Camp Granada

From the LA Times: Hard lessons on getting home loans with no money down.

Two years ago, Patricia Prado worried that she would never be able to buy a house.

Property values in this Central Coast farm town had been rising sharply, and Prado and her husband were burdened by $18,000 in debt from their credit cards and the loan on their Jeep Grand Cherokee.

A few weeks later, Prado bought a $412,000 house with a so-called 80/20 mortgage. Those mortgages are actually a pair of loans -- one for 80% of the purchase price and another for the remaining 20%.

Property values, of course, began falling sharply last year. And that left people such as Prado, who bought near the top of the market, owing more in loans than their homes were worth. Her home is set to be sold in a foreclosure auction next week.

She acknowledged that she stated her monthly income as $7,500 on the loan application -- nearly double what she was actually earning in her job as a clerk at a food processing company and a second part-time job.

With their income down after her husband's layoff, Prado said they made their last three house payments with a credit card. In February, they stopped payments altogether.

Her biggest challenge, she said, was trying to keep her children, a 10-year-old boy and 7-year-old girl, from figuring out what happened.

"They pick up on a lot of what's going on," she said. "They say, 'Why are you fighting with Dad? Why are we moving; we already have a house?'"

Dear Children,

Mommy and Daddy are complete and utter fuckups. One might even say that they are some of the biggest fuckups in town.

They bought a house they couldn't afford, and they were speculating even though they claim they're not.

Now, that they've got their financial clock completely and utterly cleaned, they're lying to you because they can't handle the truth themselves.

Love,
Your Friendly Neighborhood Banker.