BLOOMBERG: Countrywide Takes Away Home-Equity Credit Lines in Las Vegas (Cash-Flow Twits are S.O.L.)

[El Pinko]

http://tinyurl.com/4vlm9p

Countrywide Takes Away Home-Equity Credit Lines in Las Vegas
By Vivien Lou Chen


Since January, Countrywide, Bank of America Corp., Washington Mutual Inc. and IndyMac Bancorp Inc. have frozen about 600,000 equity credit lines nationwide, said Michael Kratzer, president of a Bankrate Inc.-owned Web site that's fielding consumer complaints. The lenders are targeting borrowers in cities where property values are falling, including Las Vegas, Chicago and Los Angeles, he said. Frozen credit and real estate declines are putting a chill on spending and hurting the economy. In February, taxable sales in Clark County, Nevada, which includes Las Vegas, fell 3.1 percent from a year earlier, dropping 13 percent at furniture stores and 6 percent for durable-goods wholesalers. In the same month, as it became harder to borrow money across the U.S., consumer spending rose at the slowest pace in more than a year.

....

Homeowners' pain is acute in Las Vegas, where property values soared 50 percent or more during 2004 and 2005 and since have plummeted. Las Vegas housing prices declined 23 percent in February, leading 20 U.S. cities tracked by the S&P/Case-Shiller Home Price Indices. Nevada had the highest U.S. foreclosure rate in March: one of every 139 households. Home equity lines of credit are a form of revolving debt often used to make home repairs or for other expenses, with the borrower's home equity as collateral.


....

``If you had anything on the ball, you could make it happen in Vegas,'' said real estate agent Donna Marie Gold, 62, who built a $4.5 million fortune buying and selling properties over six years. After failing to complete a single sale last year, Gold said she fell $22,000 short each month on payments needed to maintain 14 properties. Now two to four months behind on some mortgage payments, she's lost access to a $250,000 Wells Fargo & Co. equity credit line. ``The whole thing was upside down in a New York minute,'' Gold said. ``There needs to be some forgiveness in this climate with regards to credit and rebuilding one's credit.''

John Simon, 42, borrowed $35,000 on low-interest credit cards in 2007 to pay down his $63,000 credit line and save on the 11.75 percent interest he says Countrywide charged. He expected to be able to access the credit line later. When Countrywide froze the line, he wasn't able to get money needed to pay his bills.`They took away the last amount of cash I had to make all the payments on my father's retirement home,'' Simon said. ``From a business standpoint, this was the stupidest thing I ever did. But it was so easy.''





Aw, poor Mrs. Gold. She bought into Dave Del Dotto's Cash-Flow infomercial. Looks like now she may actually need to get a JOB like normal people. Oh, and I love the mention of her "$4.5 million fortune", which of course refers to the mostly illusory equity she supposedly had in all of her heavily leveraged properties. Cry me a river lady. People like you are the reason so many millions were priced out a few years ago. You're the reason for the bubble, for the foreclosures, and for the economic disaster we are in now. All because instead of supporting candidates who would KEEP GOOD JOBS IN THE US, you voted for more Reaganomics and globalization, and hitched your wagon to the casino of real estate cash-flow shell-games. I look forward being served by Mrs. Gold the next time I eat one of those cheap steak joints in Vegas...

[HowHasItComeToThis]

1. THIS IS THE REPUGS OWNERSHIP SOCIETY

[AP]

2. Donna isn't the reason people were shut out of the housing market.

The banks willingness to give anyone and everyone money to buy houses when they knew this would happen is the problem. If you wanted to buy a house, prices were driven irrationally high because of banks' willingness to lend. Prices are going down now because banks are requiring 20% down and actually, for the first time in years, care if you have the income to pay off the loan.

Blaming realtors like Donna for making money off of the rising price in an asset is like blaming your uncle for buying Krugerands when the price of gold is going up. If your uncle didn't buy them, maybe the price would be lower because demand is lower, but why isn't he allowed to make money? Why does your uncle have to sit on the sidelines while somebody else makes all the money?

[notesdev]

3. Speculation is piracy

I don't feel sorry for Donna or her ilk. Such people made more in a few years than many do in decades, and they did it without adding any value to the line of production. The only thing they added for their profits were the added liquidity of their credit and borrowing; but as we see today, much of that credit is bad debt. Donna personally may have added little to the price of housing, but the tens of thousands of Donnas out there contributed quite a bit to the bad situation.

Just because it's legal doesn't mean it's ethical... or economically productive.

Those millions that ended up in her pocket can be unambiguously described as a misallocation of capital, diverted into the pockets of the unproductive.

[KharmaTrain]

5. It Was A Ponzi Scheme

And many in the banking and real estate world knew it...but the game had gone on for a long time and no one thought it would come crashing down when it did. Many made big money off arranging the loans and other fees and didn't care about how they got it. The lenders were more than happy to let things slide or accept fraudulent credit reports as the money was turning over so fast and kept going up. As long as people kept borrowing and "buying" the prices rose...as long as it rose, the game when on.

What screwed the pooch was the represive bankruptcy bill of a couple years ago...removing any liability from the lenders and opening the door to the massive increases in not just mortgage rates but all other forms of credit that really made the crunch hit fast. It wasn't just a person's mortgage that shot up but the banks also could crank up rates on credit cards and other loans that added to the squeeze. It wsan't a surprise that the bubble burst and burst as badly as it had.

Many innocent people got screwed and continue to pay for the games of the lenders...either by being caught in a massive credit crunch due to the new bankruptcy laws, by seeing their portfolions (many that ran up based on real estate and banking stocks) crumble or now are stuck in houses that are worth less today than they were a couple years ago...their equity wiped out. It's not a pretty picture out there and don't expect any help as long as this regime remains in power.

[El Pinko]

6. The lenders are of course equally to blame for laying the bait...

...but many of the millions who took the bait knew that they were speculating - trying to make something for nothing.

Donna on her own could not have driven up house prices, but millions of Donnas with the same mentality definitely did.

If only the only people buying houses had been people who simply WANTED A HOUSE for what they could genuinely afford, there would not have been a bubble.

It's unconscionable that lack of regulation allowed the banking industry to create this mess, but it's a shame that so many greed-crazed Americans STILL would rather chase get-rich-quick gimmicks than work for a living and demand in usison that their government enact policies to promote good, equitable wages.

[Earth_First]

4. Typical that the investor class is looking for 'forgiveness' on bad decisions.

``There needs to be some forgiveness in this climate with regards to credit and rebuilding one's credit.''

[sinkingfeeling]

7. I agree. Why should creditors 'forgive' people who speculate on markets and not 'forgive' those who

lose their jobs or accumulate massive medical debt?

[El Pinko]

8. Or student loans for schools that taught skills that are now obsolete in the NAFTA economy...

nt

[AngryAmish]

9. Would philosophy majors fit in that criteria?

[El Pinko]

10. Ummm....

:shrug: