Another Extreme Makeover foreclosure
Both parties in Washington are united behind the principle that it is government’s role to prevent a massive number of foreclosures — and use your money to bail underwater homeowners out.
Why?
Last July, I chronicled a case study in why the tax dollars of responsible taxpayers should not be siphoned off to indiscriminately rescue borrowers and banks who made bad decisions. It was the case of a family who benefited from ABC’s Extreme Makeover show in the Atlanta area and went on a spending/borrowing binge. You can get all the dirty details here.
Now, we have another case of Extreme Foreclosure in Sandpoint, Idaho:
A north Idaho man whose family received a house from the “Extreme Makeover: Home Edition” television program three years ago is facing foreclosure.
Eric Hebert put the house up for sale last year and said the maintenance had become too expensive and time-consuming as he raised his late sister’s 11-year-old twins, Keely and Tyler.
Hebert used the house as collateral for a loan from Wells Fargo & Co. and can no longer make payments, according to a legal notice announcing the foreclosure proceedings.
As of Feb. 11, Hebert still owed the bank nearly $396,145, the Coeur d’Alene Press reports.
The construction worker moved from Montana to Sandpoint to care for the twins after his sister, Francine Hebert, died of a heart attack in 2004 and it appeared her children would otherwise end up in the foster care system.
He moved them out of a rundown trailer and into a “berm house,” described as a daylight basement with a roof. In the “Extreme Makeover” program, the berm house was demolished and replaced in a week with a large, two-story house.
This is a good man who made a very bad decision aided by housing-bubble opportunists in the construction and entertainment industries. Foreclosures like this should not be obstructed. Loss of a home is not always a financial catastrophe. The catastrophe is expanding government’s power to meddle in the housing market to delay the inevitable.
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- Another Extreme Makeover foreclosure — But As For Me
- Another Extreme Makeover foreclosure — But As For Me
- Responsible Homeowners Having To Pay For the Irresponsible « Rantings of mine
- Extreme Makeover Home Edition and the American Instinct | Adam's Blog
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This is a good man who made a very bad decision aided by housing-bubble opportunists in the construction and entertainment industries.
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You send E.M. a videotape of yourself and your family (preferably some cute young kids) and tell them your story; if they choose you, you get a complete remodeling job on your current home or else a completely new home. Sounds great and uplifting, right?
People jump into these kind of things without thinking about the long-term. As he and his family were ooohhing and aaahhhing over their new home, they were not thinking, “how are we going to maintain this?”.
The few times I’ve watched that show I’ve wondered why they spend so much money to fill one home with so much unnecessary crap when they could have helped at least 10 families get what they actually needed. I know it’s all about advertising revenue and ratings, but give me a break. Besides, I’ve heard that some of the houses use shoddy construction that requires more work after the television crew rolls away; all of which the family is left to deal with on their own.
On February 20th, 2009 at 12:24 pm, behiker said:
I know it’s all about advertising revenue and ratings,
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You said it right there. They get advertising revenue from Sears, they fill each new house with a lot of new Sears appliances and electronics, etc.
True, the money spent on the luxury items in the Extreme Makeover homes could be put to much better use for people who are still in need.
Perhaps, if it is just him and the twins they should be looking into an apartment.
Look this guy sounds like a decent enough fellow. Stepping in to take care of family and all. Hey, that’s what families are supposed to do; Take care of each other.
But why is it that everyone seems to think they have to have a house and have it now? Nothing wrong with living in an apartment until you are able to actually afford a house.
Hint, don’t refinace yourself into bankruptcy. I heard the story of a guy who had COMPLETELY paid off his house. Great huh? untill he refinaced his house to get toys. Now he has lots of toys, and no house.
DEE DEE DEE
This sounds like the problem to me.
Did he really use all the money to “keep up” the maintenance? Or did he use some of it to fund other lifestyle improvements?
The question is what did he do with the money? E.M. normally provides the house free of a mortgage. So where did the $400k go?
What did he do with the money he borrowed?
I remember when this show started, it seemed like it was more about taking run-down homes and FIXING them – families moved back into their own homes that were made to be as good as new. I just think the mega mansions they put up now are so over the top. I always wonder how these families who are scraping by are going to afford triple the energy bills and maintenance. It was better before the sponsors got a hold of it.
And I agree, why do responsible people have to bail out this guy? He already got a “gimmie” once – he gambled, he lost. Cut the losses, rebuild your life and you’ll be stronger in the end.
He may have used it to pay bills/credit cards, etc.
I am with you guys. Where and what did he do with the money ?
Then the question becomes what were the bills for and what was purchased on the credit cards?
I wish I only owed $396,000 on my mortgage. And my house wouldn’t even pass building inspection on the mainland. My “affordable” house here on Oahu would be condemned in Oklahoma.
