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Reuters: A Mortgage Meltdown Tragedy

From those shameless heart-wringers at Reuters:

How one family’s mortgage is linked to meltdown

By Daniel Trotta Daniel Trotta – Mon Dec 29

HAMPTON BAYS, New York (Reuters) – Cynthia Goldrick’s daughter is in and out of the hospital for brain surgery, her mother has Stage 4 lung cancer and her father has moved into a home for the elderly.

So when the Goldrick family’s adjustable rate mortgage reset while husband Patrick was off work for a job-related injury, it eliminated the thin margin between their income and the mortgage payment and put them on the road to foreclosure

The Goldricks took out a $375,000 mortgage in 2005, when they refinanced a previous mortgage on their 1,800-square-foot (167-square-meter) house in semirural Hampton Bays, some 90 miles east of New York city.

At first, the interest rate was 6.5 percent and the monthly payment was $2,370. After two years, it rose to 9.5 percent and suddenly the payment of $3,850 was beyond the means of a family living off Patrick Goldrick’s salary as a cable guy.

Appraised at $605,000 in 2005, the house today is surrounded by others with "For Sale" signs out front and is probably worth less than the outstanding loan.

It is also the only home the Goldrick children have known. "It’s just walls. But this is where my daughter comes home after surgery, so they’re comfortable walls," Cynthia Goldrick said.

The loan was granted by Rose Mortgage Inc. of New Jersey and is being serviced by Saxon Mortgage Services, a unit of Morgan Stanley…

"We didn’t jump on the refinancing bandwagon to take a cruise or buy a Mercedes," Cynthia Goldrick said. "We refinanced to give my child a life, not a lifestyle, but a life."

The Goldricks’ 10-year-old daughter, Erin, has had 10 operations for hydrocephalus, a Chiari malformation and spina bifida. Most of the medical bills are paid by insurance and a fund established from the settlement of a malpractice suit over Erin’s treatment as a baby

At one point, the Goldricks considered selling their home and moving to a larger and cheaper one in North Carolina, but that would separate Erin from the doctors who have been treating her since she was 2.

So they enlisted the services of Sal Pane Jr., president of AmeriMod, a company specializing in modifying mortgages, a process in which banks agree to lower mortgage payments and interest rates to avoid the cost of foreclosures.

"Modifications can save this economy," Pane said. "My company could do 60,000 loan modifications a month with our current staffing. Give us government assistance and I can modify the entire country in a year." …

[E]ven though the Goldricks could afford to stay in their home if the interest rate was 6.5 percent, and the bondholders would benefit by continuing to receive income on the loan rather than have it stuck in foreclosure, the servicer of the loan — Saxon — cannot budge.

"Your loan modification request has been denied because the investor does not allow modifications for this loan. We apologize for any inconvenience," a Saxon customer service representative wrote to AmeriMod on December 19…

Despite the notice, Pane vowed to continue fighting to modify the loan, citing the extraordinary circumstances of the Goldrick family and a clerical error that put the Goldricks further into arrears when a payment to cover property taxes was credited to the wrong account…

"I am absolutely bitter," said Patrick Goldrick, who sees the scandal surrounding investment advisor Bernard Madoff as further evidence of Wall Street wrongdoing. "I am bitter toward Congress and bitter toward the big banks and the creepy billionaires who get away with stealing pensions." …

Gosh, times really are rough when an unemployed cable guy can’t afford a place in the Hamptons.

Sorry, Reuters, the family has some bad luck with their health.

But it’s hard to see why they should not have to pay what they agreed to pay.

This article was posted by Steve on Monday, December 29th, 2008. Comments are currently closed.

20 Responses to “Reuters: A Mortgage Meltdown Tragedy”

  1. BillK says:

    the creepy billionaires who get away with stealing pensions

    Which “creepy billionaires” would that be?

    Because as far as I know not even Madoff “stole pensions.”

    Wall Street is a handy bogeyman, but it would be great to see some actual analysis and see who actually benefited from “Wall Street theft.”

    Sure, CEOs made money, but no more than any other year (something that was OK when people’s portfolios were going up…)

    If anyone should be hauled off to jail it’s the underwriters who looked at the cable guy’s debt to value ratio and approved the initial mortgage and then the refinance.

    Remember when mortgages required 20% down, or 10% down with mortgage insurance?

    Oh yeah, that’s right, that’s before banks were accused of redlining and not loaning to the poor.

    Literally the only way any of this will end is with the Federal Government becoming the banker.

    TRAP money is being used to stabilize shaky banks, and Congress is complaining banks aren’t using the funds to issue loans just as risky as they did before.

