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Like you I’m a bit torn. I’ve seen a few episodes of this show and the families selected generally appear well deserving of an opportunity to rise above adversity - people who have adversity from a children’s illness and/or loss of a loved one in the armed services.
What I wonder is whether the show provides them with any type of financial counseling/tax advice etc etc. I’m not meaning to be rude but some of the people selected don’t appear to have had MBA’s or are certified financial planners etc etc. As you say monetizing $20k per annum on a fully paid house is one thing, $200k is too much.
What most of these people need is an extreme trust fund which only pays basic living expenses and repairs on an existing pre-trust fund dwelling.
Unfortunately, that doesn’t make for good tv. Can you imagine Ty Pennington cutting the ribbon on a restricted-use checkbook with trustee signature required?
Anyway, I hated watching that show. I felt sorry for the people, but you could tell that a portion of the stories were embellished, and important questions left out completely. It was a train wreck waiting to happen. Like giving a child a handgun.
Chuck
These shows don’t give a rat’s rear end if these people blow their finances after production stops and the cameras leave. Why would they offer financial counseling? First of all, it is not rocket science to know that leveraging your house is pretty damn dumb. It’s like hiring a counselor to teach you that striking yourself atop the head with a hammer is not a good habit.
These television programs are designed to spin an emotional tale that keeps viewers watching and willing to sit through Viagra commercials and these people that they use to produce their entertainment product are their tools who get thrown a few scraps for their roles in the emotion porn.
If I remember correctly, the Harpers weren’t just given the house but also a college fund for the kids and enough money to pay their property taxes for 20 years.
Ahhh…I see that the scholarship fund is mentioned in this article. I still remember something about property taxes being paid also.
I am not getting the whole business of throwing in a college fund, property tax funds, pizza and beer money, etc. WTF does that have to do with an extreme house makeover?
Why don’t they rename the show to “Extreme Over The Top Give-Away”?
I will begin writing my sob story immediately. Chapter 1 will be about my hardships of renting while trying to save up a down payment for a house while other peers foolishly took out ponzi scheme mortgages only to be rescued by the government. Chapter 2 will be about my educational expenses being denied by the IRS and being made to pay more in taxes to pay for house buyers tax credits and mortgage interest deductions.
Boo Hoo Hoo! Where is my free house and army of Do-Gooders? Oh wait, they are nowhere. Helping renters isn’t good ratings - who wants to watch a show like that where low class renters get something for nothing. Only house debtors are entitled to something for nothing.
BofA plan: No job? No house payment
If OK’d by regulators, program could be banking industry’s broadest effort to ease foreclosure pain for the jobless.
http://www.charlotteobserver.com/2010/04/18/1383119/bofa-plan-no-job-no-house-payment.html
You thought you were supposed to have a safety nest egg in the event of losing your job?
That’s for renters. The entitlement are infinite for home owners and everyone will have to chip in to help out.
Half the people in this country don’t pay any federal income tax. It’s not a country of haves and have nots, it’s a country of earners and lampreys.
Should the “lampreys” voluntarily donate their money to the IRS? If they’re following the tax code, what exactly are they doing wrong? Maybe the tax code is screwed up, but why blame the non-payers for that?
It’s our civic duty to pitch in and pay for half the working population that pays ZERO federal income tax. When I write my big check every April I am greatful that I am able to support the other half.
Yes, half the U.S. population is too POOR to pay Federal taxes.
America, where the streets are paved with gold. If you’re Lloyd Blankfein.
Even those who don’t have to pay federal taxes, actually pay taxes and fees in many other forms that range from sales tax, gasoline tax, airport fees if they are traveling, excise taxes, and of course every working person pays social security and medicare. If they rent or own, they pay property taxes whether indirectly or directly.
More extend and pretend. I would like to see the details on this scheme.
Supposedly, the home"owner” gets nine months with no payments while unemployed. BoA might even pay property taxes during this period. But if they don’t find a job during those nine months, they sign over the house to BoA-they agree to this before the nine months start. Since it takes that long to do a standard foreclosure, BoA’s additional loss is minimal. Either they find a job and start making payments, or it merely turns into a cash-for-keys program.