Maintaining it shouldn’t have been a problem, because the house they gave him was fully paid for. Where these people run into trouble is when they take the amazing blessing of a home they own outright and use it as collateral for a loan to spend on stuff they can’t afford.
Good rule of thumb that never occurred to these nimrods: if you couldn’t afford to buy the house in the first place then it’s a pretty safe bet you can’t afford a loan based on its value.
I see an emerging market for a new television program entitled “Extreme Foreclosure and Bailout Makeover”.
My collie says:
Yeah, not to mention the precipitous fall in the value of their properties — all because Peggy the Moocher lives next door.
If it were a charity that would be a good point, but Extreme Makeover is a business intended to turn a profit. That they help anyone in the course of making that profit is nice, but it’s purely incidental.
A brand new and paid for house needs little upkeep. This guy, for whatever reason, took this free equity and turned it into cash. He spent the cash, and now the money is gone. So is the house.
Bad decisions equal bad outcomes. You don’t screw with your home, or gamble with it. He did, he lost.
No mortgage is a nice chunk of change in anyone’s pocket. Why did he toss it?
Maybe it is the “get something for free” syndrome. He didn’t work for it, so he didn’t respect it for what it was.
Maybe the next owners will…
I’m really considering RE-mortgaging my paid off house, take the money and HIDE IT somewhere, (Switzerland?), skip out on the payments then apply for government foreclosure protection. (And no, they can’t kick me out of my house anyway because I have it registered under the Homestead Protection Act.) At least this way I’m more likely to approach getting my … FAIR SHARE.
I see no down side? Am I missing something in this equation? Why shouldn’t we ALL be doing this!?
Right Obama?
Might have been Federal taxes since, a gift of a home CAN be considered income to the recipient. Remember Oprah’s car give-away ?
Mookie – tha is a non-answer. Bills for what?
Are you honestly telling me he lived prudently and burned through $400,000 in three years?
Thank you, DWD, for illustrating why socialism isn’t a viable economic system. Sooner or later everyone does the same math you just did.
Only speaking for me – when I stand before my Creator, I would prefer to hear “well done, good and faithful servant” than “depart from me”.
So yes – in the big picture, you are missing lots.
a 72 year old man who works with my wife inherited a house, free and clear about 6 years ago. he has refinanced it several times, gambled and spent the money, and is now facing losing his home due to the slowdown in work at his company. yes he recieves ss, yes he draws unemployment when he is off for longer than a few days, but no one can cure stupid. he’s a nice man, just stupid.
No, not at all. He may have had the debt prior to the Makeover.
James Felix got it, (thanks!). Like I said, I’m only… considering it.
In which case the smart thing would have been to sell the house, pay off those bills and then live within his means.
Any which way you cut it this guy was essentially handed half a million bucks and blew it. My sympathy is extremely limited.
I think you might want to change your handle to Pollyanna.
Then the question becomes what did he receive in exchange for the debt?
There’s nothing Pollyanna about it. Why is it so absurd to think this guy may have had some debt prior to the makeover and decided to mortgage the house to pay it off? I’m not saying all of the debt was incurred before he got the new house. I’m saying that part of it may have come from debt he had prior to it.
We have an EM house right by us and it’s for sale at a ridiculous price like $700,000.They have lowered it several times,but there are no takers.This particular gal really burned me when they got this.Because she actually put flyers all over town to hear their story at $20.00 a head.I’m sure the EM people wouldn’t have approved of that.She also goes all over town asking everyone to give her free stuff like office space and such.I guess her and her husband split and now she’s been on the front pages of the newspaper telling her sad story and how they need to sell the house because they’re divorced.It really irritates me.I guess the problem with EM is true that when your given something for free you don’t appreciate it.These people have mortgage free houses,usually their taxes are paid for the next 20 years and all they have to pay is utilities,so why do all these foolish loans,when all you have to do is make enough to pay utilities.That’s why I think these bailouts are so foolish.What if you pay these people’s motgages off? Chances are they will do like the EM people and take out foolish loans and be back in the same boat.
Try renting, give the home back to the bank and RENT! It’s too bad for this family but remember 93% of mortgage holders are paying on time. Things like this happen all the time but you don’t hear about unless it benefits these journalists for a “story”.
This goes back to the reason my wife and I agree that you do not purchase a car for your teenager you let them pay for it themselves. In high school, I noticed the kids who parents bought them cars usually wrecked them within the first year or two, yet the kids who saved up and bought their own cars truly took care of them and most of them still had them when they went off to college.
The moral of the story is, if you have to work for something you appreciate it much more than if you are just given the same thing.
