Mark Zuckerberg & His 1% Mortgage
I bet a lot of you have mortgages out there. Probably many of you have refinanced them too. I bet you didn't get the rate that Mark Zuckerberg got though. As a reward for screwing the average investor in Facebook, Mark got to refinance his 30 year mortgage at the rate of 1.05%. Yep, that is way below the almost 3% that us typical for his kind of mortgage. Apparently the bank has special rates for wealthy customers. Mark is worth $14B so he needs a break on his mortgage because? But the person who is working two jobs while their spouse works one and takes care of the kids is probably paying 4 times that rate. Tell me how that is fair. The banks do it because they like to say Mark is a customer. Mark likes it because even a billionaire likes saving money. If you are wondering hwy he has a mortgage in the first place, it is so he can free up his cash and use it other places and a rate of 1.05% means it does not take much of a return for him to make more on his money. Because you know, $14B is not enough. Something about the whole thing seems really skeezy.
88 comments:
I really dislike this scum bum.
He is the 1%.
(HARDY HAR HAR HAR)
I blame the banks and government for this. It's not Mark's fault that they offered him such a low rate - if someone offered it to you, would you say, "no, I'd like to pay more interest,please?"
I blame Mark. He has enough money. Mayhaps he should use the money he is saving and I dunno, maybe help some people out who cannot afford their astronomical mortgages?
If you were offered that rate (no matter your income) would you sayy no? My rant is with the bank for making the offer. We should all hope to be so fortunate to come up with an idea that makes us billionaires.
I say this as someone struggling right now.
Enty, it's the Gilded Age all over again. If you ain't in the top 1%, you ain't anybody.
Check out the difference between the first class and second class cabins on the Titanic. Seriously. Night and Day. That's the Gilded Age. The Middle Class might as well be steerage. And the First Class passengers got on the lifeboats first, as well.
That's the world we live in.
Haha...exactly Cathy.
Still don't like him...or banks.
Mortgage rates are not random. They aren't set based on how much society feels you can afford to pay. They reflect the amount of risk the bank is taking on in lending you the money. Have bad credit? Bank needs a higher rate to offset the potential loss if you default. Zuckerberg is very low risk. If he gets behind on payments he can pay off the mortgage with Facebook stock. Low risk, low mortgage. Sorry, but I don't see the outrage here
Skeezier than that IPO and how it went down (and down and down)??
I would absolutely take advantage if offered that deal. Who in their right mind wouldn't? And when did it become the responsibility for someone who came up with an business and made it big (regardless of whether we all think it is worth that much) to pay for those who bit off more than they could chew? If you have an "astronomical mortgage" and don't/didn't have the means to pay for it, whose fault is it? It isn't Mark Zuckerberg's fault, nor is it the fault of other responsible borrowers (taxpayers). And I am by no means a 1%. Just someone who works for a living and believes in the real American dream.
I'm sorry, but I don't get the surprise here. People with money have always had special privileges. The people like us on the bottom fund those privileges. I'm sure that we probably pay more income tax than he does too.
I don't blame him for taking the rate he was offered, but with his money, why not just pay cash for the house? You don't have to worry about making the payments or anything then, just set aside money for property taxes and insurance - wish I could have paid cash for my house!
But it's only a privilege in the sense that he's low-risk, as Seachica said. And hopefully he does pay his taxes, or we'll be hearing about it in a few years when he gets a bill from the IRS.
Well, this just shows how stupid with money Zuckerberg is. Why in the world is he carrying a mortgage AT ALL? Dude. Pay cash.
Period.
We fund everybody,the rich, the poor, the aliens and above all, the bloated government. That's why we are no longer the middle class but we are now the never ending working class. We'll all die with our boots on (or flats):)
Also, he's WORTH $14B. That does not necessarily mean liquid cash. Depending upon how big the price tag on his home was, it may make more sense for him to finance it if he has his money tied up in business ventures and investments.
I doubt this is an "extra special rate no one else can get" - this is an adjustable rate mortgage that is adjusted monthly. It's a huge risk - not sure what index it's tied to but generally the super low rates are tied to the LIBOR index which everyone knows now has been manipulated. I just looked at the rate sheets and I could get this rate too, I'd have to buy down the rate a bit but it could be done.
Most people get a fixed rate mortgage, and those are at a higher interest rate but no risk of it increasing for the life of the loan. Everything is a risk tradeoff, and I'm sorry Enty but comparing the type of loan Zuckerberg has to the type of loan the average American has is not gonna work. Apples to oranges.
I think it's stupid risky to take that kind of mortgage but hey, not my money.
I agree with Cathy and Searchica.
Here is a really good article if you choose to read up on it, or not if you choose to yell about the 1%
http://www.bloomberg.com/news/2012-07-16/zuckerberg-s-loan-gives-new-meaning-to-the-1-mortgages.html
*sorry for sounding snarky.. still drinking my first cup of joe this morning*
Banks are Fucked Up
I really feel bad for anyone who bought that stock...they lost money before the check they paid with cleared.
Oh and why get this type of mortgage - if you think about it and you borrow for 1.05% (let's assume for the sake of argument that it's always going to be that rate) you can take your cash and even if you only put into a CD you will make more than you pay in interest. It's a smart way to grow your money if you're sure that interest rate will never go up.
Also, so many people here are saying that he should help out people who can't afford their mortgages, but fail to mention that he's already donated 100 million dollars to newark public schools and signed a pledge (along with Warren Buffett and Bill Gates) to donate at least 50% of his wealth to charity. I realize that he's a pompous ass, but really, how much more do you think he should do?
From the article JoElla shared: "Wealthy individuals often choose to finance a home purchase rather than pay cash because of the overall low cost of mortgage debt and the additional access to liquidity, Kricena said. In many cases, they invest excess cash that they would have used to purchase the home into higher-yielding assets, he said.
“Even if someone would be able to pay off that mortgage with cash or other assets, they don’t want to tie up their holdings in real estate because they may have access to other types of more attractive investments,” he said. "
I have always felt that if i had tons of money I would give lots to my family and friends, and buy all the houses in my street and give them their homes as gifts so they won’t have to worry about keeping the roof over their heads. But I haven’t got money so I can’t do it. A local man won 14 million pounds and the first thing he did was to get a beautiful high-end car. What many don’t know is that he’s a nasty piece of work who has been to jail following a beating he gave to his wife. And he’s also a drug dealer who peddles misery to the vulnerable. I am sorry for ranting but these people with tons of money always get tons of freebies. Even Angelina Jolie carries a Louis Vitton bag that was gifted to her. Yeah, it’s no fun being in the 99% but at least us in the 99% are able to keep our heads held high and always will.
As much as I do not like Zuckerberg, I don't blame him for this. The fault lies with the banks and those whose pockets are lined so deeply by them that they will never be held accountable for the financial disaster they've wreaked upon the world.
And...I'm so effing glad I never got sucked into Facebook. The more I learn about this guy the less I like him.
Seeing posters looking at this from a logic, economics-based perspective makes me happy. Railing on about how unfair life is, without taking time to understand the economics behind the issue undermines the OWS movement. There are circumstances in which getting upset about unfair treatment is warranted - this is not one of them.
Enty, I'm disappointed in you. I don't expect that because you are a lawyer you will have a perfect understanding of the law and finance. However, I do expect that as a lawyer you have been trained not to jump to the emotional conclusion without first doing some basic research.
Billy Joe Armstrong played at his wedding for free. He can't be all bad if he's friends with Green Day.
If this is true, this is sleazy on his part AND the Bank's part.
His part: He shouldn't even HAVE a mortgage. He has plenty of "freed up" cash & certainly doesn't need to build credit.
The Bank's part: 1.05% is unheard of even if you have perfect credit - unless you have a friend at the bank, and what bank wouldn't want to be friend's with Mark and his $14 B.
I don't blame him, but it's the rich people only helping out the rich. I blame our govt for allowing and pushing such rules and regulations and allowing banks to have these rules that allow discrimination.
This is what the American people want. Their voting patterns the past 30 years have shown this. This is what Republicans run on consistently and since 1980, Americans, including the middle class, have sent the GOP to Washington regularly.
