I dont blame the politicians or the capitalists......I blame the facists that removed the 'direction book' from the schools----let me say it again,,,though we may not be able to tell the future....there is a perfectly good direction book on what to do in the 'now'.....however, some decided to remove our conscience.....we reap what we sow.....capitalism is not dead, although if we cry to the government for regulation it will be......the only thing that has died is our society's conscience.....just become something is not deemed illegal doesn't mean that it is righteous.......capitalism used by those with SOLID foundations rings true......capitalism hijacked by those without solid foundations brought us here........
AGAIN masterful statement, you are the chief philosopher here and my favorite poster no offense to the others mind you
Congressional analysts peg cost of propping up Fannie Mae and Freddie Mac as high as $25b
By JULIE HIRSCHFELD DAVIS, Associated Press Tuesday, July 22, 2008
WASHINGTON -- A federal rescue of troubled mortgage giants Fannie Mae and Freddie Mac could cost taxpayers as much as $25 billion, Congress' top budget analyst said Tuesday.
But Peter R. Orszag, director of the Congressional Budget Office, predicted in a letter to lawmakers that there's a better than 50 percent chance the government will not have to step in to prop up the companies by lending them money or buying stock.
Congress is expected to vote this week on a housing measure that would give the Treasury Department authority to throw Fannie and Freddie a temporary lifeline.
Treasury Secretary Henry M. Paulson, who has been pressing for the power, says it's intended as a backup plan to help calm investors and stabilize financial markets.
Paulson said in a New York speech Tuesday that Congress needs to quickly approve a support package for Fannie Mae and Freddie Mac -- which guarantee or own almost half of the home mortgages in the country -- to make sure they maintain their critically important role in housing finance. He said their continued operations were "central to the speed with which we emerge from this housing correction."
Treasury officials confirmed that bank examiners from both the Federal Reserve and the Office of the Comptroller are currently inspecting the books at both Fannie Mae and Freddie Mac. Paulson said in an interview published Tuesday in the New York Times that he believed the results of those examinations would provide an important signal of confidence for the markets.
After a period of market turbulence in which fears grew about the fiscal soundness of both institutions, the administration on July 13 unveiled a plan to provide unlimited government loans to the two mortgage giants and also to purchase stock in the two companies if needed. Paulson has stressed that the proposal is a backup effort that would be in effect for 18 months as a way to calm investor fears.
Critics have charged that the open-ended offer of support exposes taxpayers to billions of dollars of losses.
Paulson said that Fannie and Freddie have issued $5 trillion in debt and mortgage backed securities. Of that amount more than $3 trillion is held by U.S. financial institutions and over $1.5 trillion is held by foreign institutions, making the stabilization of the two companies essential to the global economy.
"Because of their size and scope, Fannie and Freddie's stability is critical to financial market stability," Paulson told an audience at the New York Public Library. "Investors in our nation and around the world need to know that we understand how important these institutions are to our capital markets broadly and to the U.S. economy."
During a question and answer period, Paulson said that housing was at the "heart of our nation's economy." He added that a key to turning the housing market around was bringing home buyers back into the market, an area where he said Fannie and Freddie needed to play a critical role to provide mortgage financing.
The effort to provide support to the two mortgage giants follows the government's involvement in dealing with the near-collapse of Bear Stearns in March when the Federal Reserve provided a $30 billion loan to facilitate the sale of Bear Stearns to JPMorgan.
----
AP reporters Candice Choi in New York and Jeannine Aversa in Washington contributed to this report.
Fannie Mae and Freddie Mac and the Law of Unintended Consequences July 16, 2008 at 10:58 am · Filed under Analysis, Current Events, Economics, OP/ED, Vox Populi
I told you it would happen. I’ve been telling you for years: you can’t pump money into the housing market, and keep lowering the interest rates, without creating a bubble; and eventually the bubble will burst. Water runs downhill. Eventually it reaches bottom no matter what you wish.
