How did a strawberry picker earning $15,000 a year qualify for a $720,000 home loan?

Racism, of course.

Ignoring the fact that he was living in the U.S. and never bothered to learn English…

“It’s all very nice and beautiful,” Rosa tells me through a translator. “The neighborhood is very peaceful. The problem is not with the house at all. It’s the price of the house.” […] Neither Rosa nor Alberto speaks English, so they were completely dependent on their real estate agent and their mortgage broker for advice and to translate and educate them about the process.

…and ignore the fact that they tried to buy a house they knew he couldn’t afford…

One of the first homes they were shown was a “new” four-bedroom, two-bath house in Hollister for $720,000. When the Ramirez’s heard the price, they worried that they couldn’t afford it.

So instead of wondering why someone would move to a country and not bother to learn the language, or requiring someone who knew they couldn’t afford a purchase show some personal responsibility, let’s just cry racism.

And when the racism bell tolls, all the race pimps come out to play.

Last week, a coalition of civil rights groups, including the National Council of La Raza, the Center for Responsible Lending and the NAACP, called for a national six-month moratorium on foreclosures — after observing that the subprime crisis disproportionately affected minorities.

So is it a case of poor minorities being taken advantage of, or is it a case of someone trying to live beyond their means and paying the price for it?

But for Rosa and Alberto Ramirez and many others like them, a foreclosure moratorium won’t help. It’s not that a better loan would have remedied their situation — it’s that they can’t afford the home they bought.

Ding, ding, ding. We have a winner.

And I don’t feel sorry for the lenders going belly up either. You give a guy making $15,000 per year a mortgage for $720,000, don’t come whining to us when it doesn’t work out.

1. You’re right, it’s not a racist issue (although the article didn’t say it was). It’s a poverty issue.

   Comment by endorendil — 3:10 pm
   

2. The article most certainly tries to make the claim that this is a racial issue.

   And it’s not a poverty issue. I’m not in poverty, I can’t afford a $720,000 house (yet) and I wouldn’t leverage myself beyond my means to try and do it. It’s a basic math and simple common sense issue.

   Comment by Texas Rainmaker — 4:50 pm
   

3. Are you concerned with the Journalism of the piece? The need for personal responsibility on the part of the major players in the piece? Or the fact that the couple given attention can’t speak English. Again, with the constantant conflation of distinct issues. Spread the fear. Spread the hate. Gee. . . aren’t those who don’t learn Spanish DUMB. Gee. . . aren’t those who purchase beyond their means DUMB (as dumb, perhaps, as those who don’t learn English).

   Meanwhile — why don’t you take a look around the nice comfy life that you lead and seriously ask yourself how much more comfortable dumb and illegal workers in this country support your standard of living.

   Comment by djernigan — 9:16 pm
   

4. What I think djernigan is trying to say is that… um… sorry, I’m not really sure. That some people are better off than others, which is totally unfair? Something like that, probably. Plus the constantant conflation. Spread the hate!

   Comment by jtreacher — 1:50 am
   

5. Gee jtreacher - I’m so, so , so sorry for the “constantant” typo. Will you ever forgive me??

   And in the second paragraph - “Support” should be “make” - so string me up and ignore what I say for sloppiness. Again - I’m, sooooo sorry.

   But no - I am not simply concerned with how some people are better off than others. Nor even wit hhow some people who are well off take advantage of those who are less well off (which is very distinct from the first - but leave it to right-wingers to try and conflate the two). No - it is about how Tex just LOVES stories about how DUMB (or immoral, or criminal) non-english speaking (especially, illegal) mexican-americans are.

   Comment by djernigan — 8:22 am
   

6. TR, it’s a poverty issue because poverty is what forces these people to think of immediate issues of survival, leaving them no time to think about learning English or working up on their financial savvy. Reading a legal contract, especially a financial one, can be challenging for the fluent or even the native speaker.