You get the government you deserve.
Shelly I am cuirous as to why you think he shouldn't have a mortgage?
B is for brown nosers not just bankers ;)
Its always like that! Once u have money, prople tripping all over themselves to give u more or gifts!! The classy crlebs refuse, or donate stuff.
I too, don't really understand why he would want to take on a mortgage.
But one of my American friends explained to me, that the interest on mortgages is tax-deductible (it's not, here in Canada), so a lot of people see that as a benefit. To me, I would rather have the house paid off than be able to deduct something from my tax return. But that's just me.
Barney Frank and Chris Dodd were 2 of the architects of this debacle. I believe they were dems? I also blame some of us 'we the people' for borrowing money that they knew they could not and would not repay. Integrity has no political party.
Susan, paid cash for my house after doing well on other one at height of market. Still badgered with sewer tax, house taxes, car taxes, and every other gdam thing! When i had a mortgage, thise charges were folded in it. Now you still have a monthly nut to crack. Not complaining too much tho, i know im lucky. Its just not what i thought; i didnt factor any of that crap in.
I couldn't agree with you more Enty. It's ridiculous. Who cares who has Zuckerberg's mortgage? It's not as though they're using it in an ad campaign, or like it was public knowledge as in look at how Chase has HIS mortgage, they must be a great bank! The richest one percent take care of each other because they understand each other's struggles, to stay and become more rich. Us? They couldn't give a rats ass about. They would like to put chips in us to track us like dogs, what we owe them, where we were, etc. We are fleas to them, servants, slaves, minions, serfs. Cattle to be fattened, then charged the most for health care/rx's/slaughter, marketed to, sold mortgages to, paid slave wages, taxed, put in to foreign wars in order to profit private corporations that don't pay a fair tax, off shore tax shelters, lieing to us about left vs right, Politicians saying this is about the american family, or the tax payer, or jobs, or kids or whatever lie they're telling us to feel cared about and considered, I love the idea of america, and I believed it in the clinton era, but now? america has been dead and buried for a long long time, they just tell us what we want to hear, so we don't see how screwed we are by big business... ummm shall I go on or do you want to make it through today not hating this country with every fiber of your being?
Mb he's just not good with money!
And the reason why someone with money would pay a mortgage rather than buying it outright is that there is a tax break for mortgage payments, there isn't for paying cash outright. You can just keep moving your cash around and say well I'm using it for investments/capital etc. so I need this tax break because I don't actually have this money it's going in to creating jobs and funding my investments.
I guess law degrees are for smart people who suck at math.
I've always thought the whole "entertainment lawyer" thing was a cover, but posts like this seriously ding the credibility of Enty's cover story, because there's not a lawyer walking today who doesn't understand basic economics. As has been mentioned - when the average American walks into a bank to apply for a mortgage they're not going to be anywhere near as low-risk as Mark Zuckerberg so of course they're going to get a higher mortgage rate. The bank is taking a greater risk to finance their house. Find me a bank willing to finance the house on a warm-and-fuzzy sounding single mother working three jobs at a 1% interest rate when she's got spotty credit while simultaneously charging Mark Zuckerberg 10% interest because he can afford to part with the cash and I'll show you the bank where I'm not going to put my money because it'll be gone before my next paycheck comes in.
LET THEM EAT CAKE!
i feel a revolution brewing.
Wow. Just wow. This is really a non-issue - he is not getting something all of you with comparable credit and cash to buy down the rate could not get. He is NOT getting 1.05% on a low risk fixed rate mortgage. He is being smart about using a mortgage to free up available cash to work at a higher return rate for him. Something ALL OF YOU could do if you worked to educate yourself about morgages and finance.
And yeah I think all big banks should be shunned, and if you do business with any of them you are rewarding them for the behavior that put this country into economic meltdown. In my line of work I know more than a little bit about how unethical they ALL are. However this particular little newsbite has NOTHING to do with any of that.