Fannie Mae and Freddie Mac were invented to create a housing bubble. I can’t think that those who created those government owned private companies — they used to be really profitable for their stockholders — didn’t know that pumping more money into the housing market would drive housing prices to ridiculously high levels. Surely at least some Congress critters have studied elementary economics? If you make low cost guaranteed loans restricted to investing in Quaker Oats what do you think will happen? I wonder how many Congress critters profited from the bubbles? Either directly or in big campaign contributions from those who did?
The intent of Fannie Mae and Freddie Mac was to make it easier for more Americans to own a house. A noble ambition, and one that the FHA was doing pretty well with; but FHA didn’t insure loans that looked too risky. Not good enough. There were people out there who wanted a house. They had awful jobs, and often they were minority people, and they wanted to own a house. They were tired of renting. Like the chap who is losing his house in Anaheim: he paid $480,000 for a house, but his income is about $700 a month, and now he’s facing foreclosure. Big surprise. Add enough instances of this and Fannie Mae and Freddie Mac own a trillion dollars worth of unsalable housing. Unsalable at anything like the amount loaned on it, anyway. So: something must be done.
I understand that the remedy being proposed is to pump even more money into Freddie Mac and Fannie Mae so that they will have more money to lend, and thus do something about the falling housing prices. Think about that for a while. The remedy is more of the disease that caused the problem. Maybe the water won’t reach bottom for a while. Pump in more money and let a future Congress worry about what to do.
I paid $30,000 for my house in 1968. I’ve made some improvements, and at some reasonable appreciation rate it ought to be worth perhaps ten times that. Make that twenty times what I paid. But I am told that it’s “worth” about one and a half million. Of course that does me no good: where would I live if I sold it? Meanwhile my property taxes rise every year. Fortunately Proposition 13 has kept a lid on that so I can still afford to live in my overvalued house; but in some areas, the housing bubble has been a godsend for local governments, who are really happy about that part of the situation.
The housing bubble, fueled by Fannie Mae and Freddie Mac, inflated at fabulous rates. Little two bedroom houses in our neighborhood sold for a million dollars (to be torn down). People bought houses with the intent of holding on for a year and selling out. There used to be a flock of radio advertisements for courses on how to get rich flipping houses. People were encouraged to be speculators. Loans were made to people who obviously had no means for paying them back. The bubble grew.
And every damned bit of this was predictable and predicted, but that isn’t going to stop the Congress from bailing out Fannie Mae and Freddie Mac, just as the Congress quietly changed the rules to allow Fannie Mae and Freddie Mac to treat the worst of the loans they either bought or guaranteed as if they were assets, not liabilities, and use them as the basis for even more loans until the bubble spiraled out of control.
Anyone who did not understand that pouring more and more money into the housing market while at the same time using Free Trade as a means for exporting manufacturing jobs and other traditional investment opportunities cannot work forever is too stupid to be a part of the US government in any capacity. Those who did understand it and went along with it anyway —
I have considerable sympathy for those who tried to get in to buy a house they really intended to live in, and got caught when the bubble burst. I would not be averse to finding a way to help them keep their homes. But I do not think the government has any business bailing out people who went into the market intending to flip the house and lost everything. I’m sorry they made such a terrible mistake, but it wasn’t me that did it and I don’t think I owe them any tax money.
Is there a graceful way out of this mess? Not too likely. There are some measures that the government can take to make the bursting of the housing bubble a little less horrid, but we built that bubble and pumping in more money isn’t going to do anything to help. I wish I were clever enough to come up with a scheme, but I’m not; I can only show what’s likely to happen if we keep on inflating the currency (i.e. lowering the interest rates). I have a German postage stamp: it was originally 3 pfennig for a first class letter. It was overprinted twice. The second overprint makes it worth 3 Mird Millionen Marks. This is a perfect example of what happens when the government gets involved in solving a problem, disaster.
Housing market takes a dive as slump worsens BY JAMES SCHLETT Gazette Reporter Reach Gazette reporter James Schlett at 395-3040 or jschlett@dailygazette.net.
Greater Capital Region home sales headed South for the summer. The housing slump worsened in the region with sales last month dropping 25 percent and home values stalling. The region’s number of closed single-family homes fell to 771 from 1,024 in June 2007. Its median sale price was flat over the year at $195,000, according to statistics released Thursday by the Greater Capital Association of Realtors. June’s year-over sales pace is the slowest the region has seen since March’s 26 percent decline. Realtors blamed uncertainty over the nation’s economy for dragging down sales. “It’s a general feeling of malaise of what’s going to happen, said GCAR President Marie Bettini. Sales regionwide for the first half totaled 3,777, down 17 percent from the same six-month period of last year. First half sales fell to their lowest level since 2003. The region’s median sale price for the first six months was $190,000, unchanged from a year earlier. Schenectady County bore the brunt of June’s slowdown, posting a 30 percent monthly sales decline to 117. A 6 percent pricing correction also slammed the county, sending its median sale price to $158,800. Rensselaer County also took a beating in June, posting both a 25 percent monthly sales drop and 7 percent decline in its median sales price. Saratoga County continued to recover from the 15 percent pricing correction that hit it in April. The county’s median sale price rose 6 percent last month to $265,000, though sales plunged 23 percent to 189. The national front for singlefamily home sales looked slighter better — or at least moving faster — than the region’s in June. U.S. single-family home sales totaled 4.27 million, down 15 percent from a year earlier. During the same period, the nation’s median sale price tumbled 6.7 percent to $213,800, the National Association of Realtors in Washington D.C. also announced Thursday.
Wall Street woes to hurt tax revenues NEW YORK — A bad year on Wall Street may mean trouble for taxpayers, too. Government officials are estimating that New York City’s financial firms will slash pay and bonuses for their employees by $18 billion this year. And that means a big drop-off in taxable income and far less money for the local economy. City and state officials are already worrying about a shortfall in tax revenues due to the decline. Wall Street firms employ about 178,000 people in the city. Those workers account for about 10 percent of the city’s tax revenue and 20 percent of the state’s revenue. Wall Street also slashed bonuses during the lean months after the Sept. 11 terrorist attacks. This decline would be three times that amount.
COLONIE Banks provide reassurances about deposits Skepticism grows following run on IndyMac, overall sagging economy BY JAMES SCHLETT Gazette Reporter
Irony in the financial markets these days looks a little like this: An office building on Wolf Road with a drive-through branch belonging to the financially sound M&T Bank. And on a higher floor in the building is another banking office, this one belonging to the nation’s largest failed bank, Indy-Mac. More than two weeks have passed since the U.S. Office of Thrift Supervision closed IndyMac following a run on deposits at the Pasadena, Calif., bank with $32 billion in assets. On July 14, the federally insured bank reopened under the control of the Federal Deposit Insurance Corp., but $1 billion in deposits held by 10,000 of the biggest depositors are potentially uninsured. The failure of IndyMac has rattled consumers from coast to coast and made them question how safe their deposits are — even at the Capital Region’s relatively conservative financial institutions. This month, as publicly traded area banks post their second-quarter results, executives are increasingly providing reassurances about the quality of their companies’ liquidity and assets. “We’re not seeing runs, walks or any concern. But I think our clients … are really trying to better understand what is insured, what the FDIC is all about,” KeyCorp Chief Executive Office Henry Meyer III said in a Tuesday conference call announcing the KeyBank parent’s second-quarter results. Meyer noted KeyBank, which has over 50 branches in the Capital Region, saw an increase in deposits last week despite the run on Indy-Mac. But over the quarter, deposits grew only by 0.4 percent to $49.9 billion. Even the Credit Union Association of New York responded to consumers’ banking anxiety. The Latham trade organization last week issued a news release saying credit unions “remain a safe harbor for consumer savings” and “as a whole are healthy and well capitalized financial institutions with strong balance sheets.” The Independent Community Bankers of America last week launched a counterattack to what it called “hype” and “unfounded concerns raised about the safety of bank deposits.” “We’re having lots of questions. It’s