Article: Black wealth blossoms in (the Dallas-Ft. Worth) suburbs

[JROCK]

Someone mentioned how the neighborhood went down when the "RENTERS" moved in. I would say it is not the RENTERS, but the "BUYERS" who are able to buy with all these new loan programs.

Many people are able to buy $120K homes with bad credit and no money down, simple because banks are simply throwing loans out there. When you, IMO, have F'ed up your credit, done nothing to repair it, and put $0 down on a $120K home, then you don't have the same PRIDE OWNERSHIP as a person who has a 700 credit scrore and put down $10K with some other form of saving (retirement, stocks, bonds, etc.).

I experienced this in my old neighborhood. There wasn't many buyers, but after the 1st generations of buyers moved out, then the 2nd/3rd buyers simply did not take care of the house. Forecloser rates went up, and property values went down. It really wasn't the RENTERS.

VERY GOOD point DS. What is really interesting is that now a lot of these people that you are referring have acquired ARM Loans. I believe as time progresses and interest rates climb up, the foreclosure rate will continue to increase because higher payments will hinder budgets. If they are able to hold on to the house with very little or no equity they will continue to be abused by loans that exceed the LTV (loan to value) with variable rates. This situations can very easily become a "catch 22."

 

[Da_Sperm]

You are right, the ARMs will cripple people, time will tell.

The weird thing is these loan products have been around for years and they are MEANT for a different type of customer. But all it took was for one bank to give the loan to the wrong type of customer, then BANG, everybody started to get them. Take for instance:

ZERO-DOWN LOAN:
This loan is really meant for a person who has the $20K or $40K sitting in the bank who choses otherwise to invest that $20K in something other than a house. The bank knew if or when times got tight, that this borrower could tap into that $20K or $40K and make payments until the storm settled.

Interest-Only Loans:
This loan was truly an investment loan for those borrowers who KNEW their market. These borrowers (mainly California) bought property to live in for X number of years (X being years until kids got out of school). They took advantage of the APPRECIATION and sold the house before the ballon payment was due. People in Texas should not get this loan becaue the property doesn't appreciate that well.

ARMs:
ARMs are meant for those who understand how they work. A smart borrower can pay extra on an ARM and actually REDUCE his payment when the loan is up for evaluation, regardless if the rate increased. Today, borrowers are getting ARMs to get MORE HOUSE. STUPID!!!

The problem with this creative financing is everybody in the loan process gets paid and when you default, they process starts all over and everybody gets paid again.

 

[ATLJag]

Someone mentioned how the neighborhood went down when the "RENTERS" moved in. I would say it is not the RENTERS, but the "BUYERS" who are able to buy with all these new loan programs.

Many people are able to buy $120K homes with bad credit and no money down, simple because banks are simply throwing loans out there. When you, IMO, have F'ed up your credit, done nothing to repair it, and put $0 down on a $120K home, then you don't have the same PRIDE OWNERSHIP as a person who has a 700 credit scrore and put down $10K with some other form of saving (retirement, stocks, bonds, etc.).

I experienced this in my old neighborhood. There wasn't many buyers, but after the 1st generations of buyers moved out, then the 2nd/3rd buyers simply did not take care of the house. Forecloser rates went up, and property values went down. It really wasn't the RENTERS.

You have a point, but I was only speaking on the area in which I lived in. I know for a fact that it was the RENTERS because the BUYERS who could get the $120K homes with bad credit mostly opted to buy newer homes elsewhere. Newer homes didn't pop up again in our immediate area until around '03, and even then they were going for at least $130K-$140K. That priced out most of your "I'm single and broke, but I want a house anyway" folks and most undesirable buyers simply weren't savvy enough to even realize that Rex, Georgia existed(if they did, they would usually say, "That's too far" or "It's too country for me"). The people that you spoke of chose to go elsewhere rather than buy the homes in our area which were typically at least 5-7 years old at the time. As a result, many homes would stay on the market for long periods of time. This led many people in Rex, Morrow, and even Stockbridge to simply rent their homes out(after moving elsewhere) or to even seek Section 8 tenants since selling an older home in that area was an uphill battle.

Once again, in MY area it was the RENTERS that had unkept yards and unruly children. What happened elsewhere may be another story.

 

[ATLJag]

You are right, the ARMs will cripple people, time will tell.

The weird thing is these loan products have been around for years and they are MEANT for a different type of customer. But all it took was for one bank to give the loan to the wrong type of customer, then BANG, everybody started to get them. Take for instance:

ZERO-DOWN LOAN:
This loan is really meant for a person who has the $20K or $40K sitting in the bank who choses otherwise to invest that $20K in something other than a house. The bank knew if or when times got tight, that this borrower could tap into that $20K or $40K and make payments until the storm settled.

Interest-Only Loans:
This loan was truly an investment loan for those borrowers who KNEW their market. These borrowers (mainly California) bought property to live in for X number of years (X being years until kids got out of school). They took advantage of the APPRECIATION and sold the house before the ballon payment was due. People in Texas should not get this loan becaue the property doesn't appreciate that well.

ARMs:
ARMs are meant for those who understand how they work. A smart borrower can pay extra on an ARM and actually REDUCE his payment when the loan is up for evaluation, regardless if the rate increased. Today, borrowers are getting ARMs to get MORE HOUSE. STUPID!!!

The problem with this creative financing is everybody in the loan process gets paid and when you default, they process starts all over and everybody gets paid again.

This is exactly why you have people who barely make $30K a year trying to buy 4- and 5-bedroom homes that they really can't afford. The foreclosure rate in Metro Atlanta is outrageous and things such as this truly do not help matters at all.

Before someone jumps on me, I do realize that divorce is a major factor in many foreclosures out here. However, the root cause behind it is that the couple more than likely couldn't really afford their home in the first place, much less be in a position where one of them could afford to maintain it after the split.