Forclosure Ponderings...

[Kate CA]

After reading this article, something said inside it struck me:

 

"Cox said he expects homesteading — refusing to vacate a foreclosed property — will become common as blame for the foreclosure crisis increasingly shifts from homeowners to financial corporations."

 

I am trying to wrap my mind around the blame thing here. I have not lost a home (we rent) and I don't know anyone that has so this is not anything personal for me. I am staggered by the amount of foreclosures around the nation. That said, is this the right way to view it? Is this really the "financial corporations" fault because they agreed to loan the money in the first place to some that maybe shouldn't have been able to get it? Or are these personal bad choices? Or a combination?

 

The article discusses tactics (homesteading in foreclosed homes) that seem to be overboard (not to mention illegal). This was surprising to me.

 

Anyone have thoughts on these things? There is so much hedging on the foreclosure issue that I was curious what others thought about all of it.

 

ETA: Homesteading is the term they used in the article. That is not my understanding of the correct definition.

Edited February 24, 2009 by Kate CA

[Carrie12345]

I know two couples facing foreclosure. One is family, one is friends. Both made awful choices that they need to be held responsible for.

 

Don't get me wrong- they're in terrible positions right now and my heart goes out to them. But they did it to themselves.

[clwcain]

I'm more troubled by the idea that "homesteading" has come to mean squatting.

 

What Cox is describing is "squatting", not homesteading.

[bettyandbob]

The situation seems to be the fault of both the lenders and the borrowers. Why did the lenders lend money to people who obviously weren't going to keep up once the rates changed. Why were people borrowing so money money that it was clear they'd default with the slightest change in circumstance.

 

I'm angry about this. My dh and I have been responsible with our borrowing. We first purchased before kids and made sure our payments were below one salary. We could have moved "up", but weren't comfortable with higher mortgage payments and the smaller financial cushion that resulted from higher payments. Now, we have to bail the irresponsible people out. And if we don't we will be punished with more foreclosure--lowering our own homes value further.

 

And yeah--refusing to leave a foreclosed home is squatting not homesteading. Homesteading, requires you to add value to the land among other things.

[Sara R]

It's both, but I would place most of the blame on the banks. Historically banks are not ones to throw around money willy-nilly. Bankers are historically seen as respectable people. If a banker said that you qualify for a mortgage, an uneducated consumer is going to trust what he says. It's different with, say, used car salesmen. They have a reputation of cheating consumers, and most consumers know that they have to be careful. Bankers didn't have that reputation.

 

Plus, it is the business of the bank to plan for these kinds of contingencies. They run the numbers. They should have been able to foresee that if house prices started falling (and they were bound to fall, because house prices surpassed income so much), that everything would come crashing down.

 

Psychology was different for the average consumer as well. In bubble markets, younger and younger members of my family stretched to buy a house or condo, because they were afraid they would be priced out forever because prices had been rising so quickly.

 

Yes, people should have known better, but very few people actually did. I've always been debt averse, and looked at California's bubble from the outside in, so I saw through it while it was going on. But even people I knew that were financially prudent got suckered in.

[TXMomof4]

It's both, but I would place most of the blame on the banks. Historically banks are not ones to throw around money willy-nilly. Bankers are historically seen as respectable people. If a banker said that you qualify for a mortgage, an uneducated consumer is going to trust what he says. It's different with, say, used car salesmen. They have a reputation of cheating consumers, and most consumers know that they have to be careful. Bankers didn't have that reputation.

 

Plus, it is the business of the bank to plan for these kinds of contingencies. They run the numbers. They should have been able to foresee that if house prices started falling (and they were bound to fall, because house prices surpassed income so much), that everything would come crashing down.

 

 

There's also the role of the government to consider in requiring banks to offer loans to lower income/higher risk borrowers. Or rewarding them for doing so - or whatever the situation was exactly.

 

Now that the banks have the money though (our money) I would love to know how the people whose homes are being forclosed are benefitting. Wasn't that the point? If the bank took the money, they shouldn't be able to take the house too. So all the taxpayer is left with is the tax bill? Something just ain't right!

[RebeccaS]

I remember, years ago, when we applied for pre-approval on a loan (we wanted to buy a house) and I was absolutely astounded at the amount the bank was willing to loan us. Chris and I had already decided what we felt comfortable spending on a home and this number was so much higher. I have trouble feeling sorry for people who over spent and now find themselves in a bind.

 

I, also, think it's weird to use the term homesteading. Refusing to vacate does not mean homesteading to me, but squatting as was already mentioned.

[ekarl2]

There's also the role of the government to consider in requiring banks to offer loans to lower income/higher risk borrowers. Or rewarding them for doing so - or whatever the situation was exactly.

 

 

This is where Fanny and Freddie come in. They have a government guarantee, so mortgage lenders who sell their loans to F&F are given carte blanche to be lenient, F&F will be good for it. The other lenders were just trying to compete. This is why government interference in the marketplace is SO bad. You can't just have a little capitalism or a little socialism. The free market doesn't work like that.

Without the gov't guarantee, lenders would be watching their backs and only lending to those who could really afford it. The lenders wouldn't have that security net. There was a LOT of gov't pressure to lend money to lower income/bad credit people.

 

I have a solution, though, girls ... ready? I read that OP's article this morning. I thought this:

If ACORN is so concerned about people losing their homes to foreclosure, they should stop this squatting thing and start putting their money where their mouthes are.

There are obviously a lot of people out there who are in favor of bailing out homeowners in foreclosure. Let ACORN take on the job of gathering the contact info of anyone willing to help, monetarily, pay the mortgages of those in default. The could match, say, two payers each to a foreclosure and those two people could give their money directly to the person who needs it. It would be a WHOLE lot cheaper than having a gov't entity runt he bailout ... you know the money that will be wasted on overhead there. Also those who do NOT want to pay their neighbor's mortgages won't have to. Only those who want to need participate.

 

It's so funny how many people are all in favor of gov't bailouts when it seems to be paid with "funny money." But it's NOT funny money; it's OUR money.

