A Charleston foreclosure, dumb and dumber
I noticed a new listing the other day and based on the low asking price for a home in a neighborhood I'm familiar with, I knew it had to be a foreclosure. I'm naturally curious and so I clicked on the tax records to look at the mortgage history and I was surprised (I guess that would be an understatement) at the loans that were made by lenders on this property.
While this is from the public record, I'll keep both the property and names of the lenders anonymous.
The home was purchased in July 2005 for $740,000 and you'll notice in the mortgage history that a mortgage for more than 100% of the value was recorded, then about 2 months later, another mortgage for even more money was recorded and I would guess that replaced the first mortgage. Shortly afterward, it appears a home equity line was tapped in December 2005 and once again in August 2006. Then it seems the whole mortgage was refinanced for even more money in September 2006 accompanied by another home equity withdrawal. Once again, later in 2006, another home equity withdrawal and finally in January 2007, the home was refinanced once again for about double the original selling price.
Wow. While the home ower (not a typo) continued to take money out of the house as if it was an ATM machine, the banks kept lending and lending. I don't know who was dumb here but I would suggest the banks were dumber. You see, while the home ower borrowed to the max and ultimately was foreclosed upon with a hit to his/her credit record, he/she did go through a lot of money and could have bought cars, furnishings, taken vacations, and all in all, probably lived pretty darn good. But give me a break, what were those banks thinking.
There are certainly foreclosures in the Charleston real estate market that are sad to hear about when a nice family loses their home because of changing financial circumstances. Just my opinion but I don' think we can feel sorry for this borrower. And as for the banks who tossed money at this disaster, well, it seems the government will be helping them out with their losses. Of course, that means taxpayers like you and me will be paying for their stupidity. Ouch.