A String of Pearls — Glenn Miller
Pearl Harbor Day was Sunday, December 7. One of the enduring images of “A date which will live in infamy” is the wreckage of the USS Arizona. One thousand one hundred and seventy-seven crewmen died aboard the USS Arizona that day. The sunken hull sits quietly submerged beneath the waves.
Americans were not prepared for World War II. Peacetime isolationism and lingering problems from the Great Depression left us ill prepared for the challenges our nation faced. We ultimately prevailed, and the peacetime that followed ushered in a new era of prosperity in the United States. We are only now getting a taste of the economic upheaval of the Great Depression, and as a society, we are equally unprepared for the consequences. We will survive, and hopefully we will begin a new era of prosperity. However, some of the images of The Great Housing Bubble will also endure (I hope).
Some historians have argued that the military made a critical error
having so many ships in port at Pearl Harbor. We did not anticipate the
attack, and we were not prepared for it. Like the USS Arizona, many homedebtors today are underwater. Their lack of preparation for this catastrophe has left them deeply in debt with little hope of recovery. For those who became dependent upon a lifestyle of mortgage equity withdrawal, this is the end of times. Many are hoping our new President will be a messiah. They cling to false hopes for a bailout that will allow them to go back to living the good life of Ponzi Scheme financing. That isn’t going to happen.
Today’s featured property is another HELOC abuser who lives on Arizona and is just as underwater as the ship.
Income Requirement: $212,225
Downpayment Needed: $169,780
Monthly Equity Burn: $7,074
Purchase Price: $538,500
Purchase Date: 1/28/1999
Address: 22 Arizona, Irvine, CA 92606
|Property Type:||Single Family Residence|
|On Redfin:||3 days|
Floorplan With Formal Living Room & Dining Room. Kitchen Includes
Granite Counters, Breakfast Nook & Opens To Large Family Room With
Stone Fireplace. Large Bonus/Game Room. Master Suite Includes
Fireplace, Jacuzzi Tub & Large Walk-In-Closet. Entertainers Yard
With Stone Hardscape, Built-In-BBQ/Bar, Outdoor Fireplace & Pool
Sized Lot! 3 Car Garage With Storage Cabinets. Close To Central Park,
Pool, Sports Court & Tot Lot.
Why Is Every Word Capitalized?
- This property was purchased on 1/29/1999 for $538,500. The owner used a $430,530 first mortgage, a $53,800 second mortgage, and a $54,170 downpayment.
- On 6/26/2000 he opened a HELOC for $50,000.
- On 10/18/2002 he refinanced with a $503,235 first mortgage.
- On 11/15/2002 he opened a stand-alone second for $62,000.
- On 12/28/2005 he refinanced with a $848,000 first mortgage.
- On 7/13/2006 he refinanced with a $928,000 first mortgage.
- On 2/13/2007 he opened a HELOC for $205,000.
- Total property debt is $1,133,000
- Total mortgage equity withdrawal is $648,670.
If this property sells for its asking price, and if a 6% commission is paid, the total loss on the property will be $335,034 despite the property selling for more than $300,000 over its original purchase price.
All these people using mortgages as options seem to be making out quite well during this price crash. What will you be doing during the next cycle when lenders lose their minds again?