Loans That Never Made Sense, Continued

This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.

The subprime mortgage crisis is complicated, but it’s also simple: a lot of those loans never made sense. The San Francisco Chronicle tells the story of a loan that boggles the mind.

It’s worth reading the whole thing, but briefly, it goes like this: two couples with low-paying agriculture jobs (Alberto and Rosa Ramirez pick strawberries, Jesus Martinez and his wife are mushroom farmers) pool their earnings and figure they can afford $3,000 a month in mortgage payments. Naturally, New Century Financial loans them $720,000 to buy a house in Hollister. Payments start at $4,800 -- more than the two couples can afford -- and then spike to $5,378. On the road to foreclosure, they find out they’ve been taken twice -- the house is only worth about $580,000.