 

I do think there are those who tried really hard to make good decisions but lost jobs or whatever and that lead them to foreclosure. Most of those, though, still have decent credit and the banks will usually work with them. There are a TON of people, though, who got 100% loan-to-value, interest-only mortgages that adjusted up and they knew they would and didn't care. They can just stop paying the bill and walk away ... why not? They have no equity ... what's to lose? Makes me sick.

[clwcain]

Yup.

 

It's creepy when definitions are changed. I think Orwell wrote a book about that...

 

Doubleplusungood.

[Wendi]

Apparently the government is to blame, too. Some lawmakers changed legislation, and pushed lenders to extend more loans to those who were previously considered unqualified, and to qualify borrowers for larger amounts. This was apparently done in the name of increasing homeownership, with the idea that widespread homeownership has benefits for society. The lenders then extended loans, with ridiculous rates and terms, to borrowers they knew full well were unqualified and a poor risk. The borrowers themselves were greedy, foolish, or desperate. They may have been assuming their income was going to rise dramatically, or hoping rates would stay low, or just poor money managers, or just driven to impress others with their amazing house. (Credit is no longer considered a big deal in our society, and people borrow money to buy things they can't afford all the time.) Some people, especially in certain markets, bought during a housing "bubble", assuming that house prices would continue to rise and they could refinance their crappy mortgage in the future, and perhaps continued to borrow against their homes; when values plummeted and they could no longer afford the original terms of their mortgage, they couldn't refinance.

 

So, I think the blame can be shared by lawmakers, lenders, and borrowers alike.

 

Wendi

[Wendi]

Apparently the government is to blame, too. Some lawmakers changed legislation, and pushed lenders to extend more loans to those who were previously considered unqualified, and to qualify borrowers for larger amounts. This was apparently done in the name of increasing homeownership, with the idea that widespread homeownership has benefits for society. The lenders then extended loans, with ridiculous rates and terms, to borrowers they knew full well were unqualified and a poor risk. The borrowers themselves were greedy, foolish, or desperate. They may have been assuming their income was going to rise dramatically, or hoping rates would stay low, or just poor money managers, or just driven to impress others with their amazing house. (Credit is no longer considered a big deal in our society, and people borrow money to buy things they can't afford all the time.) Some people, especially in certain markets, bought during a housing "bubble", assuming that house prices would continue to rise and they could refinance their crappy mortgage in the future, and perhaps continued to borrow against their homes; when values plummeted and they could no longer afford the original terms of their mortgage, they couldn't refinance.

 

So, I think the blame can be shared by lawmakers, lenders, and borrowers alike.

 

Wendi

[Aubrey]

You know, when we bought our house a couple of yrs ago, we were definitely tricked into a loan that could have blown up in our faces. We were told that "most people pay for financing they don't use." That since most people move in less than 5 yrs, a 5yr arm was a much better buy.

 

I'd heard that those were really bad. But after listening to the banker, knowing that we *didn't* plan to stay in our home for more than 2-3 yrs (or less), that we'd bought at a really low price, we did it. We signed a 3yr arm. :eek:

 

The housing bubble burst as we were selling our house. Our poor neighborhood plummeted in value while we were living there. Gang activity, incl a murder, increased. Suddenly, I realized that the house we could survive for a couple of yrs might be the place we were stuck. And then I remembered the arm. The arm that we "could always refinance if you decide to stay."

 

We sold our house when we did because we felt the Lord lead us to do so. All of the above happened while it was on the market. When we sold it, we didn't lose anything, even though prices had dropped around 30% and were continuing to fall. I *felt* the nearness of the disaster, but I was lucky, blessed, whatever word you prefer to use here.

 

Some people overbought, sure. Banks overlent. The gov't is bailing out the banks but not the individuals (as far as I last heard). The banks *knew* what they were doing. The individuals? Some yes, some no.

 

Now, staying in a house that's been foreclosed is a separate question. It's illegal, yes. BUT in *some* cases, the way the economy's going, we *might* all be better off if people did this. MAYBE. Because empty houses invite crime. Homeless people become desperate. (sp?) If the banks would get smart, look at the foreclosure rate, the prices they're getting for foreclosed homes, & start making new deals w/ the owners, I think everyone would be better off.

 

There's no reason to boot someone out of their home only to sell it to an investor for dirt cheap. Do something else, let the people keep their homes, keep crime lower, & end up w/ more money in the end. MAYBE. :001_huh:

[OnTheBrink]

It's both, but I would place most of the blame on the banks. Historically banks are not ones to throw around money willy-nilly. Bankers are historically seen as respectable people. If a banker said that you qualify for a mortgage, an uneducated consumer is going to trust what he says. It's different with, say, used car salesmen. They have a reputation of cheating consumers, and most consumers know that they have to be careful. Bankers didn't have that reputation.

 

Plus, it is the business of the bank to plan for these kinds of contingencies. They run the numbers. They should have been able to foresee that if house prices started falling (and they were bound to fall, because house prices surpassed income so much), that everything would come crashing down.

 

Psychology was different for the average consumer as well. In bubble markets, younger and younger members of my family stretched to buy a house or condo, because they were afraid they would be priced out forever because prices had been rising so quickly.

 

Yes, people should have known better, but very few people actually did. I've always been debt averse, and looked at California's bubble from the outside in, so I saw through it while it was going on. But even people I knew that were financially prudent got suckered in.

 

Is it not the responsibility of the buyer to know what they can and can't pay for? I'm sorry; I'm just not buying how the buyer is a victim here. If you don't know how to buy a home, how banks work, or how mortgages work, then make it your job to find out. Good grief. I really don't think we should hinge all this on industry reputations.

 

When EX and I bought our house (well, his house now), we were told that we qualified 2x the amount of house we could easily budget for. We had taken a course on home buying, we knew how to set a budget for a home and went into the mortgage process armed with an idea of what we could afford. In fact, to qualify for our first time buyer program we HAD to take this course, which also included household budgeting.

