WaPo: The $698,000 Mistake

by Mark Wellborn


Last Friday, The Washington Post published a heart-wrenching account of a Maryland woman who was misled into thinking that she could buy a far more expensive home than she could afford. The piece is a fitting anecdote for the housing crisis that has plagued the entire country.

Back in 2006, 42-year-old Daverena White decided to buy a four-bedroom home in Clarksburg, MD for close to $700,000. Her own worries that she was stretching too much by buying the home were overshadowed by assurances from the seller, a loan officer, that she could. However, it is clear that the seller, Wendy Zhang, was the catalyst for the nightmare that followed.

From The Post about White’s experience at the settlement table:

At first it all seemed straightforward. Papers were read and presented, most of which White did not try to decipher. The type of financing that had started it all would later come to be known as a liar’s loan [100% financing] because it required no proof of income. White’s papers cited income of $163,320 a year, even though she says her 2005 income-tax earnings were less than $15,000 and she relied at times on food stamps.

The same papers showed how much she had in her bank account. The total was $14,026, appearing to reflect two deposits made the day before the closing, when a $7,000 check from Zhang’s husband was deposited into White’s account at 12:20 p.m., which was one minute after $6,000 in cash was added. A good-faith loan, Zhang would say later.

No loan at all, White would say, but rather an infusion of cash to make her appear qualified to the lender.

We highly recommend reading the full article here. Without giving much more away, we can tell you that the story does have a relatively happy ending.

See other articles related to: the washington post, horror stories, editors choice

This article originally published at http://dc.urbanturf.com/articles/blog/wapo_the_698000_mistake/1557


  1. B said at 12:47 pm on Monday November 30, 2009:

    I’m sure there will be mixed reaction to the buyer’s plight, especially the ill-advised decision to sign for unaffordable loans.  However, it seems downright criminal that the seller manipulated the buyer’s application to deceive the lenders into approving the qualifications for the loan.  The seller pumped the buyer’s bank account at the 11th hour to create an appearance of assets which did not exist.  The Buyer gets a financial nightmare while the seller clears a $200K windfall.  I found the seller’s actions utterly reprehensible.

  1. KStreetQB said at 1:58 pm on Monday November 30, 2009:

    I’m afraid that many buyers were swindled long ago by an education system that does not promote financial literacy. However, I find it hard to sympathize with Ms. White despite the predatory practices of the lender, agent and sellers. You don’t need anything more than a basic concept of arithmetic to know that a $1,250 monthly income will not cover a $5,000 mortgage + utilities and living expenses.

    I hope she comes out of this mess, and that the actions of the other parties involved are punished to the full extent of the law, but there are many other cases where individuals who found themselves in trouble were presented with something they COULD afford but did not have the ability or representation to fully understand the moderately complex agreement into which they were entering.

  1. Georgetowner said at 5:04 pm on Monday November 30, 2009:

    I agree with KStreetQB… what kind of a person walks into a closing not having a clue what her monthly payments would be?  She “thought” she could afford $2000 and was hoping that that was her monthly payment.  When she was told it would be over $5000, she knew she couldn’t afford that and signed anyway.

    I feel bad for her kids, but I have a hard time feeling sorry for her.

    As for the seller/mortgage broker, her ass belongs in jail.  Her husband too.

  1. B said at 5:46 pm on Monday November 30, 2009:

    At worst the buyer was naive and the damage was inflicted squarely upon herself and her family.  The sellers committed blatant fraud to complete the transaction and profitted handsomely by their deceit.  Just because you rob someone gullible enough to think you’re doing them a favor doesn’t excuse the crime. 

    There is a clear victim here and a clear perpetrator.  You can argue about the buyer’s lack of financial literacy and highly questionable decision making, but that doesn’t erase the fact that she was a victim of fraud.  Any remotely reputable broker would have simply denied her application given her lack of assets and inability to meet the loan demands.

