The article focuses on rising bankruptcies due to liar loans, no money downs and the huge downturn in the real estate market. But the real interesting story is about the over his head investor. Let's take a look -
Noel, a 28-year-old math teacher from Harlem who asked that his last name not be used, always thought it would be smart to invest in real estate. So when his cousin introduced him to a mortgage broker who promised he wouldn't have to put a penny down on a $1 million piece of property in New Rochelle, he jumped at the chance. Then, the same broker told him about a home in Yonkers. Again, he didn't have to put any money down.
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Before he realized what he was getting into, Noel says, he was scammed into signing two mortgages totaling more than $1.5 million. The mortgage broker even provided a lawyer for the closing."I make $50,000 as a schoolteacher," he says. "There's no way I should have been approved for loans that big."
Hemmed in by monthly payments totaling more than $10,000 and bills for maintaining a third property on Long Island, Noel had no choice but to file for bankruptcy, he says. He filed without the help of a lawyer—he couldn't afford one—and he plans to walk away from the three homes and get a fresh start, this time without dreams of making it big.
"I thought real estate was a good business," he says. "But I guess it's not for me. I'm not buying property again—ever again."
It sounds like the only one who will make out in this deal is the broker. The real sad cases are the older people who raided their retirements thinking that RE investing would make them millionaires and make their golden years gold.
2 comments:
Noel is roadkill on the Real Estate Investment Highway. If his little plan made money, he would consider himself a brilliant real estate mogul. Since he had no clue as to what he was doing, and did not read the fine print on the mortgage documentation, a large semi ran his butt over. He swears it wasn't a semi, but a "scam". Right. Its too bad the gene pool isn't as efficient at removing the incompetent as the marketplace.
YEAH BUT THE REALTWHORE i spoke with yesterday told me I probably would not be able to buy a house at a lower price. He also said i better buy before interest rates go up,. well if interest rates go up I will drop the price i am willing to pay for the house whore!
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