Smart plan for BoA, IMHO. Good PR with minimal downside.
This seemed like a smarter plan - own the place yourself and let the troubled owner stay for free or reduced rate. Why didn’t the donors set up a trust they controlled that owned the house to prevent the HELOC abuse?
Trump to buy McMahon’s home for him
Developer says it ‘would be an honor’ to help out entertainer
http://www.msnbc.msn.com/id/26209739/ns/entertainment-celebrities/
“Why didn’t the donors set up a trust they controlled that owned the house to prevent the HELOC abuse?”
I have wondered about that too, but then it isn’t a gift. When people truly give a gift, there is no strings attached.
I think the real question is whether or not these improvements should be a gift at all. Why don’t the producers take a first or second lien position equal to the value of their improvements? Then there would be nothing to HELOC.
Or maybe they should do something similar to Habitat for Humanity which does not allow them to incur liens or sell the home for awhile.
I have an idea for a brand new TV show that has never been done. Here’s the pitch:
We call it: Your New Construction Business
The show goes around the country to overimprove houses for people who dream of starting their own construction businesses. All of the work is done for free and at the end, the house debtor gets to extract the money to go and start their construction business.
We followup with sister shows like:
Your New Beauty Salon
Is anyone ready to invest in my new TV channell that promises such high quality programming?
You could also have one where teams of out of work mortgage brokers fight like gladiators for the right to manage each HELOC and cash-out re-fi. We’ll call it “Commission or death”.
You know what’s really funny? The ‘gifts’ from the show were actually income to the homeowners. The IRS defines income as ‘all income from whatever source derived’ and this is a classic case of a wealth increase. Just as forgiven debt is counted as income because a person does not need to pay it back, an increase to the value of an asset is also income. I wonder how many “contestants” on the show paid taxes on their ‘gifts’...
I don’t like Extreme Makeover for two reasons: ABC isn’t doing it to help people, but to make money. If advertisers didn’t allow ABC to net a profit on it, would the show be on the air? Would the homes be remodeled?
The degree and ostentatious nature of the remodels also shows they aren’t really interested in doing the most good. Think about the money they put into those homes, and how much good could have been done had reasonable remodels been done, closer to the Holmes on Homes show on cable. Plus the reasonable home would be less apt to be he-hocked. Would people watch ‘Reasonable and prudent home remodels’?
Habitat for Humanity is a group with the mission of safe affordable housing that is short on glitz, long on help (1.75M people living in Habitat homes).
Well, Holmes on Homes is in it for the money as well, if you think about it. But, yeah, nobody needs a freaking “5,300-square-footer resembling an English castle”. I still say a family of five can live comfortably in 2,000 sq ft. That’s big enough for a 4 bed/2 bath, with a reasonable sized living room, dining room, kitchen, and family room.
Family of five existing in a 975 SQ/ft 2 bed 1. 5 bath just fine.
I said comfortably. That sounds quite a bit cramped, IMHO.
I couldn’t care less that ABC makes money on the show - it is a TV program for Christ’s sake - but I agree that giving people those tacky McMansions is of dubious benefit and likely counterproductive.
Horray for Habitat for Humanity—probably the only thing I would agree with Jimmy Carter on.
Driver, move that bus…
Cut to reveal of 1,300 sq ft ranch home.
Cut to faces of semi-disappointed home owners as they realize they did not get a custom castle.
- This will surly help the sponsors of the show look fabulous.
You think the castle is ostentatious? I hope there aren’t any Middle Age nobles reading this blog who would surely be offended by such disrespect and slap thee across thy face by unworn glove to challenge ye to a duel in the name of his Kingdom’s honor and all the land that be.
How serendipitous. The featured property on The Coto Housing Blog was purchased some of the proceeds from a winning lottery ticket. The property is in foreclosure.
http://www.cotohousingblog.com/?p=10929
They had to go to the HELOC for $4,000,000 after winning the lottery? Yikes!