natural,” said 1st National Bank of Scotia President John Buhrmaster. Buhrmaster said concern is strongest among area retirees who have over $100,000 in their deposit accounts because that amount is the FDIC limit for insurance coverage per depositor. However, that coverage figure can reach $200,000 for a couple’s joint account and $250,000 for some retirement accounts. Depositors can also expand their FDIC coverage by establishing payable-on-death accounts designated for other family members up to $100,000 each. GROWTH SPURT The sudden skepticism over banks’ financial stability follows a nearly five-year period of robust and often rapid growth for the banking industry. Some of that growth was fueled by the risky lending and aggressive deposit pricing practices whose consequences are now dragging the industry down. Most banks in this area did not engage in the subprime or other alternative lending practices that have hobbled industry giants, such as IndyMac and Countrywide Financial. Earlier this year, Bank of America acquired the troubled Countrywide, a Calabasas, Calif., mortgage giant. “It’s been five or six years of very profitable times for [community] banks, and it’s been a great time for them to build their capital. So the good news is banks are now as well capitalized as they’ve ever been,” said Chris Cole, the senior regulatory counsel for the Independent Community Bankers of America, a Washington, D.C., trade organization. Although the bank failures remain rare — IndyMac holds 0.2 percent of the assets at the nation’s 8,494 depository institutions — they are spreading. IndyMac was the nation’s fifth bank failure this year, up from three in 2007. The pace of failures is the highest since 2002, when 12 banks failed in the wake of the Sept. 11, 2001, attacks and the 2000 dot-com bubble burst. The number of banks on the FDIC’s “problem list” is also growing. By the end of the first quarter, the FDIC noted 90 problem banks which were exhibiting financial, operational or managerial weaknesses. That figure stood at 76 by the end of 2007 and 50 in 2006. At the height of the nation’s savings and loan crisis in 1989, 1,513 banks landed on the problem list. In response to the S&L crisis, Congress in 1991 empowered banking regulators to force banks and thrifts to raise capital to meet certain financial thresholds and reduce the risk of failures. The FDIC rates banks on a scale of 1 to 5, with a 5 representing the regulator’s highest level of concern. The agency neither publicly discloses banks’ ratings nor its problem list, but consumers have other options in determining safe places to put their money. “Some people, all they want to hear is ‘Everything’s good.’ Others want specific bank [statistics],” said Kevin Timmons, the vice president and treasurer of TrustCo Bank Corp in Glenville. For the latter group, financial reports filed with the FDIC each quarter provide highlights of depository institutions’ financial results. Banking analysts frequently use figures pulled from call reports, quarterly reports and shareholder brochures to calculate key ratios that measure banks’ stability. NUMEROUS CAUSES Banks can fail for a plethora of reasons, ranging from a crushing load of bad loans to fraud. In announcing its closure of IndyMac, the Office of Thrift Supervision singled out Sen. Charles Schumer as the catalyst for that failure — the largest since Continental Illinois National Bank & Trust Co. went under in 1982. The OTS cited the New York Democrat’s publicly aired letters voicing his concerns over the bank’s viability. Those letters, sent to banking regulators, stoked depositors’ anxieties and prompted them to withdraw $1.3 billion from their accounts over 11 days. That massive exodus of cash sent the bank into a liquidity tailspin. Schumer, a member of the Senate Banking Committee, rebuffed the OTS’ claims he caused the nation’s largest ever bank failure. In a statement, he said: “The breadth of the problems at IndyMac were apparent for years, and they accelerated in the last six months. But IndyMac’s chief regulator was asleep at the switch and allowed things to happen without restraint.” At First National Bank of Scotia, Buhrmaster said: “The failure of the bank may still have happened, but the run on the bank certainly wound not have” had Schumer not publicized his letters. Burhmaster and other banking executives agree failures in the Capital Region are unlikely. New York has not experienced a bank failure since Reliance Bank in 2004. Reliance was a White Plains bank with one office and $30.3 million in assets. Union State Bank in Orangeburg took over Reliance’s operations. KeyCorp in January acquired Union State Bank. “There have been many economic cycles throughout our history, and Key has always been a safe place for our clients. And we plan to keep it that way,” said Meyer, at KeyCorp.