   So these two families (that pooled the money for this house) were hoodwinked by believing their real estate agent that lied about the mortgage rates, and found false security in the fact that their broker approved the loan.

   Stupid? No. They didn’t have the knowledge to know that US lenders are willing to take huge risks in approving loans, meaning that the approval was worthless. They didn’t know that some real-estate agents lie and cheat to get the sale.

   Naive? Yes, quite a bit, with the extenuating circumstances that they are poor and are immigrants. But nothing excuses the immoral (and possibly illegal) behaviour of the real-estate agent and broker.

   Those lending institutions that simply made mistakes in their risk-assessment models are being punished correctly: by bankruptcy. Their stock holders and employees may think it’s unfair, but it isn’t - not necessarily. It is of course quite likely that some of these lenders have been knowingly painting a rosier picture, either because they wanted to keep increasing their business, or because they wanted to hide the problems after they became aware of them.

   It may also come as a shock to non-Californians, but Spanish is a legal language in California, in the sense that every legal document needs to be made available in Spanish if the negotiations were done in Spanish. Except real estate documents. It’s a legal loophole that needs to be closed.

   Comment by endorendil — 2:58 am
   

7. Notes in the margin:

   Of course the loan wasn’t made based on a 15,000 yearly income, but on about 60,000 or more (household income, even though the mortgage was made out to only one person).

   Of course the families knew what they could afford. Their budget for the mortgage was 3000 per month. They didn’t realise that the broker and real estate agent were lying when they said that this loan would cost them only 3000 a month.

   Since the house was apparently worth 150 grand less than the real estate agent and broker valued it at, perhaps these families could have afforded to pay for it if the valuation had been more realistic…

   Comment by endorendil — 3:17 am
   

8. I fail to see how a $60,000 combined annual income could possibly qualify for a $560,000 to $720,000 mortgage. Even considering the buyer estimate of “affording” a $3000/mo mortgage payment with a $5000/mo income; what lending institution would approve a loan where the payments will consume 60% of available monthly income?

   I acknowledge a rotten realty agent and possibly complicit broker; but it seems the buyers were trying to take advantage of an “it’s too good to be true” deal which in fact turned out to be “too good to be true!”

   Many people try to live beyond their means with the same results - they cannot sustain it for long!

   Comment by Old Soldier — 8:08 am
   

9. $720K for a four bedroom? There is more wrong with this than just the mortgage.

   Comment by Big White Hat — 8:49 am
   

10. OS - lenders indeed approve those kind of loans now. It used to be that you could only use about 30% of your available income, but those days are long gone. That is actually somewhat warranted because essentials make up a smaller percentage of household budgets, leaving more room for housing costs. But it appears that the broker made it look like there was only one person, with a household income of 60 to 80 K$, in stead of 4 people.

    If the house were worth what they paid for it, and if the loan had really been at the best available rate, the two families would have been building equity like mad, at great personal cost. They were willing to go without essentials (and had to when the payments went up), all in order to save money for their future. This is what we want immigrants to do, no? How many stories have you heard about American immigrants, working through incredible hardship in order to build their lives… it’s the American dream.

    Comment by endorendil — 10:59 am
    

11. BWH, friends of mine paid 450,000 for a small two-bedroom condo seven years ago. Granted, it was in Silicon Valley, but it was in a non-descript residential community in the midst of the concrete jungle. Great scenic views of three major highways too… There are some absolutely insane housing markets out there.

    Comment by endorendil — 11:09 am
    

12. […] While we’re on the subject of obligation, how about we discuss the contractual obligation of those who borrowed more than they should have? How about we take a look at those who did not take personal responsibility, like the rest of us, to borrow within their means? Why is it the government’s responsibility to now come in and help these overextended debtors get a better deal? […]

    Pingback by Texas Rainmaker » Jesse Jackson: Feds Obligated to Bailout Irresponsible Borrowers — 7:42 am
    

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