On February 20th, 2009 at 1:01 pm, Danceswithdachshunds said: (#18)
I like conservativesRus’s answer better (#22) than mine for the long term, but in the shorter term:
Because you have to look at yourself in the mirror every day.
I figured your comment was meant to encourage further discussion, and I see from your later comment that it was, but this was a piece of bait worth rising to.
$396,145? That would be a loan Eric Hebert took out on his dead sister’s dependent twins’ house. As those two are minors at least half the property is theirs upon their mother’s death-they can not be excluded.
Sorry Sob Story Spinners but something in amiss in Sandpoint, Idaho. Eric Hebert most likely has $400K somewhere and the twins are in debt. It happens, Idaho’s version of Richard the Third.
On February 20th, 2009 at 12:30 pm, sonofdy said:
he and his family were ooohhing and aaahhhing over their new home, they were not thinking, “how are we going to maintain this?”.
Hint, don’t refinace yourself into bankruptcy. I heard the story of a guy who had COMPLETELY paid off his house. Great huh? untill he refinaced his house to get toys. Now he has lots of toys, and no house.
DEE DEE DEE
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Indeed, “toys” are not so much fun to play with anymore when they’ve caused you to spend/borrow yourself into foreclosure.
Michelle, were you being sarcastic here? I certainly hope so!
People who earn what the have value what they have. This is just like the folks who win the big bucks lotteries and then end up bankrupt after a few years.
Ok – I’ll bite. What was supposed to be sarcastic in that?
Not buying it, no way this man had accumulated that amount of debt. More likely he used it to buy things or start a business that failed. How did ths bank justify 400k in a loan based on this man’s income. Using the methods to approve this loan is why we are in the mess we are in. E.M. doesn’t usually help those who have money. Either way he made a bad decision.
When the gov’t is going to guarantee against individual failure or stupidity we are finished as a free nation.
This is what Ben Franklin meant when he talked about giving up some liberty for some security and not deserving either. Not the liberal diatribe of the gov’t using surveillance to protect national security.
Absolutely!
for what? Inquiring minds want to know before coming to a conclusion…
Which begs the question who’s going to pay for the taxes and upkeep of the “face of America” Henrietta Whatshername’s donated home? Oh, yeah…we are!
I think I recall hearing about this. Wasn’t he the one who borrowed on the house to start a business, then the business failed and he lost the money? Still not a smart move, but at least he was trying to start a business. There are different stories for everyone, so I don’t want to paint them all with the same brush. I also don’t want to pay for their mortgages!!
Did you ever read, “The Giving Tree” by Shel Silverstein? It’s a great book. This man should have read that.
I agree that he did a good thing by taking in these two children, but he wasn’t thinking of them when he mortgaged it to the hilt. a $397k mortgage in Sand Point, Idaho must have been just about all that house had in it to give.
Why didn’t he…you know…sell his old house to pay off his old mortgage? What happened to the old asset which was used as collateral for the old mortgage?
Isn’t that how most people do it?
How much did he use to gambled on a failed entrepreneurial venture? Most entrepreneurs know that if you mortgage your house to fund a new venture that you risk losing your house if the venture fails!
Too many important financial details are being glossed over in these stories.
His “old house” was demolished to make way for the “new house”. Still, undoubtedly his mortgage on the “berm house” (whatever that is) was something very modest. He should have just borrowed what it took to pay off that loan instead of bleeding his new house dry of all equity and obligating himself to this hideous loan to try and start a business. What is the fascination with risking everything, particularly the welfare and stable homelife of two orphaned children, to start your own business?? Why is it so difficult to be content with what you already have and see its blessing?
Let’s face it. There are stupid people in the world. I call them the 15%. No matter what the situation is, you can always depend on the 15% to blindly screw up, often without even contemplating the consequences until it is too late. My neighbor is one of them. He never ceases to amaze me with his get rich quick schemes that always, repeat always, fail. He has purchased “rare art” from scammers, he buys used cars that are “fantastic deals” and a few months later I see them being towed away to the junk yard. He uses one van in his driveway as a storage container. He has about 50 credit cards and they are all charged to the limit. He prunes his bushes at the wrong time of year, he waters his yard right after it rains. He has a 23 year old son who won’t work but steals money from his parents, tears up their cars, smokes dope and got his girlfriend pregnant. Where does he get his money you might ask? My stupid neighbor gives it to him. And so on. He has declared bankruptcy several times and brags about it. This poor fool cannot do anything right but thinks he is the smartest guy on earth. I have tried to counsel him but he refuses to listen to me or anyone for that matter. I stopped trying because stupid people will not believe they are stupid. They cannot. They just go on doing stupid things until they drop dead.