I’m paying more at the pump, the grocery store, more to National Grid for heat and lights, and now I have to pay more in taxes to fund the failures of Fannie Mae and Fannie Mac [July 24 Gazette]. My lender made sure I could meet the requirements for a monthly payment. I’m still paying down my commitment, but I’m not so happy bailing out government lenders from my paycheck every week. DIANNE CHAGNON BURNS Scotia
Gosh, looking at some of these real estate transactions, I'd say the real estate business is booming in Schenectady county. Just looking at one for example, that shows the closings from roughly 5/20 throu 5/30, that's just over 60 houses sold, and only about three are banks (i.e., probably foreclosures), and a few that have a person's name with LLC, not sure what that's about.
That seems similar with the other reports they've given. Now it maybe that putting several months worth of transactions all in a few days makes it seem like there's a house selling boom, I didn't count each "report," just randomly stopped as I scrolled down fast. Or would a good real estate market be one in which the "report" takes up a whole page or two and reporting on one week's worth of sales? However, I will admit that there are some houses I see for sale signs and they've been out there 6 months or so. Perhaps it's time to call upon those Freeman women from HGTV
Optimists close their eyes and pretend problems are non existent. Better to have open eyes, see the truths, acknowledge the negatives, and speak up for the people rather than the politicos and their rich cronies.
CAPITAL REGION More facing loss of homes Number of houses in foreclosure process triples
BY JAMES SCHLETT Gazette Reporter Number of households in foreclosure:
The mortgage crisis is accelerating locally this summer, as the number of Capital Region homes in various stages of foreclosure during the second quarter more than tripled over the year. As multibillion-dollar housing relief legislation passed last week by Congress heads toward the desk of President Bush, heightened foreclosure activity is spreading through U.S. cities. Ninety-five of the nation’s 100 largest metropolitan areas posted annual foreclosure increases during the second quarter, compared with 90 for the first quarter. In the five-county area around Albany, foreclosure activity rose 277 percent to 1,062 by June 30, compared with a year earlier. Foreclosure activity, which includes default and auction notices plus repossessions, was up 75 percent from 608 during the first quarter, according to Realty-Trac.com, an Irvine, Calif., nationwide foreclosure tracking fi rm. Although foreclosure activity remains spotty in the region — as compared to more problematic metro areas in Nevada, Florida and California — it is growing. By the end of the second quarter, one out of every 356 households in Albany, Rensselaer, Saratoga, Schenectady and Schoharie counties was in various stages of foreclosure. That ratio for the first quarter was one out of every 622 households. Nationwide, foreclosure activity over the year rose 121 percent to 739,714, a 14 percent increase from the previous quarter. “It’s getting bad out there,” said Barbara Whipple, president-elect of the Capital Region Bankruptcy Bar Association. Whipple said her Latham law office is getting unusually busy for summer. At U.S. Bankruptcy Court in Albany, total second-quarter bankruptcy filings rose 35 percent over the year to 1,158. During that period, non-business Chapter 13 filings, which can stay foreclosure actions, jumped 25 percent to 372. New Yorkers are increasingly struggling with mortgage and credit card bills as record-high gasoline and food prices outpace lethargic wage growth. Consumer prices in June rose 5 percent from a year earlier, the nation’s largest 12-month increase since 1991. Still attempting to defuse economic catastrophe in an election year, federal lawmakers followed up on their winter economic stimulus package with a housing rescue bill. It promises everything from a $7,500 tax credit for first-time homebuyers to lender forgiveness initiatives designed to help struggling homeowners refinance into lower-cost, Federal Housing Administration-backed mortgages. In a rare Saturday session, the Senate passed the housing aid legislation, following the House’s approval of it Wednesday. After months of opposing such measures, the Bush administration has indicated the president will sign off on the bill, which promises to help 400,000 families keep their homes. Under the legislation, FHA could insure up to $300 billion in mortgages. It also increases to $625,000 the amount of home loans that