    You’d think even those with no ability to comprehend economics whatsoever would be able to see that won’t work – but of course Barney Frank and friends apparently can’t.

  2. 1sttofight says:

    Do any of these people whinning about their mortgage going up have a clue as to what “adjustable rate mortgage” means?

    • JohnMG says:

      What ever happened to the age-old rule-of-thumb for calculating whether or not a borrower could qualify for a mortgage loan? You know, the rule that said the monthly payment should not exceed one-fourth of the monthly income.

      By my calculation, when they refinanced the mortgage, the monthly payment was $2370/mo. In other words, applying the normal dictum, the Goldrick’s income would have been almost $9500 per month, projected to nearly $114,000 per year. And he’s a CABLE GUY?!! I guess I’m in the wrong business. Plus, the insurance pays for most of the doctor’s/hospital’s fees, and there is a trust fund established due to a mal-practice settlement. Maybe they should go to their lawyer and re-negotiate his fee. Unless the lawyer’s name happens to be John Edwards. And he was hurt on the job? Believe me, though the laws vary from state to state, I know what workers comp pays, as I’m sure do most other business owners.

      As 1st says, what part of “adjustable-rate” don’t they understand?

      There is just a whole lot more to this story than is being revealed here. Yes, they’ve suffered a run of bad luck, but my experience has been that most of the bad times I’ve had to endure could be traced back to my own lack of judgement.

      I’d really like to know the whole story, because a lot of things just don’t add up.

      PS. What kind of ‘life’ are they providing for their daughter now? My guess is that a home in North Carolina with new (different)doctors probably looks pretty good right about now.

  3. mrfocus says:

    “in semirural Hampton Bays,”

    That’s a nice misdirection there. Makes it sound like the Beverly HillyBillies are still living in Tennessee.

  4. proreason says:

    They should call Barney Franks. I understand his male prostitution business is thriving now that he has his drooling problem under control.

    And he obviously has a soft spot for downtrodden voters, so he should be willing to give them a hand.

    But wait, that would be BARNEY’s money, not ours. Guess that idea won’t work then.

    They’ll just have to suffer. That’s what happens to people who had the mis-fortune to be alive while Bush was President.

  5. curvyred says:

    Why didn’t they attempt to sale the house while the market was still hot? They obviously realized a while ago that they were in over their heads – if they desired to give their ill daughter a stable home – why not a reasonable home?

    Oh that’s right that would require sacrifice and forethought – never mind – something tells me they vote Democrat

  6. retire05 says:

    I was in the “cable” business for years and still have friends that work it. I can tell you, a “cable guy” doesn’t make that much money, at least not in Texas, Arizona, Missouri or any of the other states I worked in. This guy was lucky if he was taking home $800/wk and that is taking into consideration he is probably union (CWA) and the high wage scales on the Beast Coast. So how the hell did he qualify for a house payment that was 3 xs his weekly income? And notice, the article did not say he was the manager of a cable company, or even chief tech, just a cable “guy”.
    This story has the smell of a dead fish.

    Did they use the daughter’s funds to pay for the house? After all, any settlement given to the child would be controlled by the parents until she is 18.

    So you know you have a daughter that requires extensive medical treatment and you know that any financial set back is going to put you in dire straits, but yet, you buy a home with an adjustable rate and don’t realize that the damn thing is probably going up?

    My home mortgage is an adjustable rate. It rolls every September. This past September my payment went down from $564 to $486. That’s $78 a month that belongs to me.

    Here is another thing that stinks about this story; if they have an adjustable rate, and it is tied to prime, it should be going down, not up. So this tells me that this is not a current story. If they have an adjustable rate, and it is not tied to prime and will not decrease as prime decreases, they are too stupid to own a home.

    And if that is what an 1,800 sq. ft. home costs in the Hamptons, then they should have moved to Texas. They could have gotten 4,500 sq. ft for that price. And had the finest hosptial in the nation at their disposal.

    Just another “poor me, I don’t want to do anything to help myself so you poor taxpaying smucks should.” story.

  7. Anonymoose says:

    Granted that’s a lot for anyone to be going through, but two things are going badly wrong:

    1. Not reading the fine print

    2. The American Dream of living in your own castle—er, home.

    Or to put it another way—a cable guy in the Hamptons? Rather than keep their dream home, they should have looked at what would be the best situation that would still leave them solvent. A small home in a not-so-trendy place with a good job market would be ideal.

    I expect the next round of money problems is going to be from student loans—although I have noticed the companies that were advertising every five minutes last year have stopped. I was lucky enough my loans are backed the the Gummint, but even still forebearing them because I was unemployed several years ago sacked me with $7,000 in interest. Fortunately I’m paying down in the principal now, and hope to someday be rid of them. But these kids who took out $100,000 for a liberal arts degree—just wait!