Put the big banks out of business if you feel they're corrupt. You have the ability to do it. Do not carry their cards, do not put your money with them, do not get mortgages with them. Go through the credit unions everyone has available to them. If you continue to use their cards, and continue to use them for checking and savings accounts, and continue to get your mortgages through the, YOU ARE PART OF THE PROBLEM. We do have the ability to hold them accountable. Every person who believes they are corrupt can vote with their dollars and take those dollars to your local credit union. Business owners have local banks as an option.
I always felt like I'd buy my houses out right if I was a billionaire. I think I understand some basic reasons why you wouldn't neccesarily want to do that. Thanks informative peeps!
@Maria , worth repeating your advice, over and over.(We did this 15 years ago)
"Go through the credit unions, everyone has available to them".
Banks are for business and the ultra rich. Never should have been bailed out by our taxes.You have said well what an entire movement completely missed.
To be honest, that whole 1%/99%/Occupy thing annoys me.
First world problems, yo.
*snort*
I like him, I think he's a smart kid and I hope he continues to do good with his money, unlike MOST of the 1% who only give a crap about themselves and how they can get YOUR money. Facebook doesn't cost a dime to the users, so he didn't make his money off me. And since anyone who buys stock in a business is a fool (in my opinion) he didn't get most of the 99% sucked into that.
So why again is he so hated?
I blame the banks and government for 99.99% of the mortgage crisis, but the fact that so many mortgage holders are so unaware of how it works certainly plays a role as well. So many people buying this black-box product without actually knowing about the process behind it.
I'm sorry, but as long as it was all done above board and with full disclosure I don't have a problem with it. If someone offered me a mortgage with a 1% interest rate I'd take it too. It's only a problem if he's paying someone off under the table in order to get a sweetheart deal or the bank is forging documents or something. The banks aren't under any obligation to treat everyone the same if they don't want to; they're only under an obligation to be honest about it.
How dare he create all those jobs and profit from it. That rat bastard!
I see a little unfairness, but nothing really wrong. Do any of us give the banks anywhere near the amount of money that Marc Zuckerberg does? They need to keep him as a customer so they have all his money to play with as he transfers it from account to account. Most important is, "Mark likes it because even a billionaire likes saving money." You don't get to be a billionaire by NOT saving money! How many lottery winners lose it all in a year? You become rich by having the skills. Not by being handed a giant check.
@Cathy, absolutely.
I interpreted it this way:
"so many mortgage holders are so unaware of how it works".You'd be surprised and dismayed at how many of them (consumers) knew exactly what they were doing. They don't care about walking away.
Others that refinanced during that period are the ones that got screwed, as well as those of us who chose not to refinance as we all suffer from the decline in value.
We have only seen the tip of the iceberg re fraud that occurred during that time. Not sure it will ever be unraveled.
@ dia papaya , and I agree with you too, my friend.
"I still don't understand how we qualified for the loan on the house with the condo still on the books."
This speaks exactly to the fraud I was mentioning (not you ! the damn mortgage broker !!!!!!!).
Yes, you will be better for it and you will really, really appreciate all the many good things that will happen in your life.Good for you.
Yes, our world is run by money and the rich. That said, I wonder how many people on this thread that hate Zuckerberg and his wealth are on Facebook...
It's called Capitalism people.
The rich get richer the poor get food stamps and called lazy.
Not me. But I don't hate him nor his wealth. I hate us for being collectively financially stupid:)
Without going into extensive detail and believe me we could discuss what they did and who ultimately is culpable for decades and so many pages have been written on it, probably rivals the total number of pages in the encyclopedia britannica. This goes well beyond selling mortgages to unsuspecting comsumers that they could not afford. There is some blame to put on the consumer at for that, but what they did is much more insidious. The bundling of known bad loans with good loans to be sold off, the manipulation of data for the financial market, the insider trading is nothing short of jaw dropping in its ballsiness (for lack of a better word). I'm going to link some articles. When you have time, if you have the inclination to really understand what happened rather than take the emotional "OMG it's so unfair" approach, you will educated for the better. And you can make real and meaningful arguments other than OMG it's so unfair.
First, let's look at one CEO - Angelo Mozilo. Google him. That man is still walking around free. I will the Wikipedia article - in particular, read the section "Settlement with SEC" which highlights the atmosphere of so what if I get caught, i still made more than I paid in fines and I did not go to jail. http://en.wikipedia.org/wiki/Angelo_Mozilo
To learn more about the bundling of known bad assetts - here are some links - http://dealbook.nytimes.com/2009/12/24/banks-bundled-bad-debt-bet-against-it-and-won/
http://dealbook.nytimes.com/2009/12/24/banks-bundled-bad-debt-bet-against-it-and-won/ Follow the links in that article, very enlightening.
That's just to begin with, you guys can learn so much more if you look. Take a good look at how you reps voted and you'll find that blame can be placed across both political parties. Once you look beyond the rhetoric and dig for the truth, you will be astounded at how pervasive the problem is and it is not divided along party lines.
ach totally messed up my links but if you read that one article you will have a jumping off point to learn about it - i highly recomment everyone do so. When we are educated, we are not as easily fooled.
I'm not going to write a novel about this, but the economic failure in the States is not just about the banks and giving mortgages to those that couldn't afford them, or people not being smart enough to realise that they couldn't afford said mortgages.
There are many factors that contrubute to this mess, which include the cost of war, the institutional framework of the USA, the fear of change/possible loss of libery, the American conception of capitalism and the free-market system, the minimal government intervention/regulation in specific areas, such as banks, the openess of the American economy etc...
I went into more detail, but then erased it because I know someone will have something snarky to say to me if I go on too much. So I shant.
Right on, Maria! We are responsible for this insofar as we as the public need to educate ourselves (by actively reading different perspectives on an issue) and vote accordingly.
@Maria, great, great job. Really enjoy that kind of research that you are sharing. I hope folks will follow your links. I am very familiar with Angelo Mozilo. That whole financial situation was a huge game changer for me. And you are correct, that we should be more focused on the bundling aspect.
We now have this carbon tax in Australia and businesses are getting slugged for $ by the government which is getting passed onto consumers everywhere but can't blame the tax kinda reminds me of how voldermort can't be named, and the government has the nerve to try claim it'll better the environment, it won't, in fact it'll make it worse. So not only is the government making it hard to live it's also making it hard to produce, one of the worst parts is our P.M. lied big time to get in power and is doing so to stay P.M. only consolation to majority Aussie public? She has less than a year to go now if she's not booted out by then.... then bye bye worst P.M. in Australian history....
The bank is still going to make WAY more money off him and his 1% (and his I'm assuming multi-million dollar home) than they are off me and my $250,000 home at whatever rate I'm paying.
Thanks Agent**It! My life would have been SO much better without the house. But at the time you believe that it is possible. We moved right as the bubble burst too. Had it been six months earlier or later it wouldn't have happened.
I'm happy with my new life. I'm not complaining (that much). Ha! I just wanted to share my story bc not everyone who ended up in this mess was a dumbass or con artist. A lot of good people got screwed too. We definitely made some mistakes (and I own them). But I have to keep on keeping' on and make it work. Life is weird sometimes. Gotta be flexible and have faith :)
Just remember that it was Frank & Dodd who pushed the Fannie Mae nightmare on us. You're a typical uninformed sheep. If you think democrats aren't as exploitive of the American middle class as the Republicans, you're a fool. Educate yourself -- start thinking for yourself!
@dia, you'll be fine,keep the faith !
How does inventing a web site (doesn't make/sell anything) make you an uber-billionaire? Who decides that he's worth 800 bajillion dollars? What a weird world. It's not like he invented computers (or some part to a computer...or...).
True Story: Several years ago in Spokane WA. a farmer dressed for work parked his truck and went into the bank to break a large bill into smaller bills.
Afterwards he asked the teller if she would validate his parking, she would not, and told him his bill breaking did not qualify as a "bank transaction." He spoke to the manager and got the same answer.
He then politely asked them to close his account, they said "sure" until they realized it was several million dollars.
Yea farmer!
Just another member of the elite living parasitically off the flesh of the Anerican middle class. If you really want change, tell the dems and repubs to take a flying f@ck in Nov & vote Libertarian!
Thanks GF!
I am fine! Honestly I'm happier now than ever. Money issues still shaky, but things have a way of always working out!