 

Anyway, even if such a class isn't available in all areas, isn't it just common sense to find out how the process works? To create a budget and get an idea of what you can pay? Isn't it just plain foolishness to buy a home that's going to tap you out? How can we sit here and say "Bad Banks! Bad government!" when people had a choice on what to buy and how much to pay for it.

 

Am I missing something here? (And, I realize, not everyone who's facing foreclosure is for the same reason. I understand that companies have fired and laid off thousands of employees--I'm talking here about people who willingly overextend themselves. How can they blame anyone but themselves? Ultimately, they signed on the dotted line.)

[Anita in NC]

Honestly, I'm wondering how much time and effort people took to research loans and stuff.

 

I remember spending time researching rates and figuring out what dollar amount we could afford. We bought a house for about half of what the bank actually said we could afford.

 

It seems like a lot of people want the biggest and the best NOW instead of working their way up to it over time.

[Carol in Cal.]

But I have heard that resisting foreclosures and evictions in that way was not uncommon during the Depression, and that the logic was similar--no one else will live here; why shouldn't we be off the streets?

 

I have also heard that in some parts of California's Central Valley people are sneaking back into their homes, which have no utilities anymore, to camp out there unless and until they get caught.

 

I don't blame the housing crisis on any one entity. I know personally of people who were sort of bamboozled into bigger loans than they should have taken on, and also of people who overstated their incomes to borrow money that they knew they couldn't afford to pay back. It's a mess.

 

I think that there have always been foreclosures, and that the issue right now with bailouts is that if there are too many of them, the whole viability of communities becomes questionable. It's a matter of degree. When allowing the 'normal process' to go forward means that over half of the homes in a neighborhood are going to be empty (and available for meph lab use, doncha know), then the normal process has to be interrupted or mitigated somewhat, even if it's not strictly fair.

 

From a Christian perspective, sure, everyone should pay back what they owe, and sure, I'm not wild about my choice of a small, prudent home now subsidizing others who were not as careful, but stuff happens, too, and we have to temper justice with mercy to be Christ-like. The year of jubilee in the Old Testament was kind of similar in concept to a nation-wide bailout, in my view. I just hope that the mercy now being administered is used wisely.

[Parrothead]

 

I'm angry about this.

Me too. We are struggling to pay rent and a mortgage every month. Because of all the crap going on with the bubble burst I don't think we will ever sell the house.

[Pamela H in Texas]

I never understood this either. We've faced foreclosure twice. The house is not too much for us, neither is the note. We bought a foreclosure so that helped. Our issue has been a combination of really bad happenstance and not being the most financial responsible people. If it were just one issue, we could probably do well, but with both? EEEK.

 

Anyway, even if banks of over-lending, it's still the family's responsibility also. We were offered a loan for a home we had built (by a builder who turned around and sold it to another family). That house was about double what this house was (something the builder neglected to really make known). We just could not do that. Just because the bank WOULD let us have way too much of a note didn't mean we had to take it!

 

Obviously, job loss, health issues, etc aren't people's fault. I understand that, but my understanding is that people are just not taking responsibility. They are either making poor choices or not handling their budgets well.

[beansprouts]

Yep, it all started when the government decided to stick their hands into the market. Check out the Community Reinvestment Act.

[Audrey]

I'm more troubled by the idea that "homesteading" has come to mean squatting.

 

What Cox is describing is "squatting", not homesteading.

 

 

Yep. That's what I thought, too. It is squatting that he is advocating. Homesteading is an entirely different concept.

 

If I'm not mistaken, I believe in most states there are still provisions for "squatter's rights." If the state has squatter's rights, then it isn't illegal. I don't know all the details though (and I think each state would have it's own qualifiers anyway).

[Murphy101]

What Cox is describing is "squatting", not homesteading.

 

:iagree:

 

Now that the banks have the money though (our money) I would love to know how the people whose homes are being forclosed are benefitting. Wasn't that the point? If the bank took the money, they shouldn't be able to take the house too. So all the taxpayer is left with is the tax bill? Something just ain't right!

 

they aren't and never will.

that was not the point

the point was to keep these companies in business

altho they obviously have no business being in the business

 

You know, when we bought our house a couple of yrs ago, we were definitely tricked into a loan that could have blown up in our faces. We were told that "most people pay for financing they don't use." That since most people move in less than 5 yrs, a 5yr arm was a much better buy.

 

I was lucky, blessed, whatever word you prefer to use here.

 

sadly this has happened to many people that were not so lucky

 

and I cautioned every one of them to NOT get such a loan, you never really know where you'll be in the future and the majority of the time a bad investment idea is bad whether it's long or short term.

 

but what did I know? those bank people have degrees and they are "in the business" so they must know more than me... right?:glare:

 

Now, staying in a house that's been foreclosed is a separate question. It's illegal, yes. BUT in *some* cases, the way the economy's going, we *might* all be better off if people did this. MAYBE. Because empty houses invite crime. Homeless people become desperate. (sp?) If the banks would get smart, look at the foreclosure rate, the prices they're getting for foreclosed homes, & start making new deals w/ the owners, I think everyone would be better off.

 

There's no reason to boot someone out of their home only to sell it to an investor for dirt cheap. Do something else, let the people keep their homes, keep crime lower, & end up w/ more money in the end. MAYBE.

 

I agree mostly.

If there's a way the foreclosed upon can show they have income and a budget that allows them to realisticly pay their mortgage, then it's foolish or sharky to boot them right now.

 

I think it was everyone.

gov't for allowed sharky loaning practices of banks

banks for luring and deluding clients

individuals for not having enough sense to make a simple budget of monthly income vs monthly outcome and impluse buying a big purchase instead of researching/waiting for the best deal on bank and home

[LizzyBee]

I think it was everyone.

gov't for allowed sharky loaning practices of banks

banks for luring and deluding clients

individuals for not having enough sense to make a simple budget of monthly income vs monthly outcome and impluse buying a big purchase instead of researching/waiting for the best deal on bank and home

 

The govt didn't just allow poor lending practices. They threatened to shut banks down if they refused to make loans to high-risk borrowers. Every time I hear a politician talking about the greedy banks, their hypocrisy makes me want to scream. You're right, though - it's not just one factor. There is plenty of blame to go around.