  8. Kilmeny says:

    I agree with JohnMG. There’s more to this than is being reported. The child’s medical bills are all covered by the insurance and settlement, so why did they really refinance? And if you’re an adult with the ability to know how to refinance your home then you should also know what the term “adjustable” means and what it might mean in the future. I wouldn’t wish a seriously ill child on anyone, but if you can’t afford to live in the Hamptons and you CAN afford to live in North Carolina, then perhaps adjusting to a new set of doctors isn’t such a bad thing.

  9. Gladius et Scutum says:

    Didn’t our left wing pundits tell Sarah Palin she was supposed to have aborted this baby? For those unfamiliar with the jargon, each of the daughter’s problems might have been detected by ultrasound, but it could not have missed all three, and any one suggests the others.

    This story may be more tragic than anyone has yet guessed.
    I called my brother and sister-in-law to make sure, (my sister-in-law is an MD, my brother is both an MD, Ph.d, and teaches at a medical school). I also talked my wife, a clinical psychologist.

    There is, possibly, a single explanation for the hydrocephlus, Chiari malformation (type II), spina bifida, blaming others for the problems (the lawsuit, the mortgage), and making poor decisions with money. They can all be explained by alcoholism.
    SG – feel free to delete

  10. Landshark says:

    http://library.hsh.com/?row_id=92

    30-year fixed mortgages peaked (for 2006) at 7%. In other words, had these idiots gone fixed-rate, they’d have paid a half point more in ’06 (assuming worst case) but be 2 1/2 points lower now…

    If I were them, I’d be looking for the mortgage broker in a dark alley with a number two golf club.

  11. wardmama4 says:

    ditto to every comment here: Most especially – 1) why did they refinance? The real reason? and 2) our ARM has gone down – hmmm, I wonder why their’s hasn’t?

    Lastly, I really, truly hate the msm that now that Christmas is over (and oh, btw the sales stats is probably coming in a lot better than expected – I know our malls were humming) they have to once again for the the final three weeks until The One ™ is installed as Master of the Universe, Savior of the World and of course, The Magic Negro to reverse and put an end (forever) to racial divide and make everything (even the rising seas) peace, justice and kumbyah for all – to remind us, the stupid masses, that evil Bushitlerburtonco ruined, just ruined everything in America (for the past eight years).

    • cjokry says:

      I noticed that about the malls and stores too, wardmama. Just bristling. People breaking down the doors in some places, i heard. There must not be so many people losing their jobs and homes as the media suggests. The fact that they had to dig up people in the most unimaginable, convoluted circumstances to report on their foreclosure is almost proof: this is the mildest “economic meltdown” anyone has ever seen.

  12. Liberals Demise says:

    Or……they could all just up and die. That would show them who’s boss!!
    Cable guy….my eye!

  13. sheehanjihad says:

    Our economic meltdown is akin to Global Warming. Pure bunk invented by a subversive self serving media to pave the way for “The One’s” rescue.

  14. 1sttofight says:

    Lets see now, The house was supposedly worth $605,000 in 2005. They then took out a loan of $375,000 on it and now claim it is worth less than is owed on it. How much was the original mortgage that was refinanced?

    My question is are they saying the house lost over $230,000 in value in 3 years? Also from the article , it says it is a semi-rural area, looks to me like it is in subdivision. Lot of difference.

    From personal experience, I know that a house in a subdivision can lose a lot of value depending on who moves into the said subdivision.

  15. proreason says:

    Since this is from the AP, one has to understand it could be completely made up, but here it is:

    “The fallout from the horrific holiday season for retailers has begun, with the operator of an online toy seller filing for bankruptcy protection and more stores are expected to do the same — meaning more empty storefronts and fewer brands on store shelves.

    A rash of store closings, which some experts predict will be the most in 35 years, is likely to come across areas from electronics to apparel, shrinking the industry and leading to fewer niche players and suppliers.”

    As I’ve been saying, this economic catastrope is real. The media’s and Obama’s handlers efforts have been rewarded beyond their wildest expectations.

    It will be a Socialist playground, and will set back the cause of freedom for decades.

    And of course, Dubya has been a willing dupe. When Paulsen rushed into the Oval Office 7 days after Lehman Bros’ fall reversed McCain’s lead, George should have said, “let’s think about this bail-out thing for a few days before acting Henry. The world didn’t end today, and it won’t end tomorrow either.”.

    Instead, we are where we are….and it has worked out EXACTLY like the Socialists planned.


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