Extreme Home Makeover - What a disappointment!

[omieluv]

Date: 7/29/2008 3:06:46 PM
Author: Loves Vintage

In this case, the bank apparently did a poor job in determining whether the borrowers could repay the loan. Yes, the bank needs to ensure they have adequate collateral to support a loan, but they also need to evaluate whether the people have sufficient income to pay the loan back.

Question, what if people are trying to start a small business, how would a bank know whether the business would generate enough income to pay off the loan? Sure, I would assume a business plan would need to be provided to help the bank decide. In an ideal world, the small business would be able to generate enough income to pay back the loan, but how is anyone really to know if it will? In this case, their business failed, so they paid the loan back with their home. I could of course not have enough information on the process a responsible lender takes to evaluate such things.

 

[meresal]

Date: 7/29/2008 4:13:37 PM
Author: omieluv

Question, what if people are trying to start a small business, how would a bank know whether the business would generate enough income to pay off the loan? Sure, I would assume a business plan would need to be provided to help the bank decide. In an ideal world, the small business would be able to generate enough income to pay back the loan, but how is anyone really to know if it will? In this case, their business failed, so they paid the loan back with their home. I could of course not have enough information on the process a responsible lender takes to evaluate such things.

They aren't for sure, but that is why they offer small business loans (start-up $$) then you can apply for more if your company shows growth, or even line's of credit... which can also be increased if you prove growth. They also usually require extensive business proposals and so forth, liek you assumed.

The lady didn't strike me as someone that had a real "plan"... Which is why I suspect that the bank may not have known what the funds were truely going to be used for. However, what got me, is that they said the compnay was "struggling", and never said it went "under". I don't think that this was their company. It sounds like maybe they were just investing in it, especially if they can just up and walk away from it.

 

[omieluv]

Date: 7/29/2008 4:28:08 PM
Author: meresal

They aren''t for sure, but that is why they offer small business loans (start-up $$) then you can apply for more if your company shows growth, or even line''s of credit... which can also be increased if you prove growth. They also usually require extensive business proposals and so forth, liek you assumed.

The lady didn''t strike me as someone that had a real ''plan''... Which is why I suspect that the bank may not have known what the funds were truely going to be used for. However, what got me, is that they said the compnay was ''struggling'', and never said it went ''under''. I don''t think that this was their company. It sounds like maybe they were just investing in it, especially if they can just up and walk away from it.

Gotcha, that makes sense. I suppose they never said it was for a small business loan anyway.

 

[HollyS]

Date: 7/29/2008 11:57:58 AM
Author: Haven

Date: 7/29/2008 11:01:15 AM
Author: Loves Vintage
I also think the Home Make Over tv program is ridiculous. I cannot watch it, for several reasons, most of which the homes they produce are usually gaudy, oversized, monstrosities that do not fit the neighborhoods they are built in. Imagine how many more families they could help if they actually renovated the existing homes to make them comfortable for the families. That''s what they used to do when the show began. Now, all they do is tear down and build up as close to a mc mansion as they can fit on the existing lot. uggh.

I agree completely, Loves Vintage. Those homes are horrible monstrosities, and they definitely fall into the McMansion category. I''d be embarrassed to live in a home like that.

As for passing judgment on the family, I won''t. I''ve never had the misfortune of being financially unstable with three children to take care of, and I''m sure that if I was in that situation, and someone swooped in and gave me a big, gaudy gift, I''d do whatever I could to use that advantage to try and get my feet on some firm financial ground.

It''s very easy to be all high-and-mighty when you have no idea what was really going on. I see families all over the suburbs of Chicago losing their homes because they purchased gaudy, over-sized McMansions that they certainly couldn''t afford, and while it would be easy to shake my finger at them and think they''re unintelligent for trying to purchase homes that were obviously outside of their price range, I don''t. I just feel bad for them because whatever their taste in homes, they are still families in crisis facing a very, very scary situation.

And then I thank my stars for being in a comfortable financial situation myself.

Talk about beating somebody when they''re down. Have a little compassion and grace.

Well said. I just had to ditto.

 

[Loves Vintage]

Date: 7/29/2008 4:13:28 PM
Author: meresal
This family went from being very well respected in the community, enough to have them all build a house for a week straight, night and day... and now even the mayor sounds like he would rather them move as well. Obviously more has happened than what we know, and I would venture to say that the foreclosure with the bank is just the final straw in this situation...

Banks don''t make money on houses that they take over and then sell; They make money on interest payments and fees. There''s no way a legitimate bank would be handing out $450K without extensive backround checks, and I would venture to say that they probably weren''t aware that a significant amount of this money was going to be invested , and in a contruction company none the less.

True, banks do not make money foreclosing on homes. But, there were legitimate banks that were handing out huge loans to people who could not afford to pay them back -- hence the current foreclosure crisis. See, e.g., IndyMac Bank. http://www.responsiblelending.org/issues/mortgage/indymac-what-went-wrong.html

 

[diamondsrock]

There are so many millions of deserving families out there that need homes and can''t afford them. Hardworking, honest people. To see someone be handed a house, out of charity and donations, with the intention of making their lives more comfortable and giving them a home, to have them throw it away in the hopes of making more $$$ is absolutely ridiculous. The home wasn''t enough for them so they wanted more. They in effect used their donated home as collateral on a business venture. Not what the volunteers had intended for sure.
I have a hard time watching that show and to be honest, would be more interested in watching a show about Habitat for Humanity. I''m sure each one of those families getting a habitat home has a story to tell, without all of the excessive materialism I see on Extreme Home Makeover. Most of those houses are huge and out of whack from what most people need, or can maintain.