[Kate CA]

I posted about our credit card issue last week. We had a credit card with a reasonable interest rate. We did carry a balance on it. We had the card for years. Yes, we did know that the rate could change. We were responsible about it. We paid more than the minimum, we were never late on paying, etc. They jacked up the rate to 25%. Who is to blame? While nobody forced us to have a credit card, is it reasonable to expect that most people can afford a loan of any kind with a 25% interest rate (which is well over double the rate it started off at)? Imagine you are buying a car and they suddenly double or triple your monthly payment.

 

I wonder if this is the sort of thing that happened to some people. That they started out being able to afford their home and the hike in rates was just too much. If the bank doubled their rate, that would likely make it unaffordable to most people. I doubt it was entirely that every person in this situation simply made bad financial decisions.

 

Sure, it is ideal to be able to have a cushion when the unexpected happens. It just doesn't always happen that way. And there is only so much "unexpected" the average person can take care of without a hitch.

 

There are so many factors.

 

I didn't see your original post on this. Were you able to do anything about it? I am so sorry.

[hillfarm]

So much blame to go around an so much frustration at such unfairness. And what would we tell our squabbling children who make these claims about each other? "I don't care who started it, stop being part of the problem and get your part of it cleaned up, and I mean NOW!"

 

A long time ago I read a novel called Rising Sun (I keep thinking the Benchley was the author, but could that be right?). There was a lot about Japanese management theory in the book, plus lots of vulgar and gratuitous violence, so I wouldn't really recommend it, but one thing in it stuck with me. The author said that the Japanese philosophy was to fix the problem, not the blame, whereas the American tendency was was to fix the blame, not the problem. I see a great deal of truth about that statement in modern day America. We are very quick to point an accusing finger but so slow to look at what part we each played in the problem (Why did we ever let the politicians do the things they did? Why did we stand for the banks' lending practices? Why did so many of us live beyond our means?) And even slower to work hard at seeking solutions instead of fixing blame. Are we still letting today's batch of politicians make more mistakes on our watch.

 

Dh and I are some of the people who made the choice to not live above our means. Dh and I have sacrificed and done without all those lovely things that our peers bought on credit. And now our hard earned tax dollars are protecting them from losing all those luxuries. No, it's not fair, and we may be beyond the point where I can do that much about the injustice of it all. All that I have in my power is to make sure that my family is still living by Biblical principles of sound financial management. I will continue to strive to make the best choices I can. I will make my concerns known to my elected officials and vote for those who have the courage to make tough decisions based on what is best for our country. It's just not fair, but enough with the whining. Now it's time for me to be sure I am doing my part to not compound the mess and to be supportive of those who are in a position to clean it up.

[Kate CA]

Yes. We called the company. They offered us a low rate to pay off the balance, but we had to cancel the account. I have no clue what the reasoning is behind that, but at least we don't get stuck with an unmanageable bill.

 

How odd! I am very glad you were able to resolve it without having to pay more than you would have otherwise. :001_smile:

[texascamps]

I have no sympathy with the woman Donna Hanks from that article whose home was foreclosed. This is from a site that investigated the news story

 

"According to real property data search information, Hanks bought the two-story home in the summer of 2001 for $87,000. At some point in the next five years, she re-financed the original home loan for $270,000. "

 

 

So do you see what she did? When property values went up she cashed out her equity (cash) then spent the money. When she couldn't afford the new $270,000 payment. The site that showed her paper trail said she was allowed to make alternative payments, which she failed to do as far back as 2006. THis wasn't even a recent event.

 

There is something to be said for someone who loses their house because of the economic downturn forcedthem to lose their jobs. I sympathize with them. So many of us could be foreclosed upon if we losed our jobs.

 

However, a lot of people cashed out their equity by refinancing, took vacations, bought cars, clothes, etc with the money. They bought homes they knew they couldn't afford using the Interest only loans, knowing full well (but hoping they would keep making more money) they wouldn't be able to pay once the adjusted rate kicked in. They just thought that surely in the next three years after buying the house, they would either a: be able to sell it at a profit with the housing market ever increasing, or b: they'd get a raise at work which would cover it.....

 

That's gambling.......and when you gamble....the odds are always against you.

 

Now they want a bailout........

[Sara R]

But don't you remember the ads and the psychology around refinance? Even respectable financial types in newspaper and magazine columns were advocating having a HELOC instead of an emergency fund. Having untapped equity in your house is wasteful, the thinking went. People should invest it in the stock market for a greater return, because the stock market always goes up in the long term (except, um, when it doesn't).

 

Just a year ago, when things were already starting to implode, I heard a stock market guy on a call-in radio show advise someone calling about his 90 year old mother. She had a mortgage but was in a position to pay it off. The advice was that there is no sense in paying off the mortgage; she should invest the money instead. Unbelievable. Imagine how much she lost last year, and she has the house debt on top of that.

 

Dave Ramsey was about the only guy preaching against this kind of thinking. Just about everyone else in the mainstream was on board with mortgages and HELOCs.

[Sara R]

Yep, it all started when the government decided to stick their hands into the market. Check out the Community Reinvestment Act.

 

That's one small piece of the puzzle. The other, larger piece is the Fed reducing rates after the crash after 9-11. Money got really, really cheap, which led to the real estate boom and lots of mortgages. The Fed blew up the housing bubble to get us out of the 2001 recession. Now we are facing the recession we should have had in 2001, but now it's worse than it would have been then, because delayed pain is compounded pain.

[TXMomof4]

It seems like a lot of people want the biggest and the best NOW instead of working their way up to it over time.

 

Now that it's all falling down around our ears, it seems someone (the government at least) wants resolution to all the problems NOW instead of actually dealing with the results of our 'instant gratification society'. Patience isn't a concept that anyone seems to be familiar with.

