Sunday, October 23, 2005

'Sense Of Entitlement Part Of American Culture'

Myrtle Beach Online reports on a rash of foreclosures. "At least 106 families have lost their homes to foreclosure since 1999 in Laurel Woods, a 135-acre manufactured-housing neighborhood with 369 homesites in the Burgess community. That is the highest foreclosure rate, an average of more than one out of every four homes, for any Grand Strand neighborhood, according to Michelle Halstrom, a local real estate agent."

"Laurel Woods is perhaps the area's most stark example of the pitfalls of the state's and region's booming mobile home industry, which has a network of subprime lenders who specialize in high-risk loans that real estate experts say can be susceptible to questionable lending practices. For many aspiring mobile home owners, these lending practices can leave families without homes or hope because of ruined credit and foreclosures."

"The situation in Laurel Woods, according to interviews and a review of 5,000 pages of documents, is the result of three factors: Developers, mobile home dealers, appraisers and mortgage brokers who work closely together to steer home buyers into high-profit land-and-home packages they might not be able to afford. Lenders willing to take risks on low-income buyers with bad credit, sometimes based on misleading or falsified loan applications. Long-term mortgages with high interest rates and other costs for homes that may lose rather than gain value over the life of the loan."

"The foreclosures represent $10 million worth of bad debt on mortgages with interest rates as high as 18 percent. Much of that debt, according to interviews, state documents and court records, resulted from loans to consumers who had little or no resources to repay the money."

"Halstrom said there are four reasons for most foreclosures: death, divorce, job loss or bank fraud. 'In a place like Laurel Woods, where 10 percent of the property is bank-owned and pieces of property are foreclosed on two, three or even four times in a four-year period, that's not due to death, divorce or job loss,' Halstrom said."

"There are only two ways to get out of a high-interest mobile home mortgage once a home buyer signs his or her name on a contract, Surfside Beach lawyer Nate Fata said. 'You can either die or you can file for bankruptcy protection,' said Fata. 'The odds that a borrower will be able to sell that mobile home and get enough money to pay off the loan is less than 1 percent,' he said."

"Joey McNutt..did appraisal work in Laurel Woods. In one case McNutt valued a mobile home at about $141,000 in 2000. That appraisal was used for a $124,200 mortgage that Willie Carter and Emma Jean Young signed for in August of that year to buy the home. Carter and Young made one of their $1,112.96 monthly payments before defaulting on the mortgage. The home was sold at auction in September 2001 for $60,000."

"Horry County tax records show the current owner purchased the property for $49,900 in 2004. McNutt said the Shady Grove Road home sold for less in foreclosure because 'banks are notorious for taking pennies on the dollar in a foreclosure, and the homes never sell for their market value.'"

"While he sees a mortgage industry that feeds off the lack of financial knowledge of many high-risk buyers, Fata said he agrees buyers must share in the blame. The buyers, he said, rarely read what they sign and usually are the ones initiating a loan for something they know they can't afford."

"'It's part of American culture, this idea that everyone wants to own a home,' Fata said. 'And then you have these people out there saying, 'Don't worry, we can get you financed' and the buyers go along with it. It's almost like a sense of entitlement people have, they feel they deserve that home or that new car, even if they can't afford it.'"


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