 

[Skippy123]

Date: 7/29/2008 6:07:26 PM
Author: diamondsrock

I have a hard time watching that show and to be honest, would be more interested in watching a show about Habitat for Humanity. I'm sure each one of those families getting a habitat home has a story to tell, without all of the excessive materialism I see on Extreme Home Makeover. Most of those houses are huge and out of whack from what most people need, or can maintain.

Diamondsrock, I thought i was the only one that thought that about the show?!?! My husband and a few of his coworkers a few times a year help build homes for HH and when I see that show I think of how many HH houses they could made instead of those mansions for EHM. I am glad I am not the only one that thought that!!! I also always wondered how the Extreme Makeover home fit into the neighborhood or if it was ostentatious?

eta: don't get me wrong, I am all of helping others but I just wondered those things and think it would help more, if they helped build more habitat homes instead?

 

[luvmyhalo]

That is SUCH a good point Skippy!!!

 

[diamondsrock]

Date: 7/29/2008 6:26:25 PM
Author: Skippy123

Date: 7/29/2008 6:07:26 PM
Author: diamondsrock

I have a hard time watching that show and to be honest, would be more interested in watching a show about Habitat for Humanity. I''m sure each one of those families getting a habitat home has a story to tell, without all of the excessive materialism I see on Extreme Home Makeover. Most of those houses are huge and out of whack from what most people need, or can maintain.

Diamondsrock, I thought i was the only one that thought that about the show?!?! My husband and a few of his coworkers a few times a year help build homes for HH and when I see that show I think of how many HH houses they could made instead of those mansions for EHM. I am glad I am not the only one that thought that!!! I also always wondered how the Extreme Makeover home fit into the neighborhood or if it was ostentatious?

Skippy, you are so right. Think of how many multiple families they could help with the cost of one of those houses! Plus the houses would be a decent size that the family could upkeep. I can tell you that in my neighborhood, most of those luxurious homes would be out of place. I know if given one I couldn''t keep up with the utilities, insurance, taxes, repairs, etc.... Why can''t they just give these families normal, average sized houses in proportion to their neighborhood? Maybe over the top is more droolworthy and has people at home going ooh and ahh for tv ratings. I dunno.
Good for your hubby for volunteering! I don''t think we have habitat around here (that I know of anyways), but how rewarding to be helping people like that. What a great thing to do.

 

[brazen_irish_hussy]

Date: 7/29/2008 6:07:26 PM
Author: diamondsrock
There are so many millions of deserving families out there that need homes and can''t afford them. Hardworking, honest people. To see someone be handed a house, out of charity and donations, with the intention of making their lives more comfortable and giving them a home, to have them throw it away in the hopes of making more $$$ is absolutely ridiculous. The home wasn''t enough for them so they wanted more. They in effect used their donated home as collateral on a business venture. Not what the volunteers had intended for sure.
I have a hard time watching that show and to be honest, would be more interested in watching a show about Habitat for Humanity. I''m sure each one of those families getting a habitat home has a story to tell, without all of the excessive materialism I see on Extreme Home Makeover. Most of those houses are huge and out of whack from what most people need, or can maintain.

This is exactly my take. To take a gift so many people would work for their entire lives in the pursuit of more money is sad.

As someone who works with the banks the banks who gave out these loans, I will say many were very preditory. They gave the high interest loans to the people who could least afford to pay them since it was the most profitable until the market soured. Some of these loans were 8-15% which no one could keep up with but they sold by ripping off the American dream. I used to work at a homeless shelter, if you told them they could have a house for the first time in their life and handed them the documents, they wouldn''t understand the risk. Also, many subprime loan lenders don''t fall under federal banking laws, so there was no oversight to their preditory practices. Unfortunately, it is also racial with over 70% of the home loans given to high income, low risk hispanics and blacks are high interest whereas for whites in the same position, only 17% have high interest loans.


As someone who works with the companies that gave the loans for a living, I truely can tell you it is 80% their fault and they deserve what they get.

 

[Anna0499]

Date: 7/29/2008 6:26:25 PM
Author: Skippy123

Date: 7/29/2008 6:07:26 PM
Author: diamondsrock

I have a hard time watching that show and to be honest, would be more interested in watching a show about Habitat for Humanity. I'm sure each one of those families getting a habitat home has a story to tell, without all of the excessive materialism I see on Extreme Home Makeover. Most of those houses are huge and out of whack from what most people need, or can maintain.

Diamondsrock, I thought i was the only one that thought that about the show?!?! My husband and a few of his coworkers a few times a year help build homes for HH and when I see that show I think of how many HH houses they could made instead of those mansions for EHM. I am glad I am not the only one that thought that!!! I also always wondered how the Extreme Makeover home fit into the neighborhood or if it was ostentatious?

eta: don't get me wrong, I am all of helping others but I just wondered those things and think it would help more, if they helped build more habitat homes instead?

Yeah, it's funny how the whole town wants to get involved when the show is filming there...I wonder if they have as strong a HH chapter.

The one episode I saw in full wasn't that bad because I thought they had more legitimate reasons for making the house so large because of the rigging system (the disabled police officer who couldn't pick up her baby), but the others are huge and usually contain unusual rooms (i.e. solarium?) that no one needs in their house. I guess people must be watching the show since it's still on the air. Sadly, even with the economic slump we are experiencing I haven't actually seen a decrease in materialism anywhere. I don't doubt that some banks do take advantage of people, just like I think credit card companies who send preapproved cards in the mail are sneaky...but I do think personal responsibility is a problem for a lot of people as well. Anyway, the reason why I put these people in a different category than most of those who are losing their homes is that most of those people had loans to buy their homes whereas these people had the home already and used it to make a profit for themselves...that's the main issue for me anyway.

 

[nclrgirl]

That''s sad...