Thursday, February 07, 2008

The Story of Kevin Mims

A free-lance writer and commentator by the name of Kevin Mims did a piece on the American Public Media financial radio show "Marketplace" today. In it, he provided his own personal "subprime crisis" story. The entire transcript and streaming audio can be found on the Marketplace site, but here are the relevant excerpts:

..four years ago we bought an 80-year-old home in a nice Sacramento neighborhood. My wife, an escrow officer, and I, a notary public, were earning good money. We had every intention of staying here forever, but the subprime lending crisis has triggered another real estate meltdown. Now my wife's salary has been cut and her bonuses eliminated. My notary work has dwindled to a trickle. It becomes more difficult to make our house payment each month.

Financially it doesn't make sense to even try. We owe about $430,000 on the house. It's currently worth no more than $400,000. Selling isn't an option. Sooner or later we will probably give up another home to foreclosure. The interest rate is competitive, six and an eighth, and it's fixed until August of 2012. A sudden upward adjustment of our loan won't force us out. It's the sudden decrease in our incomes.

Of course, this isn't the whole story. Agent Bubble was kind enough to fill in the blanks in the Mims' timeline:

June 2004: Original purchase for $350,000 ($315,000 first from Saxon, $35,000 down)
February 2006: $100,000 cash out from JP Morgan
June 2007: Refi into a $360,000 first and $67,500 second from NL Inc

For some reason, Mims forgot to mention that $100K in cash he took out two years ago in his tale of woe. The last part of his commentary really goes for the jugular:
On the bright side, my stepdaughters are grown up. We won't have to uproot them. The only downside for them is, they may end up housing us for awhile.
This guy blew $100,000 in two years and now he want to move in with his kids? And sympathy from the Marketplace audience? Is he joking?!

I wonder what he spent the money on?


Agent Bubble had this to add:
One thing on your post...The following line:

($315,000 first from Saxon, $35,000 down)

I'm not 100% certain they put the $35K down. The tax records don't go far enough back to see. I can only assume that since it happens to be 10% of the purchase price.


wannabuy said...

Hey, $100k is barely a Hummer, a few trips, and at most $30k of much needed clothing...


Got popcorn?

Anonymous said...

I sent Market Place an email to ask if they could 'confirm' that info ;-) Will be interesting to see if they reply.

... said...

80 year old home - I bet some was needed there.

Josh said...

80 year old home - I bet some was needed there.

Whatever. At this point, I don't think the particulars really matter. The guy painted himself as some kind of victim, when in reality he simply spent the money.

My guess is if he or his wife had some kind of medical issue or quote unquote "legitimate" expense, he would have mentioned it in his commentary.

Why didn't he just admit the truth? "My wife and I got carried away spending our HELOC on (X), and now we're losing our house." I'm sure millions of Americans can relate.

Kimberly Michelle said...

Here's the rest of the story:

He's never been steadily employed and has been in financial distress multiple times. It's not a sob story... life and living within their means has caught up with these people yet again.

Kimberly Michelle said...

Max said...

It's not a sob story... life and living within their means has caught up with these people yet again.

Man, this guy is so smug it's driving me up a wall. That NY Times story only makes my point further: Mims is perfectly aware of his failings, yet he does nothing about them.

This is what I call hostile insecurity. The world does not owe this guy a living. His wife's ex will have a comfortable retirement earned by driving a bread truck! This dude took it easy for 30 years trying to become a writer, blowing through $100,000 in the last two years alone.

Obviously they weren't living within their means if they're in this situation.

patient renter said...

Great detective work! I caught marketplace last night but didn't hear that story... maybe dazed off or something.

You guys should DEFINATELY report back to them what you found (maybe directly to a producer or editor). Being that Mims works for them, I don't support we'll get a followup story, but if it makes him sweat a bit I think it should be done.

patient renter said...

May I also take this opportunity to point out that this is EXACTLY why a bailout (the things proposed by certain leading Pres. candidates) is a moral hazard.

We're going to bailout a douchebag like this, with our money!? Give me a freaking break!

... said...

He's just a part of the real estate papparazzi machine - $$ for your sexy RE story!

smf said...

"Hey, $100k is barely a Hummer, a few trips, and at most $30k of much needed clothing..."

Since a lot of these idiots thought this was 'free' money, they spent it...unwisely. Money can quickly slip thru your fingers when you don't know HOW to spend it.

"We're going to bailout a douchebag like this, with our money!?"

Yes, but I still get a sense of satisfaction when those who thought they had money lose it all. Nothing worse than falling down from a high, a high that you can never reach again. My life has always gone up little by little. I don't look back and pine for the 'good old days' as a lot of these morons will.

Anonymous said...

He wants it to look like the market took all his equity, when in reality he used his home as a line of credit and spent all his equity. I'd love to know what percentage of the current foreclosures are similar stories. Home values have only come down about 30% in Sacramento, and since they rose more than 30% from 2003-2005, there should really only be a small window of buyers who would now be upside down; and even those should only be the one's that had little or no down payments.

