From the San Francisco chronicle:
"Most foreclosures nowadays are homes purchased just a year or two ago with no money down. But the Gardners' home is different. Jo_ann's parents, Johnnie Gardner, 87, and Estelle, 88, bought the two-bedroom in the Sobrante Park neighborhood in 1954 for $11,500. His salary as an electrician at the Oakland naval shipyard allowed them to make the payments.

But in recent years, Jo_ann and her brother refinanced it several times for increasingly larger amounts.

The final refinance at the end of 2006 left the family owing $454,000. The monthly payments of $3,362 exceeded the household income of $3,144."

Link

Note: $11500 in 1954 is ~$80,000 in today's dollars.

I can't believe she's not in jail.

That's a clear case of elderly abuse. She refinanced and took out all the money and she doesn't know where the money went.

But somehow, she has money left to buy Hennessy.

Why is this woman not in prison?

This is a sad story, why would anyone do this to their parents?

lilstabber said:bigdinkel said:This is a sad story, why would anyone do this to their parents?

Greed. Unfortunately, this type of elderly abuse is quite common.

The biggest prey of the elderly is family members.

This makes me sick. I could never do this to my parents after all they have done for me. Greed is the root of all evil IMO

ehh sad. she had to quit her job to "fix" the house... idk what kind of renovation she was doing for half mil.

verruckterBaum said:$80,000 in 1954 (2008 dollars), $250,000 today

That's a 2.1% real rate of return. I love it when people tell me buying a house is the best investment I'll ever make.

you are not looking at it the right way

She should have lied and said the $450k went to health care expenses for her 2 parents.

Man, I sure hope someone investigate this and put her in jail. Her parents worked and saved their entire life for the house and they probably hope to leave it to her, but they never thought their daughter would refinance the house and use all all the equity to buy Henessey.

What the hell is she teaching her own kid? It's cool to take away everything your parent worked their entire life for?

The article states that "In late June, the home went up for foreclosure auction on the Alameda County Courthouse steps. There were no bids, so it reverted to National Asset for $170,000, property records show." They should have had a family member or relative purchase at the auction for that amount (or something higher), and they'd wipe the $200k+ off the mortgage, and keep the house. If they were smart enough, that's what they'd do, especially if the terms on the mortgage make it non-recourse.

Economist said:The article states that "In late June, the home went up for foreclosure auction on the Alameda County Courthouse steps. There were no bids, so it reverted to National Asset for $170,000, property records show." They should have had a family member or relative purchase at the auction for that amount (or something higher), and they'd wipe the $200k+ off the mortgage, and keep the house. If they were smart enough, that's what they'd do, especially if the terms on the mortgage make it non-recourse.

Aren't refinances in California nonrecourse?

JM80 said:verruckterBaum said:$80,000 in 1954 (2008 dollars), $250,000 today

That's a 2.1% real rate of return. I love it when people tell me buying a house is the best investment I'll ever make.

No it is about a 7.3% real rate of return, compounded once annually. This is not bad when you remember the fact that you live in that investment. Their adjustment is for inflation, which if you didn't realize, happens even if you are invested in the stock market or cds. Or as you may have meant, a net return adjusted for inflation of 3.4% annually.

By definition, a "real" rate of return means with the inflation component subtracted out. The 7.3% return would be the "nominal" rate of return. But yes, in addition to being an "investment," they also had a place to live. So to really compare, you'd need to also include the "imputed rent" as dividends on the investment to get a total rate of return.