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DelGallo, a real estate broker, has used some of her credit line over the years. Had she known the freeze was coming, "I would have drained it," she said. "I would have taken every dime and possibly placed it in a money-market vehicle."
That has to be one of the craziest things I've heard! I am not sure people like this truly understand what a home equity line of credit is or that home appreciation values are not guaranteed and/or fixed.
And it's most definitely got to hurt to hear that:
Five months ago, the Ellicott City house was appraised at $560,000; the lender says it is now worth $469,100. "I told them, 'You guys are wrong,' " Nancy Corazzi said. "They said, 'Sorry, this is what we're doing in the entire area.' "
Unfortunately, telling them that "they are wrong" and being in denial about the situation isn't going to help here.
one thing for sure..the highest price areas are the one that get hit the most. A lot people is getting harder to find a jumbo loan, really if you ask me a middle class family of 3 with a set income of $150k a year or less can afford a $600k home? lol
supply and demand. Instead houses in the $150k-$300k sell the mosts and hold it values
We just purchased a foreclosed single family home and because it was an REO we got it well below the appraised value. We had thought that we could tap into the equity right away to help carry our townhome and pay off the equity loan we have on that property because there is no way in this market we could sell it and not lose out.
But when hubby tried to apply for one, he was told that now you can't loan more than 75% loan to value... *sigh* gone are the days of 90-100%, right? I guess its good in the long run? we shall see.
Fortunately for us, we can still afford both homes, but it would have been nice to be able get the lien off the townhome ASAP so if the opportunity came up to sell we could w/o worring about the large equity loan we decided to take when the market jumped sky high in '05. Fortunately [or unfortunatley? ] there is none of that loan money left for them to take back!
Corazzi initially used her line to consolidate debt. She and her husband took out the credit line in October because they thought her job was in jeopardy.
It was. In December, her salaried position as a loan-processing manager at a local mortgage bank changed to a commission-only job.
Given the slowdown in the industry, Corazzi has collected only one paycheck since then. Her husband, Ron, sells large-format copiers and printers to builders, and his salary alone cannot support them and their four children, ages 4 to 8.
By the time their lender called, the couple had $45,000 remaining unused on the credit line. Ron Corazzi is now looking for a second job, and his wife is hoping to pick up work as a substitute teacher.
Meanwhile, they are trying to open a new home equity line elsewhere, but chances are slim given the change in Nancy Corazzi's job status and the drop in their home's value. Five months ago, the Ellicott City house was appraised at $560,000; the lender says it is now worth $469,100.
"I told them, 'You guys are wrong,' " Nancy Corazzi said. "They said, 'Sorry, this is what we're doing in the entire area.' "
Corazzi said she was blindsided by what's happened. "I didn't know they could do that. I thought I was too smart to have something like this happen to me."
maybe they should sell their house and move to a place that they really can afford..they live beyond their means..no sympathy for those who live way beyond their means
It looks like Adam, who has a blog called "Baltimore Housing Bubble" (Baltimore Housing Bubble) also covered this story. He went further and did some of his own digging through public records to find out more about this family....
Now just out of curiosity I did some digging in maryland public records on the hunch this couple has been draining the home for money for years.
The house is located in the 21242 zip code and is a circa 1968 house 2546 sf home.
Purchase 1998 - 178,000 Refi -Nov 2001 - 213,600 April 2002 - HELOC opened amount unknown Dec 2004 -Refi 375,000 Oct 2006 - Refi 381,000 Oct 2007 - HELOC opened for 95,000 -mentioned by Wash Post (they have spend 50k before it was pulled)
Total house debt ~ 430k
Even if they wanted to sell add in the Realtor's 6% and the paying likely at least 3% contribution to the buyer for closing costs and they are underwater.
So yeah it's hard to have any sympathy for those who live way beyond their means.
When will our elected officials begin to discuss and prepare for the unable to pay tuition debacle that is headed our way real soon.
We know that government auctions are bombing and we now know that equity accounts are being frozen or reduced. Clearly it doesn't take a rocket scientist to know that a college funding crisis is emerging. Where is the discussion at the legislative level? Where is the discussion and planning at the executive level?
What does this mean for our ability to produce the needed intellectual property to compete against China and India? College tuition is bleeding parents and now the transfusion is being taken away
When will our elected officials begin to discuss and prepare for the unable to pay tuition debacle that is headed our way real soon.
We know that government auctions are bombing and we now know that equity accounts are being frozen or reduced. Clearly it doesn't take a rocket scientist to know that a college funding crisis is emerging. Where is the discussion at the legislative level? Where is the discussion and planning at the executive level?
What does this mean for our ability to produce the needed intellectual property to compete against China and India? College tuition is bleeding parents and now the transfusion is being taken away
Student loans are already heavily subsidized by the Federal Government. The more money the government throws at it, the more college tuition goes up.
Now that alumni are complaining about it, several schools are starting to offer bigger and bigger tuition "breaks" (i.e.: price reductions) though of course they're all selective so that they can continue to wring as much money as they can out of the people they think can pay more.
Point is, the government has done enough, and they need to stop it. Tuition isn't set in a vacuum. The schools know exactly how much money is floating around out there, and they know how to get their hands on it.
That's the emerging problem , there was money and it is drying up. It is being discussed in financial markets but where is the discussion being led by government leaders. If you followed the markets you could see the sub prime mess etc coming and government two years ago said?
DelGallo, a real estate broker, has used some of her credit line over the years. Had she known the freeze was coming, "I would have drained it," she said. "I would have taken every dime and possibly placed it in a money-market vehicle."
And the scarriest part is.. She's a real estate broker..
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] there is none of that loan money left for them to take back! 
College tuition, the next crisis not being prepared for.
