker]

134. There may be OTHER variables:

Did the guy have a rich relative helping him out, maybe he had a large insurance policy that left him some money, maybe he won a lottery, etc???...What I'm trying to say is that in addition to his income from his job, MAYBE he had other income sources which he thought would have made him able to afford that house....

[Deja Q]

135. One hell of a boss. What next, to go play with a sander without wearing eyegoggles?

With that income-to-debt ratio, no bank should have given Dan that much of a loan.

Dan wasn't perfect, but in this instance, the bank was the crooked one; are not banks supposed to deny loans based on the borrower's debt-to-income ratio?

[dysfunctional press]

143. could it be a scam with the builder and his employees?

buy some land, build some huge houses, inflate the prices, have the builders "buy" them- knowing that they could qualify for fraudulent loans, once the check clears- split the profit under the table with "buyer" the builder.

a lot of young guys don't care/understand about credit, and would happily give theirs up for 200K in cash.

[Lydia Leftcoast]

144. Another disgusting thread

where people get all superior about the "dumbass" who fell for this scheme.

Well I have news for all of you "buyer beware" types out there: taking advantage of people's stupidity to run a con operation is ILLEGAL.

The reason is that there ARE people who, through no fault of their own, are naive and gullible. Maybe they're borderline retarded. Maybe they're just impulsive. Maybe no one ever told them different. Maybe they're in the early stages of Alzheimer's.

The gullibility does not lessen the guilt of the criminal. It's actually WORSE to take advantage of a naive person.

Can you imagine a defendant saying, "But Your Honor, my victim was stupid, so I had a right to swindle him?"

[Marrah_G]

145. You are assuming he was somehow swindled

I think he knew exactly what was going on but he thought he could flip it quickly for a profit.

Any reasonable person making 15 dollars an hour realized they cannot buy a mansion and a Ferrari, oddly enough the Ferrari is more difficult to get financing for.

[BadgerLaw2010]

146. He didn't accidentally buy a $700K house on $15/hour income.

No one is assigning an unfair burden of knowledge to this guy.

[Lydia Leftcoast]

151. i.e. He was too stupid for his own good, and the lender was at fault for

lending it to him.

No honest lender would have qualified him. That's my point.

It really bothers me that I'm seeing more condemnation of the stupid borrower than the predatory lender.

[Dorian Gray]

153. But he lied

as did his boss, about his income. That was a calculated decision on his part.

Lydia, it seems that you believe that he was stupid, and therefore we should feel sympathy for him. i agree to a certain extent, but not at the expense of taking all culpability from him. He's still responsible for his role in misleading the lender and agreeing to the unethical plan. I do also think that his boss bears some responsibility, as does the lender, who should have delved a bit deeper into the mess. But, the guy should have used his brain rather than going on whatever greedy impulses led him to think making 30,000$ on a 760,000$ investment was a good idea!

[One_Life_To_Give]

154. Get Rich Quick schemes

This is nothing more than a Get Rich Quick scheme gone bad. Trying to clear a quick years pay by flipping a house.