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news · Joined: 14 Jul 2007 Posts: 0 Location: Greater Boston

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Description: Profile of Sherborn couple "just getting by" on $150K because their house is pushing them to the brink of financial ruin
URL: http://www.wbur.org/news/2008/82079_20081218.asp
Info/Broken?: http://www.bostonbubble.com/link_info.php?id=2086

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JCK · Joined: 15 Feb 2007 Posts: 559

Great story. They do make a decent income, but $640k is/was simply too much house for them to support. And I wonder how much their property tax is, if they need a $900/mo escrow payment to catch up?

The $500/mo "miscalculation" by the mortgage company is truly bizarre. I've never heard of such a thing happening. Once you close, the terms of the mortgage are pretty much set. I don't know how you would miscalculate the payment on a fixed-rate mortgage

These are good example of people who thought they were doing everything right, but weren't very sophisticated (i.e., didn't do the calcs on cost of home ownership or diligence on day care costs) and naively assumed that RE prices would go up (or they would be priced out forever!).

I suspect they're probably not going to earn much sympathy in these parts, however...

Bottom line, is to purchase a place within your means. With that income, I never would have considered a $600k+ place, unless I had significant equity.

admin · Posted: Thu Dec 18, 2008 6:09 pm GMT Post subject:

JCK · Joined: 15 Feb 2007 Posts: 559

Just took a quick look at the registry of deeds. It's amazing to me that these reporters never bother to look into the claims made by these people.

The house was purchased for $640k, but they originally took out two mortgages a $160k second and a $448k first ($608k total). Four months later, they refinanced to a $512k first mortgage and a $128k second.

This must have been the $500/mo "adjustment." Now they have NO equity, because their mortgages add up to $640k.

So either they were tricked into refinancing by a shady lender, or they decided to withdraw $32k in equity that they are not taking responsibility for...

admin · Posted: Fri Dec 19, 2008 2:09 pm GMT Post subject:

Nice research. It's too bad the WBUR website doesn't let you leave comments for the story.

- admin