I believe in good things and good things arrive! This is my new life philosophy. I "Secret-ed" myself.
Went thru a mile of shit and ended up clean on the other side.
It's not uncommon and anyone with good credit can buy down to that rate.
@Maria- thank you for pointing out that there is some culpability on the consumer's part. As a former lendor, I can say that I was very honest with my clients and explained everything to them. When I recommended that some people not take out loans (either because they were taking out HELOCs or HELoans for things they could get lower rate loans for...like education), or that the loan was too high rate, or I could only get them approved for something with a ridiculous ARM and/or balloon payment, they often would not heed my advice because, damnit! They wanted that house/car/etc. Some went elsewhere to get the loans that I advised against and others told me that they werent interested in my advise or need to understand their loan.
Why doesn't he just pay the house in fing cash. Jag off
Is this even a typical mortgage loan? We already know it adjusts monthly, which most consumer mortgages do not do. I wouldn't be surprised if there's also a requirement that he keep at least X million on deposit with the bank during the life of the mortgage, so its barely a loan at all -- they would basically be loaning him back his own money while charging interest to do it.
Not sure this is really super special treatment or more like a deal pretty much anyone who was worth a lot more than their house but wanted to finance it anyway could get.
Did the bank offer it to him, or did he demand the rate from the bank?
When they say Zuckerberg is worth $14 billion they are talking about the value of his shares of Facebook stock were he to sell them all at current market value. In reality I am sure he gets a nice salary from Facebook that is nowhere near as huge as most people estimate it to be.
It makes sense to mortgage the house because he can take a tax credit on his income taxes and invest the cash he'd have sunk into paying cash for the house into something that returns more than 1% a year, thus making money on the deal instead of sinking a ton of dough into something that will most likely depreciate in the long run. Also, if it does appreciate and he sells in a few years he will have made a profit on the full value of the house while only paying a fraction of the cost out-of-pocket. It shows he has smart people advising him and he is making sure that he is set in case Facebook flames out totally.
@Lori - I ran in to that too much in the heyday here in Southern California and it's why I quit doing loan origination. I went to work for a developer selling homes in subdivisions instead. When the market turned my husband and I started a company that offers outsource loss mitigation negotiations to listing agents.
Just a note about what proves (or not) that Enty isn't really a lawyer...
Stephanie said...
"I've always thought the whole "entertainment lawyer" thing was a cover, but posts like this seriously ding the credibility of Enty's cover story, because there's not a lawyer walking today who doesn't understand basic economics."
Most lawyers know a lot about whatever branch of law they actually practice, i.e., "entertainment law" but virtually nothing about other branches, other than the one class they had in law school. An entertainment lawyer would generally know nothing more than I do about tax law or family law; a family lawyer wouldn't know anything about corporate or contract law. Lawyers (especially at large practices) are generally highly specialized.
tl;dr...not knowing about financial matters/law is not indicative that enty isn't an entertainment lawyer.
People with good credit always get better rates, because they pay their bills. They are less of a risk. Why is this an issue now?
Oh, because people like to hate.
Cry well put!
Sorry ..trying to type on my new phone...meant very well put @The
@dia papaya have you looked into the HAMP mortgage program? Because of severluy reduced income we qualified for a 2% mortgage. It was a major pain in the ass to do the paperwork but worth it.now we can keep our home til we die
Many thanks to the financially savvy posters who gave rational explanations and links to us. I hope that some of you who don't have their level of understanding will follow up on the insight they gave us. It really will shed some light on the darkness you're laboring in although it won't magically get you out of the muck. And, Maria, that is a truly exquisite horse.
Awwww thanks elspeth - that's my baby girl Maggie's six month old picture. She's 6 years old now, but I still haven't changed my avatar pic, lol. She's an Arabian. She's the kind of horse you wait your whole life to have - sweet, talented, the whole package. I wish I could take the credit for breeding her, but I can only take the credit to have the good sense to buy her before anyone else could, lol.
I know I am super late and no one will see this, but husband and I bought our first house 2 months ago and we have a 30 yr fixed 1.973% interest rate. Our credit is good but not perfect.
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