It appears that 22431 Avena Lane was purchased by it’s present owner in 1995 for an unknown amount. If any of our dear readers know what the purchase price was, please feel free to let us know. It looks like the original loan amount was for $1,403,000. Serial refinancing started in 1998 with a total of 8 refis and 2nds/HELOCS with the last refi funding as a neg am option ARM in July of 2006 for $3,850,000 with an initial interest rate of 7.87% and a change index of 3.57%. Geez! The current Notice of Trustee Sale lists the published bid as $4,492,149 as of 3/31/10 which is the total amount owed to the filing lien holder on the day of recording.
22431 Avena Lane was listed for sale in February of 2009 for $6,295,000. It does not appear there were a multitude of bidders at that price. The listing went through a series of prices decreases and of course the obligatory change in agents, (it’s always the agent’s fault if the home doesn’t sell, not the price). Recently the price decreases have been occurring fast and furiously in $100,000 and $200,000 increments within days of one another. The price decreases seem to be a good plan. At some price point a bid will be received and the short sale process can begin.
The first auction date is scheduled for 4/22/10.
I buy The Harpers “took out a HELOC to start a business that failed” line. This appears to be an actually pretty common use of HELOC funds-to start or prop up a small business. Of course, if you have to resort to that, chances are the business will not succeed.
I don’t. You would have to be a pretty f-d up small business person to blow a quarter million dollars. Even if it is invested in unsold inventory, you would get the money back eventually when you liquidated the inventory—nope, these folks are just crooks.
“Start up a business” = “Flip Real Estate”
Well, it was a “constuction business”. That could mean buy a vacant lot, build a house or three, find you can’t sell them for anything near what you paid to build them, fail.
Or it could be a straight buy a bunch of houses, slap granite in the kitchens, find you can’t make any money flipping them, fail.
Or perhaps they just bought a “phat” dually truck, went on a shopping spree at Home Depot for some tools, and then proceeded to live the high life until the easy construction money just started flowing in.
I stopped watching this show in 2005, and I distinctly remember saying they should do a show to revisit these folks to see what they did with these homes, many of which were given to them free & clear.
The show usually made me mad and we would joke towards the end, “but wait, there’s more!” like an infomercial: after the reveal, they would say… We’ve also paid off your mortgage, and put two new cars in your garage, and here’s a check for $50,000….
They could have built more modest homes, skipped the Gourmet kitchens and the new cars and aired 3 times a week to help 3x the deserving families. The show started to disgust me as they tried to one-up themselves week after week :(
Instead, they showcased all that was wrong with American consumerism and greed.
PS Holmes in Homes is great… Love him!
I remember the one and only time I watched this show. I thought how out-of-place the new McMansion seemed in the working-class neighborhood. I wondered how the owners would be able to afford the upkeep. I agree that this show is absolutely ridiculous. Most of the folks on the receiving end of these homes are in no way capable of owning them long-term.
People are generally where they should be in life. No amount of found wealth, whether lottery winnings or extreme makeovers can or will change that. It is no surprise this happens
Nonsense - we need to find random souls and bomb them with tons of money. It’s high time we declare a War On Humility and eradicate it from the face of the earth once and for all.
I’m going to have to take issue with your “didn’t they have insurance?” dig at the last family. If you loose your job, you’re allowed to access COBRA for 6 months, and then its gone.
After that, you buy you’re own insurance. Individuals buying insurance pay much much more than people who get their insurance from their employers (like an order of magnitude more). If you’re buying your own insurance, then you can be excluded for pre-existing conditions (e.g. cancer).
If you can’t buy insurance, then you have to pay for everything out of pocket. Now, you may think, with insurance, you have an 80/20 split; 20% you shoulder, the other 80% your insurance shoulders. If you’re paying for medical care out of pocket, then you’re paying for 100%—5x more.
Sure, that’s more, but it’s doable.
This is not the case. You will pay something like 10x more. Why? Insurers leverage their size to exact huge discounts on hospitals and doctors.