government-sponsored mortgage giants Fannie Mae and Freddie Mac and the FHA can insure. Also included in the bill is a provision that would send $3.9 billion in Community Development Block Grants to help revitalize blighted areas hit hardest by the foreclosure crisis. “If you’re already in foreclosure, this doesn’t help you. It’s going to remain a problem,” Whipple said. Whipple said the housing rescue bill will better aid homeowners who are 30 to 60 days behind on their mortgages — still weeks away from when most foreclosure actions start. Realtors are hopeful the $7,500 tax credit will spur sluggish housing sales by luring more first-time buyers into the market, as a similar measure did in the mid-1970s. The tax credit is available to people who bought or will buy their first home between April 8 of this year and July 1, 2009. “We’ll be looking to people who have been sitting on the fence,” said Mary Trupo, a spokeswoman for the National Association of Realtors, a Washington trade organization. The tax credit works like a nointerest loan, which homeowners have to repay over 15 years. During the first half, single-family home sales in the greater Capital Region slumped 17 percent, compared with the same period of 2007. As for relief for homeowners in foreclosure, area housing assistance officials are placing their hopes in a bill that the state Legislature passed last month. It was sent Friday to the desk of Gov. David Paterson, who supports it. The foreclosure relief legislation would mandate court-supervised settlement conferences between lenders and borrowers deep in default. It would also require lenders to notify borrowers 90 days before a foreclosure action begins and list local counseling agencies. “That will definitely help … We’ll definitely see [client] volumes increase,” said Stephanie Galvin, the senior housing counselor for the Albany County Rural Housing Alliance.
BY SAM MANUEL WASHINGTON, D.C., July 23—The U.S. House of Representatives approved today a plan put forward by the Treasury Department and Federal Reserve to rescue the country’s two largest mortgage companies. The bill now goes to the Senate. Since early October, Freddie Mac shares lost 83 percent of their value on the New York Stock Exchange and Fannie Mae shares lost 77 percent. As government-sponsored entities, Fannie Mae and Freddie Mac were created to provide loans for home purchases. The two companies hold or back $5.3 trillion of the $12 trillion total in outstanding U.S. home mortgages.
Federal regulators took over IndyMac Bank July 11 in the second-largest bank failure in U.S. history.
These are the latest examples of the volatility gripping financial markets spurred by a deepening debt-driven credit contraction resulting from default losses in housing mortgages.
Bush administration officials said there are no immediate plans to take over Freddie Mac and Fannie Mae. However the proposal before Congress is to provide larger credit lines to both companies and to request authorization allowing the Treasury Department to purchase an equity stake in them if necessary. The Federal Reserve will open special lending options to the mortgage giants.
Those announcements sent shares in Freddie Mac from its opening of $4.26 July 11 to opening at $10.96 today. Fannie Mae shares rose from $7.16 to $15.50 in the same period.
Both were selling for more than $60 a share this time last year.
Shaken confidence Events at the mortgage companies and IndyMac Bank highlighted the growing skittishness of the billionaire families in the financial markets.
On July 10 a rapid sell-off of the mortgage companies’ shares began after a former central banker commented that the companies might not be solvent and a financial analyst at UBS, a major international financial firm, issued a report critical of Freddie Mac.
In the case of IndyMac Bank, the chairman of the Joint Economic Committee in Congress, Charles Schumer, wrote letters June 26 to several federal banking agencies saying the bank might have “serious problems” with its loan holdings. Federal regulators accused the senator of helping fuel a massive run on the bank’s deposits. A total of $1.3 billion was withdrawn in two weeks.
Mortgage and credit crisis Since June Fannie Mae and Freddie Mac have lost $11 billion due to home loan foreclosures. One in every 501 households was in a stage of foreclosure in June according to RealtyTrac Inc., a company that sells data on defaults. Bank seizures of homes have risen 171 percent since January 2005, the company said. A JP Morgan analyst estimates Fannie Mae and Freddie Mac losses through next year will total $48 billion.
