Ground Zero for the Mortgage Meltdown Part III
[Click the following links for Parts I and II.]
- Credit:
-- Since I grew up here, I had the opportunity to get credit cards when I was in college and screw up my credit.
-- People like the Venezuelan couple come to the States when they are older ... their credit history is clean, and they are not likely to make the same idiotic mistakes as a teenage college freshman away from home for the first time.
-- Back in 2005, a friend at work suggested I open an AmEx account to build my credit. This, along with a line of credit at the credit union, and another Visa card, helped us get to a point where we reestablished our credit. Also, we learned that having three lines of credit for more than a year or two is a requirement for qualifying for a mortgage, according to a lender we met.
-- Credit was only one half of the equation -- the "Debt to Equity ratio" was the other side of the equals sign. Prices had to come down, or our earnings had to go up.
-- I graduated college, and found a job making only a couple grand more per year. It would be another two to four years before my earnings could put us in a position to buy a home ... and that included going back to school to get my Masters degree.
-- We moved out of the house the summer of 2006 (my wife's cousin sensed the market was going down and decided to sell the house). We moved into a small 2/2 townhouse near my job. Rent skyrocketed to $1,285 per month.
-- The electric bill went up at this time, due to the 2004 hurricane season.
-- So ... how did the Venezuelan couple qualify for those mortgages? We're still earning more money than they are.
-- A friend of mine recently informed me of a property-exchange laundering scheme he'd heard about that might explain what happened. I searched the web and found a page at the Department of State's website that describes how "some money is also laundered through the real estate market in Margarita Island." Were they also trading properties in Venezuela for houses in the U.S., as my friend described to me?
- Credit:
-- Since I grew up here, I had the opportunity to get credit cards when I was in college and screw up my credit.
-- People like the Venezuelan couple come to the States when they are older ... their credit history is clean, and they are not likely to make the same idiotic mistakes as a teenage college freshman away from home for the first time.
-- Back in 2005, a friend at work suggested I open an AmEx account to build my credit. This, along with a line of credit at the credit union, and another Visa card, helped us get to a point where we reestablished our credit. Also, we learned that having three lines of credit for more than a year or two is a requirement for qualifying for a mortgage, according to a lender we met.
-- Credit was only one half of the equation -- the "Debt to Equity ratio" was the other side of the equals sign. Prices had to come down, or our earnings had to go up.
-- I graduated college, and found a job making only a couple grand more per year. It would be another two to four years before my earnings could put us in a position to buy a home ... and that included going back to school to get my Masters degree.
-- We moved out of the house the summer of 2006 (my wife's cousin sensed the market was going down and decided to sell the house). We moved into a small 2/2 townhouse near my job. Rent skyrocketed to $1,285 per month.
-- The electric bill went up at this time, due to the 2004 hurricane season.
-- So ... how did the Venezuelan couple qualify for those mortgages? We're still earning more money than they are.
-- A friend of mine recently informed me of a property-exchange laundering scheme he'd heard about that might explain what happened. I searched the web and found a page at the Department of State's website that describes how "some money is also laundered through the real estate market in Margarita Island." Were they also trading properties in Venezuela for houses in the U.S., as my friend described to me?
Labels: credit, mortgage, mortgage crisis
posted by Skew | Tuesday, September 30, 2008
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