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LETTERS TO THE EDITOR: Property buyer in on the scamAugust 25, 2008 NOEL, THE "SCAMMED" math teacher ("Many go bust in mortgage meltdown," Aug.16) is actually the main "scammer" in this story. In buying three properties without any down payment, Noel most likely lied about a host of things including his income and his intent to own and occupy all three properties. Yes, the broker and lawyer are complicit. But that does not make Noel any less of a perpetrator. He is a math teacher and should know what the “mathematics” were on this transaction. This mortgage debacle has been created by Wall Street, the credit rating agencies and most of the mortgage industry. But let’s not exclude people like Noel. They, too, must share the blame. Sincerely, Michael Moskowitz, CPA President, Equity Now A direct mortgage lender New York The article: Many go bust in mortgage meltdownHome loan mess blamed for 31% rise in bankruptciesDaniel Massey August 16, 2008 The mortgage crisis that sparked a wave of foreclosures is now responsible for a rising tide of bankruptcies across the city. In the past, in stronger housing markets, homeowners could refinance their homes. But now, the value of a debtor's house is often less than the amount of the mortgage. "Because of these no-income-verification, no-asset loan products that were popular, people have no equity and never did," says Michael Siegel, a Manhattan bankruptcy attorney. Real estate speculators Some New Yorkers find themselves mired in debt because the wide availability of credit turned average wage earners into eager real estate speculators. They bought investment properties in the suburbs, or in places like Florida and North Carolina, hoping to get rich. Then mortgages adjusted upward or their tenants, hit by the economic downturn, stopped paying rent. And the real estate bubble burst, sending home values spiraling downward, particularly outside of the city. 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. In over his head 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." With more mortgages due to adjust upward in 2009 and 2010, credit card companies reducing limits, and Wall Street layoffs certain to rise, bankruptcy filings will surely increase, experts say. |
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