I just had a baby girl. The bill from the hospital was struck in half by our insurance. The insurance company just said “no, you can’t charge for that” and that was the end of it.
In the past and until Obamacare comes online in 2014, people who do not get insurance from their employers were basically hanging on to a sinking ship hoping that a storm never came. I get my insurance from my employer currently, but I worry that if I loose my job, I won’t be able to get insurance anywhere else. I know I can find work; but I don’t know that I can find work where my employer will provide insurance.
...
That said, my blood still boils when I see people having pissed away their homes.
Well, both the health care providers (i.e. hospitals, doctors…etc.) and the health insurance companies want you to believe that they’re giving you a lot more benefits than they really are. For example, if you are to pay 20% co-payment for a test/procedure, then the health care provide will send you a bill showing say $3,500 cost of the procedure and you pay 20% of that which is $700. In reality, the total cost of the procedure is more like $2,000 or less where the insurance company pays ~ $1,300 and you pay $700. This is because health care providers give a discount to the insurance company but not to the patient…. i know this from experience. Oh, and medical billing is often just a shame. I don’t know if that’s going to be changed with the recent health care reform… I doubt it.
I’m uninsured…and “uninsurable”.
I’d be billed the $3500 and have no choice but to pay. There is NO negotiation allowed.
If only I were an illegal immigrant that they couldn’t track down.
Well, I think you offer cash and you do your own negotiation and/or shopping if you do not have health insurance. When you have health insurance, you do what you’re told or they will ruin your credit by sending any unpaid amount, however small, to a collection agency.
What other way is there to pay other than cash? Shells? Beads?
There is NO NEGOTIATION.
Do you think I haven’t tried?
I’ve lived this way for a decade.
Don’t try telling me otherwise.
Well then, hopefully, the new health care laws will kick in sooner than later. Can I presume you supported the new laws?
“Can I presume you supported the new laws?”
Honestly, I’m not sure.
I can only speak for myself though.
Yeah, the missus had a procedure recently & the facility (not the doctors) billed us ~$1700. But thanx to her insurance the bill was discounted to ~ $500 which we paid. But what did the insurance company pay towards our bill? Nothing. $0.00. Zip. Ye olde ‘insurance discount’ scam. Better still, when I was on the phone to the facilities billing department, I asked what we would have been forced to pay w/o insurance. The person on the phone told me we would have owed the entire ~$1700. “Negotiation”? Hardeharhar… How do you ‘comparison shop’ for a surgical procedure when the bills dribble in for the next nine months after the procedure is complete?
Looks to me like uninsured patients (at least for non-ER procedures) are being forced to subsidize the billion-dollar insurance industry & the billon-dollar healthcare industry. Am I wrong?
Insurance greatly varies. Great medical at some companies and very bad at others.
At one employer’s insurance in CA, 2 hour post surgical procedure with 95 minutes of actual hand-on time but an out of network cause there was no in-network available (said to pay 80% customary charges for out of network). Insurance only paid $40 (said $50 was customary). After 10 letters and 20 phone calls, the insurance wore me out. Since I was previously in the field, the clinic only billed $800 to start with. They really did deserve more than the $800. I paid out of pocket for the balance.
I can see how medical bills can go over $200,000 for co-pay or not covered in a illness, such as cancer or extended illness.
“Looks to me like uninsured patients (at least for non-ER procedures) are being forced to subsidize the billion-dollar insurance industry & the billon-dollar healthcare industry. Am I wrong?”
Not wrong at all IMO. If I told people what I’ve had to pay for healthcare they’d shit. But from most of the comments that I read on line, people usually seem to think that every uninsured person is getting a free ride.
You can’t imagine how refreshing it was to read your comment, as it validates what I have experienced for a long long time.
The ‘Insurance Discount’ SCAM is an outrage that nobody says enough about and that needs to change. IR, I apologize about this partial hijack of your extreme makeover thread but this is important - I cannot believe medical providers can waive 70% or more of their charges just because one has an insurance card yet I have many pages of medical bills that say exactly that. I could easily subscribe to a local medical group, say pay ‘em $100/month and get the ‘insurance discount’ myself. But that is not an option, instead, being part-time employed (thanx GW & f*cking NAFTA not to mention favorable tax policy to outsourcing) signing on to the misssus’s health insurance is almost $500/month w/large copays & the worst part is that I am healthy - a doctor once a year just to renew generic scripts. Yeah, surgeons should be rich, no problem w/that. Physicians less so but in this day & age they have ridiculous education loans. But millionaire ad execs at drug companies?
Stephen Hemsley at UHC last year took home $3,241,042 not including bonuses or stock options. How many bones did he set? How many diseased people did he cure? How many hearts did he operate on? How many ill people did he cure? Hint - answer starts w/ a “Z”.
Guys, I learned a long time ago that discussing your salary w/your coworkers is a powerful tool although deemed anathema by corporate America. Likewise this health care scam really needs to come out into the open and it’s something I will mention any/every where I get a chance.
How are the participants selected for Extreme Homemakeovers? If the recipients are applying for these slots themselves, there’s an additional selection bias towards feelings of entitlement and delusions of grandeur (to want a home that over the top at all).
I don’t think the qualification in the wikipedia entry that applicants must show that they’re the type of people who give back to their communities has been enough of a screening criteria against financial illiteracy. (since it wasn’t targeted that way in the first place, no surprise).
According to the wiki entry these are the only 4 that have gotten into trouble (so far). Out of 150+ families that would put them at 1 in 37.5 households. That’s much higher than the national foreclosure rate, but comparable to some of the worst hit areas, I would think.
So perhaps the financial mismanagement is not out of proportion given that most are chosen for having had a major setback that would involve finances.
Not that this excuses the show’s entire absurd premise.
It’s heart warming to know that so many people would pitch in to donate their time to build needy folks a 5000 square foot house.
If you really wanted to help these people: pay off all their debts, give them a small perpetually anuity and make them sign something that forbids them to take on any debt.
I’m sure they would find away to screw this up as well. Stupid people do stupid things.
Very true. We had a child born with cancer when we lived in England. When we moved back to the U.S., we had to buy health insurance to cover a few months until our new jobs (and benefits) started. We got policies for most of the family, but it was absolutely impossible to buy insurance for our son. We had never been without insurance and thought we never would be, but you don’t know how many loopholes exist until you become an “undesirable”.
The reason Extreme Makeover Home Edition can lavish such nice gifts is because they have the viewing audience to support it.
I dislike seeing the recipients blowing it all after a few years. That behavior is not excusable.
However, I love the show and what it accomplishes because rather than having the ad revenue it generates go to a bunch of snobby actors, it gets pumped back into the community to people who could actually need the help.
A great concept.
I know of an Extreme Makeover: Home Edition house that was lost by the owners back in 2007. I work in San Bernardino a few blocks from where this house is located so I drove by a couple of times as they were building it to see what was going on. This house was featured in episode 14 of the first season, originally aired on 8/14/04, and featured the “The Imbriani Family.”
A few short years later I noticed the place was empty (and was epty for quite some time). I’m not sure what happened but it went back to UNLIMITED CAPITAL GROUP INC on 3/31/07 and then DEUTSCHE BANK NTL TR CO TR took possession on 6/7/07. I assume it was a case of HELOC abuse but I’m not positive. Whatever happened, it took less than 3 years after Extreme Makeover built this house before the bank took it back.
You can see the ownership history here:
http://www.mytaxcollector.com/trPropInfo_OwnerHistory.aspx?parcel=0273071310000
Here is the episode guide where I got the air date from: http://en.wikipedia.org/wiki/List_of_Extreme_Makeover:_Home_Edition_episodes
The address is 6817 Del Rosa Dr in San Bernardino if you want to check it out in Google Earth or Google Maps. It’s easy to spot using Google’s “street view” since it looks nothing at all like any of the other houses on the block.