Wednesday, September 26, 2007

Hearts and Flowers From the NYT

"'With so much sacrifice, we tried to get ahead, all for the possibility of this man to come and take the house that we are paying with such effort', said Prospero Torralba, a 36-year-old constuction worker. 'It was no fair'," reports the NYT, 26 September. What was Torralba thinking? He claims he didn't understand someone held a second mortgage on his house? OK. The NYT wants us to feel sorry for "immigrants and minority borrowers ... because they may not speak fluent English or understand the complex loan terms and documents". The NYT should reserve its sympathy for whoever holds the paper arising from these real estate sales.

Tomas Hernandez made about $4,000 a month and bought a $745,000 home in San Jose. What was he thinking? What was whoever made him the loan thinking? Where were the rating agencies? 6% of $745,000 is $44,700 per year. If Hernandez only had to pay $15,000 a year in property taxes on the house that's a total cost of about $60,000 a year. What goes on here?

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