Many “good people” are “terrible money managers.” Perhaps one thing Extreme Makeover should consider adding to its program is making sure the recipients of the home get a short class in managing their finances. Why put all that effort and money into the home, but nothing into making sure the family has the economic knowledge to keep it? An extra couple hundred bucks for a community education class could avoid something like this happening again.
We should criminalize deliquency. That will make sure that people prioritize debt payment over big screen TVs, vacations, hairdos etc.
Once they have fear of hard time in jail, these deadbeats will sell their bling bling to pay their debts.
It is too easy in USA to spend borrowed money, get bankrupt and borrow again and repeat the cycle.
There was an interesting discussion in the medical staff lounge at the hospital the other night about this very topic. One of my colleagues wondered if using the suddenly-improved house as collateral and purposefully defaulting on the loan was a way of avoiding income taxes on the capital gain? Interesting point. I wonder if the IRS or any state tax authorities have ever looked into that.
Debtor’s prison ? Dubai has that on the books and, this is what happens…
3000 cars abandoned at airport to avoid Debtors prison. Hmmm… Not sure we want to go there.
Wow, taxes kill equity…Film at 11.
Criminalizing debtors would essentially mean criminalizing the loan industry. (Wouldn’t that mean no interest on savings accounts?) A lot of people are able to use loans to buy reasonably useful big-ticket items they might otherwise not be able to get in a reasonable amount of time and pay off the loans as agreed. Sometimes, especially with cars, they need the item to make the money. There’s nothing wrong with loaning and being loaned to in and of itself.
I think Bachbone has a great idea, if Extreme Makeover: Home Edition wants to listen.
And if we must have government-run schools, perhaps some personal budgeting courses would not be out of place there, either. (I was actually made to write an approximation of a grown-up budget in the eighth grade as a class project, and I think it was good for me.)
And kudos to those who have taken what they got from the show and made better lives for themselves. They made more than three episodes, I believe, so I’m thinking that a lot of the Extreme Makeover people actually did manage to stay on their feet. Yay for them!
I would like to start seeing stories of people making it on their own. How they prioritize and how they don’t have to ask for anything. I’m sick of everyone with their hands out. Let’s see the REAL America! There are two America’s those that are responsible and those that are not.
I thought that EM gives everyone $$$ for maintenance?
Actually, they say they DO provide these families with access to financial advice. What they DON’T do is stay there with the families after the klieg lights are shut down and hold their hands to prevent them from succumbing to the desire to “be their own boss” like the equally-shortsighted EM:HE family in Atlanta did.
TinkerBrendie,
You seem better informed than I am as to the details regarding Extreme Makeover. (I’m more a Sci Fi fan, and don’t have cable right now anyway.) This question is really for anyone who can answer it. Do you know what “access to financial advice” means in this case? Obviously, Extreme Makeover is obligated to give them nothing and anything they give is generous, but if “access to financial advice” means, for example, a phone number via which the beneficiary can listen to a busy signal, it wouldn’t be any wonder why it’s not working. (I’m not saying that’s what they do. I don’t know.) If helping a family is what they want, requiring a class as a condition of getting the house or remodeling may get a better return on their investment.
Thanks!
NestingHawk:
All I know is what I’ve been told by the EM:HE production people (I’ve worked on three EM houses in the past year as a vendor and as a volunteer) and what I read on the web after the Atlanta EM:HE family’s foreclosure announcement last year. I’m positive that your suggestion of requiring some actual class time would help, but it still seems like these families are being handed a winning lottery ticket, and we’ve all seen how many of those “winners” end up. I’m of the opinion that there should be a clause in the family’s contract with ABC (don’t even THINK that they don’t have to sign one) that they CANNOT use their free home as collateral for AT LEAST five or ten years after receiving the home, and even then it should only be for a certain percentage of the home’s current market value. God Forbid that the loaning agent should bother to MAKE SURE the homeowner has a freaking job good enough to PAY BACK the loan in the first place… sigh.
That would be the neighbor across the street who bought all kinds of toys and now the house sits empty. He is living in a trailer in Mesa.
Hey TinkerBrendie,
I can’t take credit for the class time idea; I believe Bachbone suggested it first.
Thank you for responding. I got a little busier than I had intended to this weekend, so sorry about how long I took. The extent of my involvement in EM:HE has been seeing part of an episode, so you know much more than I do.
TinkerBrendie:
I hadn’t thought about it, but I think I would have been more surprised if a contract had not been involved. Your clause idea sounds like a good one, too. Maybe they could stick an exception in for genuine emergencies, like paying for life-saving medical treatment, if they did that. Most of the time using the house in that way would seem to be a bad idea.
TinkerBrendie:
Weren’t loan agents in the habit of doing just that before the Clintons leaned on them, or was that only for loans in order to buy houses?