Help Me With The Math Here
I'm no friend to Bank of America, as anybody who's read my chapter in I See Rude People on how their "security" practices put their customers at risk for identity theft knows.

I discovered that they had cheaped out on creating a single computer network to link all their banks, and that at teller windows at a branch where your account is not based, they may not be able to see much more than how much money you have in your account. Meaning that they can't read your pin or see identifying information -- that their security measures entail just "hoping it's you."

Asides aside, Bank of America is just one of the players in this story (and I do have to say that, as with GM, it is just disgusting that they've gotten ANY money from taxpayers).

My question from the headline, however, relates to loans and how they work. I don't really know because, naive little me, I didn't buy a house back when everybody was getting those ARMs, because...because I couldn't afford one! (I got a snotty message on facebook from author Francesca Lia Block. "I See Clever People," she wrote me -- about my post about how she bought a house she couldn't afford, "Gamble Big: If You Win, You Keep The Money; If You Lose, The Rest Of Us Bail You Out.")

Getting -- finally -- to the main meat of this blog item, Gale Holland writes in the LA Times of a foreclosure story. A woman, Dirma Rodriguez, with a severely disabled daughter, Ingrid Ortiz, and a house modified for her could lose it:

After she fell behind on her payments, the Bank of America lowered her monthly obligation, but then sold the house at a foreclosure auction last September. The new owner, a house flipper from El Segundo called West Ridge Rentals, moved to evict the family.

...Bank of America said last week it is considering a loan modification that would return the home to Rodriguez and her family.

...Ortiz, now 27, has cerebral palsy and does not speak. Her vision is poor, and she can walk with leg braces, but she generally finds it easier to slide around the house on her knees. She often cries and wails loudly.

The stucco house on South Rimpau Boulevard, which Rodriguez keeps immaculate, is custom-conditioned for Ortiz, with gleaming floor tiles to ease her movements and a wheelchair ramp. In the summer, Rodriguez spreads a blanket on the lawn so Ingrid can enjoy the sun and gaze at the dozens of unblemished rose bushes her mother planted in honor of her quinceañera.

...How and why this came to pass is in dispute. Rodriguez says the bank began returning her payments, then put her into foreclosure without notice. Bank of America spokesman Rick Simon said she received ample notification, and the foreclosure was aboveboard.

...Rodriguez owed $457,000 on the house; West Ridge picked it up for $300,100. You might wonder why Bank of America found it smarter to sell at a loss than to work out reasonable terms with Rodriguez, who made mortgage payments for more than 20 years without incident.

If, per Holland, she's owned this house for 20 years, that means she bought it in around 1992. I found the house with ease with methods I detail in I See Rude People (just call me Nancy Drool!), but price estimates for it on Zillow only go back to 2003. Back then, in 2003, it was estimated by Zillow to be worth about $275K.

I looked up what the LA real estate market was doing in the early 90s when Rodriguez bought the house. Here:

1990: Prices take a serious plunge. One article claims that housing booms are a bad thing and we should hope prices stay low. Increasing mortgage rates are blamed for the bust. The word "recession" is mentioned. Gloom and doom.

1991: A "dead cat bounce"? Some folks wondering if the bust has bottomed out or not. Sales are abysmal (e.g., -42%). Other parts of the country showing some signs of recovery.

1992: No one is buying; housing is an investment that no one will touch. Desperate political efforts being made to encourage house buying. Rock bottom prices and lower mortgage rates encourage some purchasing. The year ends with some buying. Another "dead cat bounce"? It's not clear.

1993: It's definitely a buyer's market. Some people are saddened by the fact that current prices are 50% of what they were in the 1980's. The housing bust in Southern California is clearly negatively impacting the California economy and the national economy at large. Sellers are desperate to sell (and some people taking extreme measures like putting huge "for sale" signs on their lawns for passing planes to see). Folks who waited out the boom to buy at the bottom are being handsomely rewarded for their patience. Proof-positive of the contrarian investing style -- be greedy when everyone is fearful and fearful when everyone is greedy. The "slump" may be ending.

Did she pay maybe $100,000 or $120,000, at most, for this house back then? It's not in a great neighborhood. And it was a really not great neighborhood back then.

This woman now owes $457,000 on the house. How? How? Even with what's there -- shiny floors and a wheelchair ramp and all -- how much can that stuff cost? Is there something I'm not factoring in? How much of a loan do you think she got?

Also, the woman apparently can't speak English well enough (or at all) to function without an interpreter. It can be hard to make it as somebody who's pretty good in the native language. How does somebody, as a non-English-speaker, buy a five-bedroom, four bath, 3,864 square-foot house on a 7,797 square-foot lot?

Some photos of the house here:

Tax assessor information: