How My Parents Lost Their House

[Arcachon]

http://www.bigfatpurse.com/2014/08/h...t-their-house/

My parents were born in the 50s and can be considered the Second Generation Singaporeans.

They weren’t highly educated but they worked hard. It is typical for that Generation of Singaporeans to be considered highly educated if you have passed the Cambridge ‘O’ Levels. My parents had Primary School qualifications.

They didn’t earn a lot but they had enough to get by.

Life could be better but it wasn’t that bad after all. There was nothing to complain about.

Like the rest of their peers, my parents found themselves working in the fast growing Singapore in the 80s to 90s. They contributed to the economic success of Singapore and also get a share of the wealth creation.

For example, they were the beneficiaries of the record low HDB prices we probably won’t see ever again. My parents bought their matrimonial house, a brand new 4-room flat in Tampines from HDB for $50,000.

In 1997, the house was worth $320,000! I bet my parents were not the only ones who benefited. I would say majority of the Singaporeans made a fortune from properties. However, the wealth paths started to diverge among the Singaporeans. Those who managed the profits well continue to prosper, owning multiple properties. Those who squandered away the profits ended up much poorer relatively. Unfortunately, my parents belonged to the latter.

My parents decided to move to a place closer to city and they bought a 4-room flat for $420,000 in the resale market. And it wasn’t surprising that the interest of moving was during the property market frenzy in 1997. If you do not remember, it was the peak of the Singapore property market before the Asian Financial Crisis. This is what psychology can do to you – fuel your greed and entice you into actions that are detrimental to your wealth.

They sold the old house for $320k and due to a positive sale, they got several hundred thousands in cash after repaying the mortgage payments to their CPF accounts! On hindsight, I would have hoped that they downgraded to a cheaper place and invest the extra cash wisely. Too bad that I do not care about money in my teens to give meaningful opinions to my parents. They didn’t use much of the proceeds as down payment for the new house and instead, took a brand new 25-year loan. They probably also did not know where the money went to after all these years.

Fast forward to 2007. The CPF Board notified my Dad that his CPF account has no money left. This means that my dad has to cough up $750 cash for mortgage repayment each month, on top of the deduction from my mum’s CPF account. To make things worse, my mum’s CPF does not have much to last for another 15 years of mortgage repayment. Even if they could, they would be asset-rich but cash-poor.

The decision was to sell the house and downgrade to a 3-room flat. They sold the house and we moved to my Grandparents’ place before getting a new place. Unfortunately we were caught in the property boom ever since and we didn’t manage to get a place. With the minimum sum kicking in for their age, my parents are unlikely able to afford a house.

I believe most Singaporeans were given a chance, or even chances. Was it because the lack of financial literacy that resulted in financial hardships? To me, most of the problems are created by ourselves, not because of circumstances. It is easy to complain but on reflections we may have no one to blame except ourselves.

However, I do not blame my parents for the lack of financial literacy. They only believed in working hard and no one emphasised the importance of financial literacy to them. I am thankful for their mistakes. They have taught me about finance albeit indirectly. They showed me how costly wrong financial decisions can be. A single decision can wipe out years of hard work. They paid for the lesson and I am not going to pay for the lesson again.

I hope this story can help you as much as it had helped me. Please do not think you can afford to be financially illiterate in a capitalist society.

- See more at: http://www.bigfatpurse.com/2014/08/h....tDPZ9sX6.dpuf

[Kelonguni]

http://www.bigfatpurse.com/2014/08/h...t-their-house/

My parents were born in the 50s and can be considered the Second Generation Singaporeans.

They weren’t highly educated but they worked hard. It is typical for that Generation of Singaporeans to be considered highly educated if you have passed the Cambridge ‘O’ Levels. My parents had Primary School qualifications.

They didn’t earn a lot but they had enough to get by.

Life could be better but it wasn’t that bad after all. There was nothing to complain about.

Like the rest of their peers, my parents found themselves working in the fast growing Singapore in the 80s to 90s. They contributed to the economic success of Singapore and also get a share of the wealth creation.

For example, they were the beneficiaries of the record low HDB prices we probably won’t see ever again. My parents bought their matrimonial house, a brand new 4-room flat in Tampines from HDB for $50,000.

In 1997, the house was worth $320,000! I bet my parents were not the only ones who benefited. I would say majority of the Singaporeans made a fortune from properties. However, the wealth paths started to diverge among the Singaporeans. Those who managed the profits well continue to prosper, owning multiple properties. Those who squandered away the profits ended up much poorer relatively. Unfortunately, my parents belonged to the latter.

My parents decided to move to a place closer to city and they bought a 4-room flat for $420,000 in the resale market. And it wasn’t surprising that the interest of moving was during the property market frenzy in 1997. If you do not remember, it was the peak of the Singapore property market before the Asian Financial Crisis. This is what psychology can do to you – fuel your greed and entice you into actions that are detrimental to your wealth.

They sold the old house for $320k and due to a positive sale, they got several hundred thousands in cash after repaying the mortgage payments to their CPF accounts! On hindsight, I would have hoped that they downgraded to a cheaper place and invest the extra cash wisely. Too bad that I do not care about money in my teens to give meaningful opinions to my parents. They didn’t use much of the proceeds as down payment for the new house and instead, took a brand new 25-year loan. They probably also did not know where the money went to after all these years.

Fast forward to 2007. The CPF Board notified my Dad that his CPF account has no money left. This means that my dad has to cough up $750 cash for mortgage repayment each month, on top of the deduction from my mum’s CPF account. To make things worse, my mum’s CPF does not have much to last for another 15 years of mortgage repayment. Even if they could, they would be asset-rich but cash-poor.

The decision was to sell the house and downgrade to a 3-room flat. They sold the house and we moved to my Grandparents’ place before getting a new place. Unfortunately we were caught in the property boom ever since and we didn’t manage to get a place. With the minimum sum kicking in for their age, my parents are unlikely able to afford a house.

I believe most Singaporeans were given a chance, or even chances. Was it because the lack of financial literacy that resulted in financial hardships? To me, most of the problems are created by ourselves, not because of circumstances. It is easy to complain but on reflections we may have no one to blame except ourselves.

However, I do not blame my parents for the lack of financial literacy. They only believed in working hard and no one emphasised the importance of financial literacy to them. I am thankful for their mistakes. They have taught me about finance albeit indirectly. They showed me how costly wrong financial decisions can be. A single decision can wipe out years of hard work. They paid for the lesson and I am not going to pay for the lesson again.

I hope this story can help you as much as it had helped me. Please do not think you can afford to be financially illiterate in a capitalist society.

- See more at: http://www.bigfatpurse.com/2014/08/h....tDPZ9sX6.dpuf

Actually still a dozen options for the parents. Can go for rental flats, move to Malaysia, live with their child who is now financially literate.

[vip]

This is a typical case of sell high buy high. It is difficult to profit from your home. Once you stay in a property, whether its value goes up or down has little to do with you now. It is because you need a roof over your head under all circumstances.

Always make it a point to separate your home from your investment.

Read my blog post "It’s not easy to profit from your home".

[Arcachon]

http://www.theonlinecitizen.com/2011...homeless-soon/

It was 8 p.m. on a Thursday night when our first couple came for financial counseling.

Mr Lim (not his real name) is a 47-year-old taxi driver and a bankrupt. Mrs Lim is an accounts executive. They have three children – two are in school and one is in National Service.

They have obtained permission from the Official Assignee to sell their Executive Condo (EC), so that they can try to clear their debts and buy a resale HDB flat. However, HDB sent them a letter, dated 1 June, rejecting their appeal through their Member of Parliament (MP) for a HDB Concessionary Loan.

Over the last few months, they have appealed a few times directly to the HDB and also through their MP.

EC owners not eligible

The HDB letter of rejection states that:

“… applicants who wish to apply for a second HDB concessionary loan must meet all the eligibility requirements, one of which is that they must not own/have an interest in any private property, including Executive Condominium (EC).

You are currently owning an EC. Hence, your household is not eligible for a second HDB concessionary loan.

From the documents submitted, we gathered that you are selling your EC at $954,000. After deducting the outstanding loan of $276,000, your wife and you are expected to receive CPF refunds of about $431,000 and cash proceeds of about $213,000. You have informed that you use about $106,000 to discharge from bankruptcy, $70,000 to settle your wife’s debts and the rest for your children’s university fees.

Your wife and you may wish to use your combined CPF refunds and available cash savings to outright purchase an affordable flat, before using the balance to settle your debts.”

Facing bankruptcy and homelessness

As Mr and Mrs Lim have been trying to explain to the HDB in their appeals, it is the Official Assignee’s requirement when permission was given to sell their EC that the cash proceeds must be used to discharge his bankruptcy debts, and that his wife’s debts must be cleared because she may be made bankrupt too and thus not be able to purchase a resale flat. Their combined net income is already insufficient to pay for their EC mortgage monthly repayments and the minimum monthly repayments on Mrs Lim’s credit card debts, as well as the cash-over-valuation for a resale flat.

Mrs Lim’s credit card debts of over $70,000 were primarily incurred to keep their home for the last seven years, which has a monthly mortgage of over $2,000. They won’t have this problem, if theirs is a HDB flat, as HDB flat sales proceeds are protected from creditors.

Since some EC owners may in a sense have been forced by HDB to buy, because they exceeded the Income Ceiling of $8,000 for HDB flats, why are they being discriminated as never ever needing a second HDB concessionary loan like Mr and Mrs Lim?

How can the HDB assume that all EC owners can get a bank loan?

Singaporeans who are undischarged or discharged bankrupts, have adverse Consumer Credit Bureau credit records, have been sued in their lifetime for a debt, loan quantum less than $100,000, etc, are typically denied housing loans by banks.

This leaves them short of about $30,000 to $50,000 (depending on the resale flat’s COV), which they are asking the HDB to lend to them as a second HDB concessionary loan, because no bank will lend them a housing loan as the husband is a bankrupt.

Second concessionary loan eligibility?

As we try to explain the HDB’s new second concessionary loan eligibility requirements which were changed last year to allow downgraders to be eligible, but at the same time imposed more stringent eligibility requirements such as that half of the cash proceeds from the previous flat’s sale must be utilised for the resale flat, Mrs Lim broke down and kept saying she cannot understand why they have $431,000 of CPF but yet they can’t buy a resale flat, because of HDB’s policies.

We tried to console her by saying that as there is now a new National Development Minister, who has been saying almost every other day that he will look into the HDB’s policies and help Singaporeans who may be suffering from their HDB housing problems, that hopefully the policies which affect Singaporeans like them may be reviewed soon.

Homeless soon?

Although we all put up a brave face and tried to console Mrs Lim that the new Minister may look into issues like theirs soon – we knew deep down in our hearts that they may be homeless, by the middle of next month, as they had already signed the documents to sell their EC following the Official Assignees’ approval.

Alex Lew, Lee Mei Wei, Ko Siew Huey and Leong Sze Hian provide free financial counseling every Thursday from 8 – 10 pm., at Block 108, Potong Pasir Ave 1.

[august]

http://www.theonlinecitizen.com/2011...homeless-soon/

It was 8 p.m. on a Thursday night when our first couple came for financial counseling.

Mr Lim (not his real name) is a 47-year-old taxi driver and a bankrupt. Mrs Lim is an accounts executive. They have three children – two are in school and one is in National Service.

They have obtained permission from the Official Assignee to sell their Executive Condo (EC), so that they can try to clear their debts and buy a resale HDB flat. However, HDB sent them a letter, dated 1 June, rejecting their appeal through their Member of Parliament (MP) for a HDB Concessionary Loan.

Over the last few months, they have appealed a few times directly to the HDB and also through their MP.

EC owners not eligible

The HDB letter of rejection states that:

“… applicants who wish to apply for a second HDB concessionary loan must meet all the eligibility requirements, one of which is that they must not own/have an interest in any private property, including Executive Condominium (EC).

You are currently owning an EC. Hence, your household is not eligible for a second HDB concessionary loan.

From the documents submitted, we gathered that you are selling your EC at $954,000. After deducting the outstanding loan of $276,000, your wife and you are expected to receive CPF refunds of about $431,000 and cash proceeds of about $213,000. You have informed that you use about $106,000 to discharge from bankruptcy, $70,000 to settle your wife’s debts and the rest for your children’s university fees.

Your wife and you may wish to use your combined CPF refunds and available cash savings to outright purchase an affordable flat, before using the balance to settle your debts.”

Facing bankruptcy and homelessness

As Mr and Mrs Lim have been trying to explain to the HDB in their appeals, it is the Official Assignee’s requirement when permission was given to sell their EC that the cash proceeds must be used to discharge his bankruptcy debts, and that his wife’s debts must be cleared because she may be made bankrupt too and thus not be able to purchase a resale flat. Their combined net income is already insufficient to pay for their EC mortgage monthly repayments and the minimum monthly repayments on Mrs Lim’s credit card debts, as well as the cash-over-valuation for a resale flat.

Mrs Lim’s credit card debts of over $70,000 were primarily incurred to keep their home for the last seven years, which has a monthly mortgage of over $2,000. They won’t have this problem, if theirs is a HDB flat, as HDB flat sales proceeds are protected from creditors.

Since some EC owners may in a sense have been forced by HDB to buy, because they exceeded the Income Ceiling of $8,000 for HDB flats, why are they being discriminated as never ever needing a second HDB concessionary loan like Mr and Mrs Lim?

How can the HDB assume that all EC owners can get a bank loan?

Singaporeans who are undischarged or discharged bankrupts, have adverse Consumer Credit Bureau credit records, have been sued in their lifetime for a debt, loan quantum less than $100,000, etc, are typically denied housing loans by banks.

This leaves them short of about $30,000 to $50,000 (depending on the resale flat’s COV), which they are asking the HDB to lend to them as a second HDB concessionary loan, because no bank will lend them a housing loan as the husband is a bankrupt.

Second concessionary loan eligibility?

As we try to explain the HDB’s new second concessionary loan eligibility requirements which were changed last year to allow downgraders to be eligible, but at the same time imposed more stringent eligibility requirements such as that half of the cash proceeds from the previous flat’s sale must be utilised for the resale flat, Mrs Lim broke down and kept saying she cannot understand why they have $431,000 of CPF but yet they can’t buy a resale flat, because of HDB’s policies.

We tried to console her by saying that as there is now a new National Development Minister, who has been saying almost every other day that he will look into the HDB’s policies and help Singaporeans who may be suffering from their HDB housing problems, that hopefully the policies which affect Singaporeans like them may be reviewed soon.

Homeless soon?

Although we all put up a brave face and tried to console Mrs Lim that the new Minister may look into issues like theirs soon – we knew deep down in our hearts that they may be homeless, by the middle of next month, as they had already signed the documents to sell their EC following the Official Assignees’ approval.

Alex Lew, Lee Mei Wei, Ko Siew Huey and Leong Sze Hian provide free financial counseling every Thursday from 8 – 10 pm., at Block 108, Potong Pasir Ave 1.

this is an example of how policies should be more flexible to take into account unforeseeable instances that can happen to anyone in life.

[minority]

This is a typical case of sell high buy high. It is difficult to profit from your home. Once you stay in a property, whether its value goes up or down has little to do with you now. It is because you need a roof over your head under all circumstances.

Always make it a point to separate your home from your investment.

Read my blog post "It’s not easy to profit from your home".

Well if they know what they had to do with the extra cash on hand and not just spend it away.

[minority]

this is an example of how policies should be more flexible to take into account unforeseeable instances that can happen to anyone in life.

Like how some people spend on credit card and rake up a huge debt?