WaPo: The $698,000 Mistake

• November 30th 2009

by Mark Wellborn

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Last Friday, The Washington Post published a heart-wrenching account of a Maryland woman who was misled into thinking that she could buy a far more expensive home than she could afford. The piece is a fitting anecdote for the housing crisis that has plagued the entire country.

Back in 2006, 42-year-old Daverena White decided to buy a four-bedroom home in Clarksburg, MD for close to $700,000. Her own worries that she was stretching too much by buying the home were overshadowed by assurances from the seller, a loan officer, that she could. However, it is clear that the seller, Wendy Zhang, was the catalyst for the nightmare that followed.

From The Post about White’s experience at the settlement table:

At first it all seemed straightforward. Papers were read and presented, most of which White did not try to decipher. The type of financing that had started it all would later come to be known as a liar’s loan [100% financing] because it required no proof of income. White’s papers cited income of $163,320 a year, even though she says her 2005 income-tax earnings were less than $15,000 and she relied at times on food stamps.

The same papers showed how much she had in her bank account. The total was $14,026, appearing to reflect two deposits made the day before the closing, when a $7,000 check from Zhang’s husband was deposited into White’s account at 12:20 p.m., which was one minute after $6,000 in cash was added. A good-faith loan, Zhang would say later.

No loan at all, White would say, but rather an infusion of cash to make her appear qualified to the lender.

We highly recommend reading the full article here. Without giving much more away, we can tell you that the story does have a relatively happy ending.

This article originally published at http://dc.urbanturf.production.logicbrush.com/articles/blog/wapo_the_698000_mistake/1557.