In March IndyMac Bank reported that nearly 9 percent of its loans were delinquent, up from 1.5 percent the previous year. At the end of 2007 the bank’s shares sold for $6. The day before it was taken over by the government its shares plunged to 28 cents.
Freddie Mac took steps July 18 to register with the Securities Exchange Commission (SEC) in order to issue new stocks. The company said it plans to raise $5.5 billion to strengthen its balance sheet.
The filing with the SEC does not guarantee that Freddie Mac will issue new stocks or be able to raise the necessary cash. In the filing, the company said, “Our ability to issue additional preferred or common stock will depend, in part, on market conditions, and we may not be able to raise additional capital when needed,” reported the Washington Post.
Freddie Mac also noted that issuing new stock could dilute the value of existing stockholder’s shares and may carry other terms and conditions that could adversely affect them.
World market threat U.S. government officials are concerned that Freddie Mac and Fannie Mae’s troubles could have serious consequences for the world capitalist economy. About one-fifth of securities issued by the two mortgage companies and a handful of smaller quasi-governmental agencies were held by overseas investors as of March. They held one out of ten U.S. mortgages.
Financial institutions in Asia hold some $800 billion in Fannie Mae and Freddie Mac debts. The bulk are held in China and Japan. As of June 2007, the most recent Treasury figures available, investors in China held $376 billion and in Japan $228 billion.
In Europe, investors in Luxembourg hold roughly $39 billion in the mortgage companies’ debt; in Belgium, $33 billion; in the United Kingdom, $28 billion; and in Russia, $75 billion.
LAKE CITY, Ga. (AP) - More than 1,800 people showed up to help ABC's "Extreme Makeover" team demolish a family's decrepit home and replace it with a sparkling, four-bedroom mini-mansion in 2005.
Three years later, the reality TV show's most ambitious project at the time has become the latest victim of the foreclosure crisis.
After the Harper family used the two-story home as collateral for a $450,000 loan, it's set to go to auction on the steps of the Clayton County Courthouse Aug. 5. The couple did not return phone calls Monday, but told WSB-TV they received the loan for a construction business that failed.
The house was built in January 2005, after Atlanta-based Beazer Homes USA and ABC's "Extreme Makeover" demolished their old home and its faulty septic system. Within six days, construction crews and hoards of volunteers had completed work on the largest home that the television program had yet built.
The finished product was a four-bedroom house with decorative rock walls and a three-car garage that towered over ranch and split-level homes in their Clayton County neighborhood. The home's door opened into a lobby that featured four fireplaces, a solarium, a music room and a plush new office.
Materials and labor were donated for the home, which would have cost about $450,000 to build. Beazer Homes' employees and company partners also raised $250,000 in contributions for the family, including scholarships for the couple's three children and a home maintenance fund.
ABC said in a statement that it advises each family to consult a financial planner after they get their new home. "Ultimately, financial matters are personal, and we work to respect the privacy of the families," the network said.
Some of the volunteers who helped build the home were less than thrilled about the family's financial decisions.
"It's aggravating. It just makes you mad. You do that much work, and they just squander it," Lake City Mayor Willie Oswalt, who helped vault a massive beam into place in the Harper's living room, told The Atlanta Journal-Constitution.
First, and if I understand the concept, the lenders sell mortgages at a loss to the government. The government establishes a new payment schedule with the homeowner and keeps any profit made on the eventual home sale up to the difference between the original mortgage balance and the new balance. Why can’t the lenders do that themselves?
And I also thought that free markets only work if it actually has a risk for a loss to the market’s participants, not to the taxpayer. Just another example of misguided government. Government was never intended to save us from ourselves. Let the market correct itself.
When the INSANE are running the ASYLUM In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. -- Friedrich Nietzsche
“How fortunate for those in power that people never think.” Adolph Hitler
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