[Sebastian (a lady)]

From a Christian perspective, sure, everyone should pay back what they owe, and sure, I'm not wild about my choice of a small, prudent home now subsidizing others who were not as careful, but stuff happens, too, and we have to temper justice with mercy to be Christ-like. The year of jubilee in the Old Testament was kind of similar in concept to a nation-wide bailout, in my view. I just hope that the mercy now being administered is used wisely.

 

Except wasn't the price of a field in part reckoned from the time until Jubilee? A field that would have several years use was worth more than a field that would have little time to produce yield. And Jubilee was a scheduled event, not just a freebie.

 

The problem that I have is the disrespect that it shows to the lenders. And I don't mean big impersonal banks. Banks don't make money any more than the government creates wealth. Banks bundle the savings of many and the interest on those loans is what puts interest into my savings account. So I'm not only on the hook as a taxpayer, but as someone who has actually saved money over the years. My savings will not show the returns that it should, because others choose not to make good on their debts.

[Sebastian (a lady)]

There's no reason to boot someone out of their home only to sell it to an investor for dirt cheap. Do something else, let the people keep their homes, keep crime lower, & end up w/ more money in the end. MAYBE. :001_huh:

 

Why assume that only an investor would be interested in a foreclosure house? Our old tae kwon do instructor is a small business owner. He's been looking for a house to buy for several years but has been unwilling to pay the inflated prices available in Hawaii. For him, a drop in housing prices is a Godsend.

[Sebastian (a lady)]

I read lots of people discussing using a HELOC for various reasons, but I can't say that I ever saw someone advocate having one instead of an emergency fund. But if they did, so what? There are all sorts of things advocated that I don't have to do because I can look at the recommendation and decide that it doesn't hold water.

 

If we can't make our own decisions and live with both the reward and the risk, then we should just have the government assign us our flat in government housing.

[CactusPair]

As a homeowner in a state that's been hard hit, I'd rather see people squatting and being allowed to pay what they can toward their home than a bunch of empty houses. Even a few empty houses make a once pretty neighborhood look desolate and invite crime. They demoralize the whole street for years. No one buys them, at least where I live.

 

I'll choose the crime of squatting over the other kinds of crime that empty houses can attract to a struggling neighborhood.

 

I think many, many factors are to blame for this crisis. I do agree with Aubrey that sometimes the lenders fast talk and literally trick the borrowers. I knew a woman who was a mortage broker--not the most honest person I've met.

 

We were also astounded by the amount of $ banks were willing to lend us when we bought our house. It was scary. We had a preset limit that we stuck to, but I can see how vulnerable people might be tempted or persuaded by the bank's confidence.

 

As far as people overbuying or buying what many imagine to be awesome houses, it isn't like that here, though I know it is in other places. The houses that sit empty here are just nice, ordinary, modest homes, nothing that would make anyone say "oh, those people just wanted it all, but couldn't pay." I don't know what happened to the vaious owners; each story is probably unique.

[fivetails]

 

but what did I know? those bank people have degrees and they are "in the business" so they must know more than me... right?:glare:

 

 

 

 

 

I think that's pretty normal. We've never owned a home (yet), just rented, so I really know nothing of mortgages and all that, but it seems like a pretty normal assumption -- ie, this "professional" has more education than I do on *this topic*, so I should listen to him/her. I don't think anyone can really fault people for that.

 

Compare it to other professions - when you go to the dentist and he says that you have blah blah blah and need blah blah blah to fix that, do you spend the next year studying dental texts and such to see if he knows what he's talking about? Or do you trust that he, as the dental professional, knows what he's talking about? When a lawyer gives legal advice, do you start scouring law textbooks to see if he's right? Or do you trust that his advice, as a legal professional with ten years of law training (or whatever it is), is correct? How about an electrician? Plumber?

 

We tend to believe that the people educated in their specific fields would know what they were talking about - yeah, sometimes, unfortunately, they don't. But *most* of the time, they do...so it's a normal assumption to make - this banking professional (whatever they're called) knows what he/she is talking about.

 

Can't really fault people for *that* - they are doing what most do when they've sought out the advice of a professional. Listening to it!

[Sara R]

I think that's pretty normal. We've never owned a home (yet), just rented, so I really know nothing of mortgages and all that, but it seems like a pretty normal assumption -- ie, this "professional" has more education than I do on *this topic*, so I should listen to him/her. I don't think anyone can really fault people for that.

 

Yes, exactly! Most people feel very uninformed about high finance, so they trust their "financial adviser." They don't trust their gut and the wisdom of Depression-era grandparents. And this was the kind of thing that financial planners were advising.

 

When I was house shopping a few years ago, my parents recommended me to a family friend who was a mortgage broker. He advised getting more loan than we qualified for, or an adjustable rate, and investing the difference in the stock market so we could earn more. We knew enough to run away at that suggestion--too bad if we offended anyone!--but most people would have trusted the professional's advice.

 

And people in finance were trusted until just a year ago. If a banker says you can afford a loan, people expect that the banker is right. They used to be right. It's only been since the mid-90s that mortgage standards started changing. Before that a banker would never give you a loan for more than you qualified for. It was not in the bank's best interest either.

 

The banks changed the loan standards. The old-timers in the profession must have known that this couldn't have led anywhere good, but they proceeded anyway. They should be held accountable. People should be too, but they will be in any case. So far no homeowners are being bailed out.

[Sara R]

If we can't make our own decisions and live with both the reward and the risk

 

I agree with you. I didn't fall for these kinds of loans either. I just think that this standard should apply to banks as well, only more so. If individuals should have known better, then the banks really should have known better. They were the better-informed than the consumer, and should have known exactly what the risks were. The banks should not have been bailed out.

