Bonfire of the homebuilders

By rushing into lending, homebuilders helped fuel the housing crisis

Excerpt:

But when it appeared that the Mottos might not qualify financially for the loan, things took a troubling turn. Beazer, according to the couple, inflated the pair's earnings in loan-application documents by incorrectly stating they were collecting rental income from the house they were leaving. "I don't want to misrepresent myself," Elizabeth said in e-mail correspondence with Beazer's outside mortgage service, dated July 14, 2006. But in the end, the couple signed the documents, and soon after they closed on the Clarksburg house.

They now regret it. The Mottos moved to Clarksburg, but they haven't succeeded in unloading their previous home in Rockville, Md. They have nearly $1 million in mortgage debt on the two dwellings. With $145,000 in family income, Elizabeth says, they are "on the brink of foreclosure" on both houses. "We are so broke."

Comments: So now we know. Behind the unprecedented and unrealistic housing values gains, were unscrupulous builders and lenders. And some gullible borrowers too! Also in the news is the bankruptcy of American Home Mortgage. I would like to say that I feel sorry about a home builder (in article above) or Alt-A mortgage company failing. But I do not!