Different River

”You can never step in the same river twice.” –Heraclitus

April 11, 2006

Can You Qualify for a Mortgage?

Filed under: — Different River @ 1:51 pm

Who can’t? A number of people have asked me lately how it’s possible to qualify for a mortgage when the payments are higher than your income. Well, don’t ask me, ask the people who gave Johnny Moon, Sr. six mortgages:

After struggling much of his adult life with unemployment, homelessness and drug addiction, Johnny Moon Sr. died last year on a dirty mattress on the floor of a small home near Tampa’s College Hill district.

Moon, who looked far older than his 56 years, died of pneumonia brought on by malnutrition. He left behind a watch, a flashlight and a wallet containing a solitary dollar bill.

And more than a half-million dollars worth of real estate.

Among the four properties Moon bought in November 2003 was a white frame home at 2714 12th St. N in Ybor City. …

Records show Moon bought the 12th Street property from Dam’s trust for $147,000 – triple what the county property appraiser said it was worth – and paid for it with a $147,000 mortgage loan.

The Federal National Mortgage Association, commonly called Fannie Mae, ended up with the home after Moon died and the loan went into foreclosure. For Fannie Mae, the loan has become a loser.

The lender’s representatives discovered the 86-year-old home with the tin roof has leaks, flooring problems, no sink in the bathroom and no kitchen. As is, it is uninhabitable. The home is listed at $88,500, but so far, no takers.

In November 2002, Moon Sr. signed for an $85,000 loan to buy the home at 2204 E Chipco St.

Six days later, Moon was arrested at a Publix supermarket on Nebraska Avenue after stuffing packages of razor blades, Tylenol and Advil tablets into his pocket and trying to leave without paying. He was charged with petty theft.

Moon pleaded no contest to the $26.69 theft and got 60 days in jail and six months’ probation.

Probation records show he reported receiving $108 a month in food stamps and $555 a month from Supplemental Security Income – a form of disability income generally available to people owning less than $2,000 in property.

A few months after being released and reporting that meager income, Moon Sr. signed for four mortgage loans, totaling $529,300, to buy four more properties. The four purchases occurred in a two- week period.

He somehow got himself to all four closings, records show, and presented a Florida driver’s license as identification, though the state had revoked his license indefinitely during the 1990s when he was classified as a habitual traffic offender.

Two weeks after Moon Sr.’s flurry of purchases, Moon Jr. and Ferrara paid $53,000 for a two-bedroom home with a fenced yard at 3309 E Dr. Martin Luther King Jr. Blvd.

In July 2005, Moon Sr.’s body was found in one of the back bedrooms there.

Five months after the death, Moon Jr. and Ferrara sold the small home for $98,000 – $45,000 more than they paid for it.

Of course, some suspect mortgage fraud here. But aren’t the lenders supposed verify things like employment, run credit checks, and that sort of thing?

If you were lending someone thousands of dollars, wouldn’t you?

(Hat tip: The Housing Bubble)

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