Gary Farber has been scraping by for a while on your previous generous donations, CT readers, but he’s in a world of hurt at the moment, so show some love.
In perhaps related news, some people just don’t know anything about being broke:
“The risk is that you could be modifying loans for people who don’t need it,” said Sharon Greenberg, director of mortgage strategy at Barclay’s. “There’s only so much you can do without talking to the borrower. You’re spending $60 a month on cable TV; can you get by with less? You’re spending $200 a month on food for two people, but food costs in your area show that you should be able to get by with $100 a month. These are the kinds of conversations that loan-servicing companies have to have with borrowers.”
Food costs in your area show that when there are no crawdads, you should be able to eat sand. No refinancing for you, Mr. Moneypants McRichington!!
{ 24 comments }
abb1 12.05.07 at 1:00 pm
Put that coffee down! Coffee’s for closers.
Chuchundra 12.05.07 at 1:54 pm
Who are all these “Lucky Duckies”?
perianwyr 12.05.07 at 2:26 pm
How exactly is Mrs. Greenberg implying anything unreasonable here?
ajay 12.05.07 at 2:30 pm
3: I suspect that the assumption that a human being could survive in the US while spending $1.67 a day on food might be considered a little unrealistic.
mpowell 12.05.07 at 3:37 pm
He may have pulled that number out of the air as an ‘example’, so I wouldn’t necessarily hold it against him. But it is completely unreasonable.
abc 12.05.07 at 3:40 pm
Her figures are clearly off. But the basic point – that people who face high debt need to cut expenses (or earn more money) – is not controversial, right? I mean, assuming there was not outright fraud, and in most of the cases no one alleges outright fraud, people got into homes they could not afford.
Is that the shareholders fault of mortgage brokerages? Or is that the person who signed on the dotted line.
And lest you think I don’t know what I’m talking about, I just – thank god – sold my Phoenix home for about what I bought it for in a very bad market while struggling to make payments. And I am facing significant debt owing to law school.
Zeke 12.05.07 at 3:44 pm
That’s the best Raising Arizona reference I’ve seen in a long while.
JP Stormcrow 12.05.07 at 3:45 pm
3: Fair enough, provided I ever hear something like this from these folks:
Amber 12.05.07 at 3:46 pm
The weekly cost for a family of two per the USDA low-cost food plan is $97.40.
Stuart 12.05.07 at 4:19 pm
Which is something over $421.90 a month, to more easily compare with the quoted figures.
Katherine 12.05.07 at 4:24 pm
5: yes, but pulling that particular number out of the air shows how much experience he/she has with actual food shopping on a budget – i.e. none – so possibly he/she should refrain from passing comment on what is or isn’t affordable.
jim 12.05.07 at 4:40 pm
On the contrary, the anecdote shows only too well what it’s like to be broke. Forget the detail (either she pulled the number out of the air, or else she meant to say “week”, but misspoke and said “month” aligning with the previous example). The conversation is only too real. If you’re broke and need help from someone, you get to itemize all the money that’s coming in and everywhere it goes to and then you get to have a conversation where you’re told why you’re doing it wrong.
yoyo 12.05.07 at 5:22 pm
Her figures are clearly off. But the basic point – that people who face high debt need to cut expenses (or earn more money) – is not controversial, right? I mean, assuming there was not outright fraud, and in most of the cases no one alleges outright fraud, people got into homes they could not afford.
Is that the shareholders fault of mortgage brokerages? Or is that the person who signed on the dotted line.
So i guess only the borrower signs contracts? That must be a unique area of contract law.
Matt Kuzma 12.05.07 at 6:32 pm
This problem is every bit as much the fault of the shareholders as it is of the borrowers. A bad deal was made, and both sides of the deal are responsible for that. On the lender’s side, that bad deal came about because of flawed business practices and the shareholders who reap the benefits of their investments also deserve the losses resulting from investments in flawed businesses.
What’s ridiculous to me about all of this is that chances are good any kind of loan adjustment will be better for both shareholders and borrowers than having the house foreclosed, winterized, and languishing on a stagnant market. Whether or not the bank overseer deems your $60/month entertainment budget extravagant is beside the point and, frankly, a useless endeavor. The bank has no business meting out justice by taking away people’s cable because they made a financial mistake. Their business is to find a payment agreement that is satisfactory in the long term to both the borrower and their shareholders. If a borrower values cable over keeping their house, that’s their business, however little sense it might make to anyone else. It’s the job of the bank to make its investments pay off, not second-guess others’ choices. But then banks have never really understood that.
Drake 12.05.07 at 8:16 pm
In economic speak, of course, opting for death is a substitute for expensive health care. So Greenberg does have a point.
Kathleen 12.05.07 at 8:29 pm
… if you don’t like sand and you have no crawdads, have you considered roadkill?
the scary thing is that maybe she ISN’T pulling those numbers out of the air. Maybe they do tell people no relief for you unless you drop you monthly food bill to $100! Anything above that line shold go to debt servicing! It’s been done before on a global scale, after all — why not locally?
Nick 12.05.07 at 8:53 pm
FWIW, despite all the current problems with mortgages, we get monthly letters from our mortgage company offering to cash out our equity and refinance our loan to a “low adjustable rate.” Since we have a relatively low-interest 30-year fixed rate loan and only bought the house last May, we’ll accept their offers right around the time George Bush marries Mahmoud Ahmadinejad in a civil ceremony, but I find it striking that the company has no qualms about converting a secure loan into a less secure one. They’re blatantly appealing to our greed, and they’re apparently risking 30 years of almost guaranteed payments in exchange for a quick refinancing fee now.
Anderson 12.05.07 at 10:17 pm
and they’re apparently risking 30 years of almost guaranteed payments in exchange for a quick refinancing fee now
IOW, they’re displaying the same lack of character that we’re continually told is the consumer’s fault and the cause of the crisis.
Down and Out of Sà i Gòn 12.05.07 at 11:47 pm
You’re spending $60 a month on cable TV; can you get by with less? You’re spending $200 a month on food for two people, but food costs in your area show that you should be able to get by with $100 a month.
Ms. Greenburg is clueless if she isn’t able to distinguish between luxuries and necessities. Wouldn’t it be better to cut out cable TV altogether and spend the extra $60 on food?
Fraud Guy 12.06.07 at 2:10 am
$60 per month for cable? Well, if you need high speed access, push that up to over $100, especially if you are trying to be accessible to companies while looking for a job that has remote capabilities. I’m not situated for satellite, and my local phone service DSL is not recommended by those who have it.
Modern necessities…I’m sure I could sign in to work from the local library.
josh 12.06.07 at 2:40 am
Something to think about, in the context of this discussion:
A person on food stamps has about $3 a day to spend on food.
That’s nearly twice as much as what Ms Greenberg’s hypothetical would seem to allow as necessary (or possible).
It’s also damn hard to actually live on (I’ve tried it out). And it’s well below even the lowest USDA estimates linked to in #9 (unless one’s under 5 years old).
notsneaky 12.06.07 at 3:09 am
Uh, how does 97.40$ per week for two people translate into 421.90$ per month for one person again?
Or was that about something else.
RobW 12.06.07 at 6:51 am
Not to mention the deeply insulting assumption that people facing a looming foreclosure haven’t already cut all their other expenses to the bone in the interest of, you know, trying to keep their house.
Matt Weiner 12.07.07 at 4:41 am
Who said “For one person,” notsneaky? Greenberg clearly said $100 a month for two people.
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