[TCoppock]

I'm sorry but I have a really hard time feeling bad for those who bit off more than they could chew. I can't tell you haw many people in my area bought multiple houses in a hope to get rich quick and are now stuck with them. We also have a large number of people that were making just barely above minimum wage who bought $300,000 homes knowing good and well they couldn't afford it. I don't feel bad for greedy people. It is not the bank or governments fault these people didn't do their homework. No one is bailing me out if I purchase stock that suddenly loses value. Why should I have to bail out others for poor investments? Personally I don't own a home because I CAN'T AFFORD IT! Should the government or bank hand me a house? NO! We should not be punished because we are responsible and save for what we can afford. Sorry no sympathy is coming from me on this one. It is one of the few things that truely infuriates me. Americans need to wake up and start living within their means. We aren't all pop stars and shouldn't be out spending like we are.

[Renee in NC]

Our house goes to auction due to foreclosure in a month. It is NOT the bank's fault - it is ours. We made decisions (multiple) that landed us where we are. We will face the repercussions for years to come. It isn't even that we made all "bad" decisions, but rather risky ones.

 

If the economy hadn't gone down hill, we'd still be in business and we'd still be in our house. However, that doesn't mean that we aren't responsible - we made the decisions, we take the responsibility.

 

Now, 5 years ago we had 20% equity, but now the house is worth about $50K less than it was, causing us to be upside down in our mortgage. That isn't the "corporation's" fault, either! We didn't have a bad mortgage (standard 30 year, 5.65% interest.) It wasn't a McMansion either - it was 1300 square feet on 11 acres out in the country. It was just a plain old house.

 

BUT THE BANKS SHOULDN'T HAVE BEEN BAILED OUT EITHER! THEY made decisions that led to their financial problems, too. I don't expect to be bailed out and why should we bail them out? It just frost my cookies to be considered a "deadbeat" because I can't pay my bills, but when the banks can't pay their's the gov't gives them money and they go on vacation, KWIM?

[Sara R]

I'm sorry but I have a really hard time feeling bad for those who bit off more than they could chew.

 

Do you think the banks should be bailed out? They are, and the homeowners aren't. Two wrongs don't make a right, so neither should be bailed out. I just think a little more accountability to the better-informed party (the bank) is in order.

[Murphy101]

Why assume that only an investor would be interested in a foreclosure house? Our old tae kwon do instructor is a small business owner. He's been looking for a house to buy for several years but has been unwilling to pay the inflated prices available in Hawaii. For him, a drop in housing prices is a Godsend.

 

we spent 4 years looking for a house that met our needs and our personal budget. it wasn't that we didn't find homes either, it was that we had to make a move within minutes of seeing the house to beat out investors. Dead serious. They have the money and the means to move FAST on a deal and most people looking to buy to own do not or are way too cautious to do so for fear of living in a lemon. Plus banks favor investors over home buyers because the money is faster and less hassle. We had one guy literally walk in the bank door in front of dh and our realtor and make a CASH offer on the house we were interested in. We had our financing already set to go and everything, but we couldn't compete with a flat cash offer. He turned around and sold it for 100K more after getting some work done on it and cleaning it up. Pricing it right out of our budget.

 

so yes, I can see why investors get far more homes at great deals than people who are looking hard for a decent home to actually live in

 

I think that's pretty normal. We've never owned a home (yet), just rented, so I really know nothing of mortgages and all that, but it seems like a pretty normal assumption -- ie, this "professional" has more education than I do on *this topic*, so I should listen to him/her. I don't think anyone can really fault people for that.

 

I can. MY money is MY business and it's MY business to know what I'm doing with it. My home is also my business and it's my business to know what I'm getting in it and how.

 

Compare it to other professions - when you go to the dentist and he says that you have blah blah blah and need blah blah blah to fix that, do you spend the next year studying dental texts and such to see if he knows what he's talking about? Or do you trust that he, as the dental professional, knows what he's talking about?

 

When a lawyer gives legal advice, do you start scouring law textbooks to see if he's right? Or do you trust that his advice, as a legal professional with ten years of law training (or whatever it is), is correct? How about an electrician? Plumber?

 

It doesn't take a year even for a house! :001_huh: I come home, think about it, maybe google it, maybe ask a few relatives/friends or get a second opinion, talk to dh (he worked in dental claims for 4 years), and THEN make a decision within a day or two. Then think how much I'm willing/able to pay for it and call to negotiate payment for the service.

 

We tend to believe that the people educated in their specific fields would know what they were talking about - yeah, sometimes, unfortunately, they don't. But *most* of the time, they do...so it's a normal assumption to make - this banking professional (whatever they're called) knows what he/she is talking about.

 

Can't really fault people for *that* - they are doing what most do when they've sought out the advice of a professional. Listening to it!

 

yikes! NOoooooo *running screaming into the night*;)

 

absolutely not. just because someone is a professional and knows their job, does not mean that the decision they would make is the right decision for you. they might be giving great advice, but that doesn't mean it's great advice for you.

 

when I seek out the advice of a professional, any professional, it's to get an opinion on available options from them. I listen to it, but that does NOT mean I feel compelled to follow it. I'm seeking advice - not to be told what to do, but to have information on what my available choices of what to do are. I listen, weight it with my own thoughts and collected information and then I make the decision I feel is best for me/my family. I never let a professional make the decisions for me.

[Murphy101]

I agree with you. I didn't fall for these kinds of loans either. I just think that this standard should apply to banks as well, only more so. If individuals should have known better, then the banks really should have known better. They were the better-informed than the consumer, and should have known exactly what the risks were. The banks should not have been bailed out.

 

:iagree:100% there. I think most consumers should have (and maybe did)known better, but there's zero excuse for the banks.

 

It just frost my cookies to be considered a "deadbeat" because I can't pay my bills, but when the banks can't pay their's the gov't gives them money and they go on vacation, KWIM?

 

:grouphug: I don't consider anyone a deadbeat until I have clear personal knowledge and have no reason to think that of you. You have my sympathy and prayers.

 

that aside, my new favorite phrase is going to be "frost my cookies":lol:

[Scarlett]

I have no sympathy with the woman Donna Hanks from that article whose home was foreclosed. This is from a site that investigated the news story

 

"According to real property data search information, Hanks bought the two-story home in the summer of 2001 for $87,000. At some point in the next five years, she re-financed the original home loan for $270,000. "

 

 

So do you see what she did? When property values went up she cashed out her equity (cash) then spent the money. When she couldn't afford the new $270,000 payment. The site that showed her paper trail said she was allowed to make alternative payments, which she failed to do as far back as 2006. THis wasn't even a recent event.

That's gambling.......and when you gamble....the odds are always against you.

 

Now they want a bailout........

 

ITA. In nearly every news story about some poor soul being foreclosed upon there comes a point in the broadcast, IF they give enough info, that I say 'ah ha! That foolish choice is why they lost their home.'

 

And I know that any of us could lose our home if we lose our job and can't find another. However, if your payments are reasonable, there is usually a way to scrape by with odd jobs....sell stuff...whatever to save your house. Because you have to live somewhere...so if you will keep that in mind and keep your payment reasonable then chances are you can survive an economic disastor.

 

Dh and I talk about this all of the time. Our payment is fairly large, not for his current income, but large in that we could live much more cheaply if we needed to. We have8 years left on our loan and we don't want to screw that up, so we would do everything in our power to pay our payment even if he lost his job. I mean we talk about actual actions we would take.

 

I usually don't get too up in arms about people suffering from their own foolish choices...I mean going to live in an apartment is not the end of the world....but if it starts to lower my home value due to the high number of foreclosures..I can see myself being irritated by that. Not that it will do me any good to b e irritated...:tongue_smilie:

[texascamps]

But don't you remember the ads and the psychology around refinance? Even respectable financial types in newspaper and magazine columns were advocating having a HELOC instead of an emergency fund. Having untapped equity in your house is wasteful, the thinking went. People should invest it in the stock market for a greater return, because the stock market always goes up in the long term (except, um, when it doesn't).

 

Just a year ago, when things were already starting to implode, I heard a stock market guy on a call-in radio show advise someone calling about his 90 year old mother. She had a mortgage but was in a position to pay it off. The advice was that there is no sense in paying off the mortgage; she should invest the money instead. Unbelievable. Imagine how much she lost last year, and she has the house debt on top of that.

 

Dave Ramsey was about the only guy preaching against this kind of thinking. Just about everyone else in the mainstream was on board with mortgages and HELOCs.

 

I do remember this. However, all the big guys on the financial channels were advising against it. I never had a mortgage lender try to sell me one. Suze Orman, one of my favorite voices of reason, (often directed to women) advised not to take out an adjustable rate mortgage and for years she said if you want a cheap house, wait around for when all these houses purchased on adjustable rate mortgages reset. Of course, Dave Ramsey is a fave and his advice may not make you rich, but it will make you secure.

 

We have a close friend who works for a large Brokerage house with clients with 25mil or more. Just before last year, in lieu of the stockmarket, he put his bonuses into paying off his own house..... I thought he was just a doom and gloomer and we didn't follow suit. Too bad I wasn't his client.

 

Voices of reason were out there....

 

Plus, think of all the folks that were given down payment assistance. They never even put down any of their own money. It was fed money. Unless you have a stake in your house, why would you feel like you need to work at it. Many foreclosures came from Illegals given loans who had no down payment or low income folks who had no hope of ever being able to come up with money. BUt the referring entity (non profit advacates) get referral fees for those bad loans. Although, the news likes to cast all foreclosures as a tragedy, a lot of folks were used to being kicked out of their rentals, so being kicked out of their foreclosure was no different.

[texascamps]

But don't you remember the ads and the psychology around refinance? Even respectable financial types in newspaper and magazine columns were advocating having a HELOC instead of an emergency fund. Having untapped equity in your house is wasteful, the thinking went. People should invest it in the stock market for a greater return, because the stock market always goes up in the long term (except, um, when it doesn't).

 

Just a year ago, when things were already starting to implode, I heard a stock market guy on a call-in radio show advise someone calling about his 90 year old mother. She had a mortgage but was in a position to pay it off. The advice was that there is no sense in paying off the mortgage; she should invest the money instead. Unbelievable. Imagine how much she lost last year, and she has the house debt on top of that.

 

Dave Ramsey was about the only guy preaching against this kind of thinking. Just about everyone else in the mainstream was on board with mortgages and HELOCs.

 

I do remember this. However, all the big guys on the financial channels were advising against it. I never had a mortgage lender try to sell me one. Suze Orman, one of my favorite voices of reason, (often directed to women) advised not to take out an adjustable rate mortgage and for years she said if you want a cheap house, wait around for when all these houses purchased on adjustable rate mortgages reset. Of course, Dave Ramsey is a fave and his advice may not make you rich, but it will make you secure.

 

We have a close friend who works for a large Brokerage house with clients with 25mil or more. Just before last year, in lieu of the stockmarket, he put his bonuses into paying off his own house..... I thought he was just a doom and gloomer and we didn't follow suit. Too bad I wasn't his client.

 

Voices of reason were out there....

 

Plus, think of all the folks that were given down payment assistance. They never even put down any of their own money. It was fed money. Unless you have a stake in your house, why would you feel like you need to work at it. Many foreclosures came from Illegals given loans who had no down payment or low income folks who had no hope of ever being able to come up with money. BUt the referring entity (non profit advacates) get referral fees for those bad loans. Although, the news likes to cast all foreclosures as a tragedy, a lot of folks were used to being kicked out of their rentals, so being kicked out of their foreclosure was no different.

[Scarlett]

It just frost my cookies to be considered a "deadbeat" because I can't pay my bills, but when the banks can't pay their's the gov't gives them money and they go on vacation, KWIM?

 

Frost my cookies. That is the cutest expression I've heard in a while.

 

I'm sorry for the situation you are in....do you not qualify for some of the provisions in this bailout package or whatever it is called?

 

I don't know who is calling you a deadbeat...but I would not dare to presume that about anyone unless I knew lots of personal details about them. And knew them personally.

[Murphy101]

I mean going to live in an apartment is not the end of the world....

 

this is the #1 reason dh and I are so careful of our home. people do not rent to a family with more than 3 or 4 kids. they. do. not. you figure most places (apt or house) are 3 bedrooms. most places figure that means a couple in one room and absolutely not more than 2 kids in each of the other rooms. Most don't like more than 1 kid per room.

 

and on top of the that, there are extremely few shelters that take in families. most take men or women and children. only a few take married families.

 

and most places that would rent to a family with more than 3 kids would cost way more than our mortgage payment, so it stands to reason that if we couldn't afford to keep our house, we couldn't afford to rent either.

 

so dh and I are very aware that losing our home is not just a case of living in a smaller place (we were a family of 10 in 1000sq ft in our old house for 6 years, and we'd do it again if we had too) It very realisticly could mean being homeless!

 

in light of that, we are very careful to have little to no debt other than the house to offset hard times. we are especially careful right now b/c we know dh will be laid off in June and it's very unlikely he'll find a job paying what he is currently making. It'll be very tight and we might have to choke on our pride for a couple years, but such is life. We've been through worse and made it. We'll somehow weather this storm together too.

 

in the mean time any money we get is either paying off things or repairing things that we won't have money to take care of later, in the hopes that his future income will then be enough to cover our few needs.

[TCoppock]

Do you think the banks should be bailed out?

 

No I don't think banks should be bailed out either.

[Peek a Boo]

So much blame to go around an so much frustration at such unfairness. And what would we tell our squabbling children who make these claims about each other? "I don't care who started it, stop being part of the problem and get your part of it cleaned up, and I mean NOW!"

 

...

The author said that the Japanese philosophy was to fix the problem, not the blame, whereas the American tendency was was to fix the blame, not the problem. I see a great deal of truth about that statement in modern day America. We are very quick to point an accusing finger but so slow to look at what part we each played in the problem (Why did we ever let the politicians do the things they did? Why did we stand for the banks' lending practices? Why did so many of us live beyond our means?) And even slower to work hard at seeking solutions instead of fixing blame. Are we still letting today's batch of politicians make more mistakes on our watch..

 

oh, i dunno -- I do try to look at what started the mess before deciding how best to clean it up, because there is usually the squabble about WHICH part is "your" part.

 

It is essential to pay close attention to blame/cause because if we don't study history, we are doomed to repeat it. i could clean "my part" up a lot easier if i didn't have to also clean up Big Spender's mess too.

 

 

 

Dh and I are some of the people who made the choice to not live above our means. Dh and I have sacrificed and done without all those lovely things that our peers bought on credit. And now our hard earned tax dollars are protecting them from losing all those luxuries. No, it's not fair, and we may be beyond the point where I can do that much about the injustice of it all. All that I have in my power is to make sure that my family is still living by Biblical principles of sound financial management. I will continue to strive to make the best choices I can. I will make my concerns known to my elected officials and vote for those who have the courage to make tough decisions based on what is best for our country. It's just not fair, but enough with the whining. Now it's time for me to be sure I am doing my part to not compound the mess and to be supportive of those who are in a position to clean it up.

 

 

yeah, we're doing that too. Thankfully we haven't missed any payments yet, even on month #8 of unemployment. but i absolutely WILL encourage people to speak out vocally --even if it SOUNDS like a whine-- and scream at our representatives by voting for someone else. Apparently the people in positions of authority aren't doing much to clean it up --they are just sweeping it under MY rug. With MY broom.

 

At least dh is finally seeing why Dave Ramsey is right ;)

[Elaine]

I know two couples facing foreclosure. One is family, one is friends. Both made awful choices that they need to be held responsible for.

 

Don't get me wrong- they're in terrible positions right now and my heart goes out to them. But they did it to themselves.

 

:iagree:

[Elaine]

Do you think the banks should be bailed out? They are, and the homeowners aren't. Two wrongs don't make a right, so neither should be bailed out. I just think a little more accountability to the better-informed party (the bank) is in order.

 

I agree, neither should be bailed out. But, no one cares what I have to say, I am just a tax payer.

[sandellie4]

I am so upset about this. I feel like we have spent YEARS watching other people buy SUVs, take vacations to places I've only seen on the web, etc. I know I shouldn't have been envious, but it seemed like they could have everything they needed and desired, and they never seemed worried. When I was younger and less satisfied with my inner self, I used to say to my husband, "How come they have everything and we always have to struggle? What are we missing?" And he'd say that it was because they were buying things on credit (one of our neighbors boasted to him that she had $12,000 in credit card debt). We do not carry balances on our credit cards, we've never missed any payments on anything (we just refinanced our house for the first time and had a credit rating that made the lender's eye pop wide open). We made our choices, and other people made their choices, and gullible me thought that it would be worth making the choice to live within our means because we'd have a little extra security (which I value).

 

But now the party's over, and I'm supposed to struggle even more to pay increased taxes? I have special needs kids and we've never been eligible for any help because we're middle class. My husband lost his job a bit over a year ago (lots of people were in disbelief that we were at the cusp of a recession then, but our own little recession had already started), and I've been told that my job is expected to be cut at the end of the year. We had a cushion, but it's gone from the time my husband lost his job. I just feel so frustrated. We've never gone anywhere on vacation, ever, and we always buy used cars and live frugally.

 

It's hard not to feel resentful. I know I shouldn't, but I do. Who was there to bail us out when I just needed a break from homeschooling a houseful of special needs children? What's going to happen to us when we're old if we lost our already-meagre 401(k) investments? What's going to happen now that taxes will have to go up and we won't be able to set aside even the amount we set aside before? I'm scared and I'm frustrated and I'm tired of everyone telling me that we have to hurry, hurry to save our economy, so we can borrow more money to pay for the damage caused by unchecked borrowing in past years. Of course, I want to help people who, like me, did their best. But I get the feeling that I'm getting gouged. I'm much older now, and much more at peace with the choices in my life, as imperfect as they are, but I would never expect someone else to pay for my irresponsibility. It says so much about today's society that we're even looking at it this way. Saving the economy? How about we save our own sorry souls?

 

Sandy