Apparently the family got the home in 2005 then got a $450,000 second mortgage on it that they used to start a business, which failed. Now they’re about to lose the house.
What I wonder is why ABC didn’t have a clause in their contract saying they couldn’t remortgage or sell the house? You would think they would want the recipients of these things to keep them instead of being able to immediately turn around and sell them or something.
What has ABC to do with it? It’s the people’s house–and they made a bad financial decision about it. They took the risk, they take the consequences. I feel bad for anyone losing a home, but at present, there are too many folks struggling to keep their homes (or losing them) that did not get this gift from manna of a madeover home, so my sympathy is a bit cursory for this family.
I guess when they give you something, they really do GIVE it to you to do what you please with. I know it may be wrong to say, but they don’t seem to be too bright. You get a half a million dollar house for free then go and pawn it for some cheesy business idea which ends up tanking…not too swift there. Makes you wonder if they deserved the house in the first place.
Both of these statements are about as unfair as they could possibly be.
First off, there’s nowhere near enough information to judge whether the business they started was a good idea or not. Not in the article link, at a minimum.
Second, business starts are wealth creation events that imply more than a little risk and I, with four of them under my belt (one failure, one success, one sale, and one still in play) have always had to place life, home, and other assets on the line for the start up capital. The other alternative is going the angel investment means or borrowing from family (it’s doubtful that mezzanine-level traditional venture caps would touch a true rookie). From the evidence they had an idea, threw the dice, and like most, failed. But that doesn’t imply anything about their character other than that they are risk takers.
Do let me say, though, that the potential payoff for even a small start up that is successful is FAR in excess of anything the average nine-to-fiver will ever see. I’m biased, I know, as a business starter, but if the gain is worth the risk what’s the point in NOT taking the chance?
Well, they lost their home (their biggest asset) because of their choice, so there’s one reason to NOT take that chance.
Seems you have a positive bias toward starting businesses. I have a negative one, having almost lost our home due to my husband’s “start up” which essentially destroyed our financial security, our marriage and damaged our health. It took us over 4 years to get out of the sewer, and even now we’re not anywhere near where we could have been by now, but for that. But hey–gotta throw those dice, eh? Not me. YMMV.
I see evidence of poor financial decision making in that article. At least their kids’ college is (hopefully) paid for. Let’s hope they can’t touch it.
Whether we agree or disagree on the soundness of financial decisions that this couple made, I still don’t see why ABC would have to provide any type of clause in the contract like you mentioned. What would be the point of a house you couldn’t sell?(it’s not Winterthur or Sissinghurst). How is ABC culpable in any way for the choice made by this family? For someone who prides himself on being self made, aren’t you asking ABC to act as a sort of Sugar Daddy to these folks?
ETA: I can no longer read the article–I have to register?
My problem with this situation is that they were GIVEN so much by Extreme Makeover that they didn’t need some giant payoff. They had a great house, no mortgage, taxes paid for 20 years, maintenance fund, scholarships. All they needed to pay for was food, clothes, cars and toys. Instead they invested $450k in a failing construction business, and wind up in foreclosure. People, out of the goodness of their hearts, gave them pretty much a lifetime of financial security, and they pissed it all away for a shot at being rich.
This has been in the papers for several days down here, and most reports I’ve seen say that they have reached an agreement with the bank & will keep the home.
Well, the point would be to NOT lose your half million dollar mansion that’s paid off for the next 25 years. Especially when your business venture is a construction company in an economy where some analysts believe that there is already enough surplus housing to meet demands for the next three years (I don’t have a site, I read it one of the analyst reports my GF gets at her job rating (well…downgrading) mortgage backed bonds.)
Can I ask what sort of businesses you started? I am assuming some sort of high tech. You generally don’t hear too many people talking about how they are on their fourth roofing contractor start-up (unless they are shady and hiding from creditors and lawsuits).
I find the Extreme Makeover show repugnant anyhow. They basically take a family that did nothing other than have a good hard luck story and then build them a McMansion. It’s basically representative of the new American dream - living beyond your means without having to do shit.
Don’t forget formulaic. I found it interesting the first 2 or 3 times I watched it, but I can’t see how that kind of repetition is entertaining to anyone.
I’m not the entrepreneurial type, but I would not automatically blame a person for making a decision to start a business which ends in failure. It may be that they are poor managers, or it may be that they were unlucky about when and where they started their business.
Maybe I’ve been in LA too long but the idea of a ‘half million dollar mansion’ is inconceivable to me. That would barely cover a fixer upper around here.
Sorry, was out of contact over the weekend and let this drop off.
The reason I was speculating as to why ABC didn’t have some clause to prevent something like this from happening was because of potential negative publicity.
Extreme Makeover likes to pitch their “winners” as “This is a poor, honest, hardworking family who, though no fault of their own, has found themselves in a bad situation. They are good people and we need to help them.” Things like this make it look (correctly or incorrectly) more like “These are financial morons who couldn’t balance a checkbook if their lives depended on it and whose money mismanagement put them in the position they deserved to be in.” Since so much of the show depends on lots of donations from various companies and lots of volunteer help, too many things like this could hurt them when their former sponsors start going “Why should we help these people who are just going to throw it away anyway.”
The article (and I see it is behind a registration screen now too; sorry about that) contained a quote from the mayor of the town the house was in. He was one of the volunteers who helped work on the house and he said something like “It’s bad that so many people worked so hard to give them this and they just threw it away.”
As for them starting their own business, at the time the show aired they already owned their own security business. They decided to go into the construction business instead, just in time for the housing market to collapse. Since they were already running a business I assume they had some level of business savvy, it’s just that they went into the wrong business at the wrong time.
And Antinor01, the house really isn’t that much of a “mansion” by Atlanta standards either; that’s actually a fairly common price on a house around here. We do have some of the best housing prices in the country though; people who move here from other parts of the country are amazed at how much house you can buy here.
Too bad we have over 100,000 houses on the market here now.
This reminds me of a song by the 80’s band The Rainmakers called “Government Cheese”:
“Give a man a free house and he’ll bust out the windows
Put his family on food stamps, now he’s a big spender
no food on the table and the bills ain’t paid
'Cause he spent it on cigarettes and P.G.A.
They’ll turn us all into beggars 'cause they’re easier to please
They’re feeding our people that Government Cheese”
Granted, EHM is not the government, but I think the comparison still holds. Call me cynical.
(Still not sure what P.G.A. is, though…)
I saw a Flip This House from Dallas yesterday and it was something like four bedrooms and two baths, on pretty big lot, and they were hoping to fix it up and get $169K for it!! Or maybe $215K but still. It’s amazing how cheap Texas is, even in the city.
Extreme Makeover is one I miss. It’s so manipulative and I just think they could do ten very nice houses, with manageable property taxes resulting, for ten families with the resources they have. And sometimes they demo perfectly good houses that just need reno.
Harassed? You borrowed the money, pinhead, by leveraging a house that was gifted to you. You took the risk, you pay the loss. You wouldn’t be whinging away if you were reaping profits on a non-stupid investment, would you?
These pinheads deserve a pitting - they get a life-altering bonus dropped in their lap, then take a stupid, stupid risk, and then play the victim.
By all means, bet your free super duper house with enhanced financial security on building a construction company during a severe housing/construction sector correction.
I feel bad for anyone losing a home, but at present, there are too many folks struggling to keep their homes (or losing them) that did not get this gift from manna of a madeover home, so my sympathy is a bit cursory for this family.