People, here is a story about just how nuts the real estate market was. The article is about how minorities are suffering from foreclosures, but try to ignore the racial politics angle and just consider the personal finance angle.
Class, the question to be answered is the following:
"So how did Ramirez, the strawberry picker with an annual income of just $14,000, purchase a $720,000 home in Hollister without any money down?"
So far the only answer I come up with is collective insanity.
hat tip to Dr. Housing Bubble.
3 comments:
Interesting story Mike. (you've got my Governor vote, BTW). I email the repoarter and told him it would also be very interesting to know who's holding Mr. Ramirez' mortgage.
-Kent Ashton
Concord
"Collective insanity?" Read some of the stuff by S. J. Liebowitz on the Community Reinvestment Act. You'll see that there was plenty of insanity, collectively shared by B. Frank, C. Dodd, et al.
You really think this outrageous loan had anything to do with the CRA? The same CRA whose regulations do not apply to the private lending institutions which made 85% of the bad sub-prime loans in question?
Loans like this were the result of greed and stupidity on the part of the lender and the borrower. A quick buck was to be made, a big house was to be bought.
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