WILTON, CT—Michael Chandler looks out the windows of his sun room, past the swimming pool and guest cottage, to the wide backyard where his two children are playing with their pet dalmatian, Scotty. At a time when Americans everywhere are sharing the struggle of a once-in-a-generation recession, Chandler can't help but wonder how he and his family fell through the cracks.
"It's just not fair," said the 49-year-old real estate developer and grandson of oil baron Duncan Chandler. "Everyone is worrying about an uncertain future and coming together to express their outrage, and I don't get to be a part of it."
Staring out at the ornate garden where workers were installing a large marble fountain, Chandler sighed and added, "It's like I don't even exist."
According to the multimillionaire, the past 18 months have been incredibly difficult to endure, as he is often left feeling excluded from an American populace that includes millions who struggle every day to make ends meet. Chandler, who watched helplessly as his enormous fortune easily withstood the market freefall, has been "completely left out" of one of this nation's most significant cultural moments.
"Everybody's suffering," Chandler said. "And here I am, not scrimping and saving at all, with no demoralizing periods of financial hardship, or frantic weeks living paycheck to paycheck. What about me, you know? Where's my struggle?"
"Everyone's supposed to get a fair shake at this misery," Chandler added. "Even incredibly wealthy people of privilege like me."
Throughout the economic downturn, Chandler has tried to tap into the recession and experience some of the sorrow and widespread desperation he has so cruelly been denied. Sadly, all of his attempts have been thwarted by his seemingly insurmountable stack of riches.
According to longtime financial adviser Ben Schultz, Chandler "constantly" inquires as to whether any of his diversely invested mutual funds are losing money, but is always let down.
"Michael's portfolio is better than ever, to be honest," Schultz told reporters. "In fact, his only real connection to the recession is that he helped to cause it by artificially inflating home prices and making millions off unstable derivatives trading."
Chandler has been so devastated by his inability to feel the same anguish and hopelessness the rest of the country is enduring that he took the extraordinary step last week of speaking openly with a chauffeur about how hard the recession has been on everyone. He even went so far as to tip the driver 50 percent less than usual in an attempt to show the man that he, too, was hurting financially.
"I kept waiting for him to say, 'Well, times are tough on all of us,' or 'Who isn't feeling the pinch these days, eh?'" Chandler said. "But he just seemed really angry."
Despite his best efforts, Chandler told reporters he knows that someday the crisis uniting so many of his fellow Americans will pass, and that the far-reaching anger will give way to the worship of money that preceded it.
But until then, he admitted, it will hurt to be excluded.
"Every month they announce tens of thousands of layoffs," Chandler said, "and every time, I'm not one of them. No matter what I say or do, it'll never be me. My only memory of this historic point in time will be the prosperity I have always known."
Added Chandler, "Dear God, when's this recession going to end?"
The difference a HELOC makes
Do you remember the chart of the options the lender and the borrower have in a delinquency?
HELOCs can be either a purchase money or a non-purchase money loan. For it to be a purchase money loan, it must be originated and fully used to purchase the property. The HELOC retains its non-recourse status up until the day the borrower first uses it for any purpose other than the purchase of the property. For instance, if a borrower uses a $132,216 HELOC to purchase a property (as today's featured owner did), and he borrowed all $132,216 to buy the property (no way to know on my end), the loan is non recourse. However, as time goes by and the borrower pays down the loan, there is equity available for the borrower to extract. The moment they do, all non-recourse protections are lost.
This issue becomes very important to today's featured property owner. It determines whether or not he walks away with no further responsibility to the lender for the debt, or if he falls down to the last three options on the chart -- none of which are very appealing. The property was purchased for $661,500 on 12/22/2005. The owner used a $528,864 first mortgage, a $132,216 HELOC, and a $420 down payment.
In either case, the sale of this property is going to ruin this guy's credit, but whether or not he used that HELOC determines if he only loses $420 or $132,216. That is quite a difference.
Home Purchase Price … $661,500 Home Purchase Date .... 12/22/2005
Net Gain (Loss) .......... $(220,640) Percent Change .......... -33.4% Annual Appreciation … -6.8%
Cost of Ownership ------------------------------------------------- $469,000 .......... Asking Price $16,415 .......... 3.5% Down FHA Financing 4.25% ............... Mortgage Interest Rate $452,585 .......... 30-Year Mortgage $88,992 .......... Income Requirement
$2,226 .......... Monthly Mortgage Payment
$406 .......... Property Tax $300 .......... Special Taxes and Levies (Mello Roos) $39 .......... Homeowners Insurance $300 .......... Homeowners Association Fees ============================================ $3,272 .......... Monthly Cash Outlays
-$352 .......... Tax Savings (% of Interest and Property Tax) -$624 .......... Equity Hidden in Payment $25 .......... Lost Income to Down Payment (net of taxes) $59 .......... Maintenance and Replacement Reserves ============================================ $2,381 .......... Monthly Cost of Ownership
Cash Acquisition Demands ------------------------------------------------------------------------------ $4,690 .......... Furnishing and Move In @1% $4,690 .......... Closing Costs @1% $4,526 ............ Interest Points @1% of Loan $16,415 .......... Down Payment ============================================ $30,321 .......... Total Cash Costs $36,400 ............ Emergency Cash Reserves ============================================ $66,721 .......... Total Savings Needed
Property Details for 208 GUINEVERE Irvine, CA 92620 ------------------------------------------------------------------------------ Beds: 3 Baths: 2 full 1 part baths Home size: 1,950 sq ft ($241 / sq ft) Lot Size: n/a Year Built: 2006 Days on Market: 164 Listing Updated: 40449 MLS Number: S616084 Property Type: Condominium, Residential Community: Woodbury Tract: Wdgp ------------------------------------------------------------------------------ According to the listing agent, this listing may be a pre-foreclosure or short sale.
This is a three bedroom townhome style open floorplan that is perfect for entertaining. Bring your must discerning buyer and notice all the fine detail in the finely open gourmet kitchen. could have a main floor bedroom or office. Woodbury is one of the nations finest communties with a walk to destination mall amenties to fit any five star accomodations and the finest schools. Come see this gem. Model perfect.
communties? amenties? accomodations?
I hope you have enjoyed this week, and thank you for reading the Irvine Housing Blog: astutely observing the Irvine home market and combating California Kool-Aid since 2006.
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