  1. Anon said at 11:44 am on Tuesday December 1, 2009:

    This is a good reason why buyers should have a real estate agent representing them in their purchase decision with a signed buyer-broker agency agreement.  That way the agent has a fiduciary responsibility to the buyer.

  1. Geori said at 12:00 pm on Tuesday December 1, 2009:

    KStreetQB is right.  The buyer knew it was too good to be true.  Forrest Gump would know that.  If you only make $1250 a month and that’s less than your monthly payment (even on a IO note), you are going broke.

  1. B said at 1:54 pm on Tuesday December 1, 2009:


    And she did go broke, so what’s your point?  There were consequences for the buyer actions and mistakes.  The sellers cleared $200K on for their willful deceit and criminal behavior.

  1. Rob said at 5:35 pm on Tuesday December 1, 2009:

    I’m not sure this was actually a bad deal for the buyer.  Yes, her credit is ruined.  But she got to live in a half-million-dollar house for more than two years, for free (she never made any payments with her own money).  There are a lot of people who’d be happy to take that trade.

    The real victims here are the investors who loaned that money that will never be paid off (and probably all of us taxpayers, since I’m sure the government got stuck with at least part of that loss).

  1. blah said at 5:54 pm on Tuesday December 1, 2009:

    I lifted this from the comments section of the WaPo…
    Boy, do I feel like a schmuck. This woman wasn’t “on and off public assistance”. She was always “on”. From the get-go (b/4 buying the house) she was getting Section 8. And it wasn’t a “mistake”, as the headline says. She’s a TAKER; she had been GIVEN everything else, why not a house?!

    Let’s add up all the “assistance” (total support) she got.

    —-She was getting Section 8.

    —-Also was putting money in some “county program” to save for a house; was it subsidized?

    —-Sellers gave her $40,000 cash.

    —-Sellers paid the first two pmts; she only made 4 1/2 payments, total about $25k—-meaning she spent the rest of the $40k.On what? We know she didn’t use it to pay her utility bill.

    She goes months without working, then gets the Comcast job. But apparently quits a short time later to run her home care business…“six months later had only one steady family paying $90 a week”.

    —-She lived in the house for SEVENTEEN MONTHS, paying nothing.

    —-County then paid for motel rooms.

    —-County “arranged for” the new apartment, with a monthly rental payment of $1,124, “ALL of it subsidized for the time being”.

    —-County paid for car repair (Why did she pay if the car wouldn’t start?!).

    —-So what did she do when she owed the gas bill and car wouldn’t start? She “began calling churches and social service groups”. Always looking for a handout.

    —-Finally, the county (again) paid the gas bill and a fried gave her a car battery.

    —-Lastly, I couldn’t help but notice that, while supposedly dead broke, one son was playing on his video game. Another was on his computer. Priorities, bah.

    This woman isn’t the victim and she isn’t stupid. In the 80’s we called them “Welfare Queens”. Of course, that’s now verbotin, but the outcome is the same. Throughout this saga, her answer to every problem was to get someone else to pay. She knows how to game the system. And, in the end, she won…she’s living in a nice new apartment complex, paid for by you and me. The article doesn’t mention it, but she must also be getting some form of welfare for the children.

    It’s hard enough paying all my bills, sending in my taxes, tightening my belt without the insult of having to completely support a lazy, overly entitled woman who won’t lift a finger to support her fatherless children. And it’s even worse when you realize those children will grow up with exactly the same expectations.

    I’m sick of it.

  1. dave said at 5:00 am on Wednesday December 2, 2009:

    As long as dumbasses exist, there will be jackasses to take advantage of them.

  1. Doug Francis said at 5:54 pm on Friday December 4, 2009:

    This is an example of a conspiracy, and when I read that article last week it was obviously an open and shut case of fraud.

    The Seller was the lender, her husband was the real estate agent, and the buyer was getting something for nothing. Sorry to say that this is an example duplicated many times over.

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