Why shouldn't homeowner's walk away from mortgages & banks getting bailouts to cover losses??

[fishbjc]

On a good note, the young generation wants everything NOW.  We have had several foreclosures in our development and it is sad.  So many of these houses were owned by young families (you can tell by the swingsets in the back yard or the sandboxes).  They buy a home on interest-only or am ARM and decide

the swanky new house needs stainless appliances.  Financing seems like a great idea, after all their ARM won't reset for five years!!!

Of course the kitchen furniture looks old and crappy next to those appliances...oops better get a new set and finance that as well.  HMMM you can see into the family room from the kitchen....better get a new sofa, a couple of leather chairs...and wouldn't a plasma over the fireplace look swanky?  Heck, they've already taken out a loan to finish the lawn and landscaping...what's a few more $$$.

Afterall, they've been to college and worked hard...they should reward themselves!  Before you know it, the ARM is resetting and the payments have climbed by $500-$700 a month.  That raise fell through, the new BMW in the garage is expensive and the designer dog is sick....what now?  Try to sell the house, only there are so many that it's difficult so the house falls into foreclosure.

I WISH someone would have sat these kids down like my parents did and went over ALL the costs!  We were told to ask for six months utility bills and water to review our costs.  We got estimates on costs of lawn equipment.  We had reserves in the bank and put down 10% (which was great for a 24 & 25 year old).  We bought a small truck instead of the car I really wanted.  We lived with cast off furniture and stuff from garage sales.  We figured $100/monthly into college for our son.  We bought a home that was a $300/monthly less than what the bank approved us for.

This society is I WANT IT NOW, I DESERVE IT.  Something has to change.  This is NOT going to get better.  And YES there are quite a few middle-aged folks in this mess, but the young first-time buyers are making a LOT of mistakes!

[Anonymous]

Hey fish,

Thanks for posting. We appreciate your candid comments.

I'm sorry to hear about your ex-daughter in law's financial straits.

It sounds like she's in a tough spot right now.

Do you know if she has female relatives or friends living close by

who might consider renting a room from her? This would help her

defer expenses and free up some monthly cashflow.

If that's not an option, she might approach a local hospital or police

department and let it be known that she's in the market for a female

roommate (who might turn out to be a potential buyer, depending on

the price of the home). If you're sincerely worried that the ex-DIL might

do something to herself, having a female nurse or police officer living

in the house could help alleviate some stress. Plus, public servants

like nurses, police officers, teachers, etc. are traditionally very stable

and work in growing career fields. So this might solve more than one

problem all at once...

Just something to think about. But it's worth mulling over and maybe

pitching to your ex-DIL. And it will help relieve your son's mind that all he

has to worry about is the 2nd mortgage, instead of paying for a house

and an apartment. True, walking away is always an option. But neither

your son nor your ex-DIL needs that kind of negative mark on their credit

when both of them are in the beginning stages of the rebuilding process... 

I'm just throwing this out there, fish. Worst case, it might spawn an

even better idea that neither of us has thought of....

CanDo

"The right attitude is everything" 

Message Edited by CanDoAttitude on 12-30-2008 12:03 PM

[llecs]

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fishbjc wrote:

Message Edited by llecs on 12-30-2008 11:35 AM  Thanks Mod for editing...just venting here!!!!!!!!!!

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I hear ya......no problems.

[fishbjc]

CANDO:

I have suggested to DS that he bring it up about renting rooms.  She has three bedrooms and an awesome dog who would be great protection (when you get to know him, lol).  

He has *offered* to maintain the exterior of the home, but she doesn't want him around.  He's limited to what he would like to do because she's acting nutty.  Poor girl!

His mid score is now 768, just signed up with NFCU, new auto, so good to go.  He pays $300 on the 2nd note and she pays $600 on the 1st.  I've suggested renting it out, but you know how that goes...people don't pay or skip out.

We offered him an additional $5,000 to knock the price down again.  What about a *rent to own* type of thing?

The problem I SEE is....it's a darling house, but with no window treatments, no furniture, no artwork, no lighting, it just doesn't show well.

I think I can swank that place up for $2-$3k and get it sold, but she wants to handle it on her own.  See what I mean??????

GRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRR

[DallasLoanGuy]

Why shouldn't homeowner's walk away from mortgages & banks getting bailouts to cover losses?

Because they signed a promise to pay.

I think the lenders will be more and more hesitant to loan to folks with a foreclosure on their record. Fannie has already pushed it from 3yrs to 5yrs.... Should be 10!

The people who walk away only hurt the rest of us.

[Anonymous]

I hear you loud and clear, fish.

Her situation is something she can control.

It has nothing to do with money, and she

definitely doesn't want her ex-father in law or ex-hubby

as part of the equation, well meaning that you both are.

It seems that things will have to get worse before she decides

to do something constructive. The "solution" is easier for you

and your son to see because you're on the outside looking in.

But you can't wrap a rational solution around an emotional

situation like a recently divorced couple moving on with their lives.

That takes time...and she'll have to work it out on her own schedule.

Thanks for the updated info.Just keep your fingers crossed that

things work out in the very near future.

CanDo

"The right attitude is eveything" 

[fishbjc]

Like our last l.o. said:  Be late on your car, be late on your cc, don't be late on your mortgage!

I realize that some people got into a situation that they KNEW they would have trouble with.  Case in point:  Neighbors...ewwww....he simply decided that if he couldn't have the job he thought he deserved, he simply was NOT going to work.

House was foreclosed on and he TRASHED IT.  He turned water on inside, there's mold everywhere.  Walls are torn apart, paint is everywhere, carpets are trashed, dog feces covering the lawn.  It's just disgusting.  This home is now on the market *as is* for $179 and s/b $279.  This *dog* should be prosecuted for damages.

Then there are the people, like my friends, whos 14 year-old had ovarian cancer...their min dr payments are $900 a month and the hospital is yet to work with them on their $250,000 debt.  They're both beating themselves to DEATH working extra hours to be responsible. 

[Anonymous]

Fish, you (and your son, of course) really have my deepest sympathy. For whatever it's worth, you guys are in my prayers!!

For the DIL, if she's REALLY bad off, I'd honestly suggest looking into involuntary psychiatric evaluation. Most states allow it with simply two family members' affidavits stating the authenticity of the claim/necessity. While I know it sounds horribly "invasive" it would get her help (possibly medication) if its needed.

We've been there, done that. It doesn't always solve the problem, but it can help in a lot of situations. At the very least, it mitigates the "what ifs" you and your son must be worried about.

Further, it might make it easier to have the house sold (if it seems that she can't keep it up herself). The court (if it goes that far) could give your son PoA so he could take care of it.

I really hope I don't sound too heartless ... it's just that I've seen this kind of thing before, and while it feels horrible to *do* those things, it might very well save her life. And your son's sanity.

[Anonymous]

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@DallasLoanGuy wrote:

Why shouldn't homeowner's walk away from mortgages & banks getting bailouts to cover losses?

Because they signed a promise to pay.

I think the lenders will be more and more hesitant to loan to folks with a foreclosure on their record. Fannie has already pushed it from 3yrs to 5yrs.... Should be 10!

The people who walk away only hurt the rest of us.

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While I really do agree with the "whys" of not bailing, I don't think a foreclosure should haunt people for the rest of their lives -- certainly not for more than 5 years.

Call me "PollyAnna," but I'd really rather think that foreclosures happen not because of any *real* irresponsibility or apathy (on the part of the homeowner), but because it's bad things happening to good people.

[Anonymous]

While bad things do happen to good people, being a good person has little to do with the ability to own and maintain a home.  Unfortunately, alot of good people got caught up in the mess without the ability to sustain a home.  People forgot that when you buy a house, you need to be able to not only afford it, but maintain it, and be puttin money aside for reserves and repairs.  Too many people in the last 5 years bought on a shoestring budget with little to no reserves.  This drove prices up further making the situation even worse.  Then when anything happened, they lost it all.

That said, a foreclosure doesn't mean someone is a bad person.  I also think that foreclosures should be like repo's on cars....  After a couple years, you can get back into the game, but expect to pay a high interest rate and high % down...  I do think that FHA and any government backed loans need to strengthen requirements post BK and post foreclosure.  This will also help to allow legitimate subprime mortgages (high DP, etc) to slowly start back up.