Josh said...

I don't look back and pine for the 'good old days' as a lot of these morons will.

I just look back at all the years we've been saving up, remembering how hard it's been to have what we have in the bank. Going to school, paying our dues at work, and only in the last couple of years are we finally beginning to enjoy the fruits of our labor.

Knowing our best days are ahead of us: priceless.

PeonInChief said...

Actually the market may end up taking all of his equity,even with the $100,000 withdrawal. If he paid $365,000 for it originally and it's now worth $400,000, a 10% decline in value this year will leave him upside down anyway.

PeonInChief said...


A 30% increase is not the same as a 30% decline. A simple example: a house costs $100,000 in 2001 and $200,000 in 2005, an increase of 100%. The price falls 50%--back to $100,000. So our example house could rise from $100,000 to $130,000, a 30% increase. But if the price then falls 30%, the price has fallen $39,000, to $91,000.

patski said...

kevin mims, "the writer"

patski said...

Unknown said...

Hey, I appreciate all the interest in my Marketplace commentary, and I apologize if anything I wrote was misleading. It wasn’t my intention to argue in favor of a government bailout for troubled homeowners or to portray mortgage lenders as predatory. I took pains to point out that my mortgage is a good one, with a competitive rate and fixed for five years. The point I was trying to make was that if your income is dependent on the real-estate industry (as mine and my wife’s are), then the current real-estate downturn can hurt you even if you have a good loan. It is absolutely true that Julie and I took out a home-equity line of credit after purchasing the house. The house was in need of a lot of serious repairs when we bought it. The heating-and-air system was over thirty years old and failed in our second summer in the home. We also spent money on improvements that were entirely cosmetic (landscaping, etc) and which in retrospect we probably shouldn’t have undertaken. And I can’t deny we blew money on stuff that had nothing to do with home-improvement.

My Marketplace commentary came about in a curious fashion. I had submitted commentary to the program before but had never had a piece accepted. Somehow, though, I must have gotten included in the program’s database of potential freelance contributors. On January 8th I received an email from Marketplace (apparently sent out to lots of other people as well) that asked “What’s Your Real Estate Plan for ’08?” I was invited by Marketplace to fill out a questionnaire which asked for responses to such things as “Describe your real estate situation,” “Describe the best and worst aspects of your current situation,” “What if any difficulty do you anticipate with your real-estate plan this year?” And so forth. I filled out the questionnaire and sent it back. The only thing about my situation that I could think of that might be unique was the fact that I had lost a home to foreclosure in a previous down market and now, 27 years later, was facing the same thing all over again. So I mentioned this in my questionnaire answers. A Marketplace reporter contacted me and asked if she could interview me for the program. I told her that, as a freelance writer, I would rather tell my story myself via a commentary. She arranged for this to happen. Alas, I was permitted only 300 words or so, which made it impossible for me to describe every aspect of my situation. Thus, I described only what I thought might interest people: the fact that for the second time in our lives my wife and I were facing foreclosure as a result of a real-estate downturn. Had I more time, I would gladly have spelled out that this situation is primarily due to our own failure to plan properly for hard times. Anyone who has read my New York Times Modern Love piece knows that I am not shy about fessing up to the fact that I am a poor breadwinner and an all-around financial loser. I never meant to imply that I have been victimized by corrupt lenders or that I endorse a real-estate bailout by the federal government. Again, I apologize if my piece gave anyone the wrong impression about my situation. Marketplace should not be held responsible for this failing on my part. I’ll try to do better next time.

--Kevin Mims

Anonymous said...

How bored must you people be, Oh wait Real Estate Market is down so this must be what you do all day, if you read the article, it was nothing but his personal situation, he isn’t blaming anyone
the market is down and many, many people are in foreclosure, good people, Why don’t you people back off, and find yourself another victim, You have no idea what kind of man Kevin is, I’m glad that you all have done so well and made perfect choices. I’m sure your life is very boring. I could sit here and bash all of you all day , But I don’t know you do I , Just like you don’t know Kevin.

Moose1971 said...

Whoa!! Let's all back up a bit. While I staunchly believe we are all responsible for our own choices and consequences, who among us thought the market would get THIS BAD, THIS QUICKLY? As a mortgage professional for 15 years, I THOUGHT I had seen ups and downs and prepared accordingly..but this drastic turn has taken many professionals who rely on real estate by surprise and dictated unforseen consequences. It wasn't risky loans NOR the 100K cash out..(and 80 year old home would certainly need that) that is causing the lion's share of Mim's plight. It is the UNPRECENDENTED collapse of the ENTIRE industry that is severely impacting their income. Shame on those who look upon this story with blame, judgement and disdain! It appears the only person in this story NOT looking to point a finger is Mim's himself. We all plan for a certain degree of ups and's market, however, is a completely different animal.