I don't think it's a stereotype issue. Certainly there are situations where good people go under for the third time and not for a lack of trying. I'm talking about all those who did jump it way over their heads and had no business buying a house at that time nor did the bank have any business making those loans. That's partially what caused this mess.

In San Diego I watched person after person buy houses for $500k - $750k that only a few years before were selling for $200k - $400k. The only way they could afford to get in was 100% financing, adjustable rates, short term interest only payments. Oh, and don't forget their property taxes more than doubled.

Now they are loosing their homes left and right not to mention being horribly upside down. What did they expect would happen?

But it is a stereotype. Whenever the mortgage crisis is mentioned it is always in connection with foreclosures and subprime loans. I am willing to bet that many people simply forget that a great many other people have been hit by this as well. So, are "most" people in the "not responsible" category? I'm not so sure. I'd love to see some hard numbers on this. Otherwise it is too easy to say scr*w 'em, it's their own fault.

...you can't imagine how bad it'll be, paticularly in the upper Midwest, if we let the auto companies go bust. In Michigan about 20% of the working age people are on some form of government assistance now--unemployment, food stamps, etc. If the car companies go bust you can't imagine what's going to happen in many towns in Michigan, Ohio and Indiana.

Some economist who testified before the Senate Banking Committee today described the economic effect of permitting the car companies to fail will be "cataclysmic". I agree with him. Even though a bailout of the car companies is offensive in so many ways, the alternative will be worse.

Captain, I'm sorry I can't answer either of your questions with confidence. I'm surprised to hear that banks asked for more equity back in the 80's. I've never heard of that. I'd be surprised if language permitting lenders to do that was in any of the "modern" mortgage loan documents. I don't have a clue in the tax question.

Originally Posted by another Linda

I’ve got to say that it really frosts me that the stereotype of people who “choose” to walk away from their mortgages is that they are irresponsible, credit card toting shop-aholics with sub-prime mortgages who never should have been allowed to buy a house in the first place. Certainly some of you must know one of the countless young couples for whom this just doesn’t fit!

If not, let me tell you about one young couple I know well. Family consists of father employed full time, mother now employed full time, and 1 y.o. baby. Conventional mortgage, car payments for 1 car (the other paid off), student loans, and medical bills for a c-section that was not fully covered by medical insurance.

He was downsized about a year and a half ago – got another job right away, but there were medical insurance issues – thus one of their bills. He now commutes 2 hours each way. Then her job moves. She now commutes 2 hours each way. They would like to move closer to work but can’t sell their house for enough to cover remaining mortgage. Figure they would still owe almost $40K. Both jobs are vulnerable to the economy, so both take second jobs. Now child care is an issue and another big expense.

Bottom line is stress is taking a toll on their health, their marriage, and the baby is spending way too many hours in day care. They are both discouraged and don’t see any way out. They are not planning to walk away from their mortgage but I wonder what they will do if either or both of them lose their jobs.

And the really sad thing is I know 3 other young couples in a similar situation. All are good solid responsible people who were doing what they were supposed to do. The details change but the impact of having a house that is worth lots less that what you bought it for doesn’t. So, please, spare me the stereotype.

Very well spoken. Seems most think, the people that are not of "MONEY" to steal a line from the Move Titanic, Should not have bought a house. And if they did and loose it then they are just simply taking the easy way out and say heck with this loan. There are those that will do just that, but as in the case here from Another Linda, this proves a side of the story most can's see happening. There are so many people in this same situation. I can tell you there are people living here in TV in the same boat. I was talking to a couple yesterday about to loose their house and have to move in with family. I posted on another thread about First Time Home buyer programs that give people up to 40,000 for down payment assistance to buy home they cant afford. But families that are trying hard and make a little money can not get the same assistance. There is so much that contributes to the problems.

There are so many that are trying their hardest working 2 jobs full time tyring to make end meet or make them at least work. I was reading some news articles and one of them made sense, they were talking how it is not really the poor that dont pay their bills. It is mainly the rich, that is why they are rich. They can find so many ways to get out of everything. I have been trying to find the one I came across web searching the other day in which a wealthy couple from the Bay area in California owed like 2 or 3 million in taxes, but we able to only pay only 250,000 and clear the lien they had placed on them. I guess if you make only 40,000 a year your a bad person if you have to let something go.

Sterotypes or not, there is so much that contributes to this crisis. It is not just the so called who most think are just "walking away".

I also agree all the bailouts are wrong. I also agree that the gov is not going to fix this and we should allow the companies and the markets to make thing work. But at the same time, we have to do something to change the way things are going to allow or help people keep what they have. Something I have never understood, why a house cost you 200,000. but depending on your credit it could cost you 500,000 to pay the house off in 30 years. The way interest adds up is crazy!!! How about this, instead of refinancing at a lower interest rate, which unless it is like 2% lower isnt going to help much, how about restructuring the way in accures. heck you could knock off 500.00a month off your payment. I know some are going to say you cant do that, it would hurt the banking industry. I belive that is already done!!!!

The foreclosure rate started to spiral out of control a couple years ago even before the economy tanked. The housing crises started by people loosing their homes mostly because they bought something they couldn't even come close to paying for.

I'm certainly NOT of money and we are a one income family. We buy what we can afford and don't buy when we can't afford it. When prices are high we wait and save our money. When prices are low we buy.

I saw many people in California living on the ragged edge. Both worked full time, they purchased $700k + homes that were really worth maybe $300k, both drove brand new cars, two or three kids, etc, etc, etc. Living the dream, right? If even one of them lost their job it would be a matter of a month or two before they went under. In my book that's just plain irresponsible and many of those situations directly caused the housing crises.

No matter if the economy is good or bad there will alway be those who play by the rules, work hard, make smart decisions and still get into trouble. That's just life and that will always happen. Those are the people that have my sympathy. In this situation it was just plan stupidity on the part of a lot of buyers that lead to this problem.

Now they are crying for reduced interest rates and even in some cases having the government / bank reduce their total mortgage amount so they can keep their houses.

Hey, where's my freebie mortgage reduction?

Reading all this makes my stomach hurt.

I personally would scrub floors before I walked away from a debt. That is just plain stealing.

I suppose that sounds stupid in this day and age.

Originally Posted by dklassen

The foreclosure rate started to spiral out of control a couple years ago even before the economy tanked. The housing crises started by people loosing their homes mostly because they bought something they couldn't even come close to paying for.

I'm certainly NOT of money and we are a one income family. We buy what we can afford and don't buy when we can't afford it. When prices are high we wait and save our money. When prices are low we buy.

I saw many people in California living on the ragged edge. Both worked full time, they purchased $700k + homes that were really worth maybe $300k, both drove brand new cars, two or three kids, etc, etc, etc. Living the dream, right? If even one of them lost their job it would be a matter of a month or two before they went under. In my book that's just plain irresponsible and many of those situations directly caused the housing crises.


No matter if the economy is good or bad there will alway be those who play by the rules, work hard, make smart decisions and still get into trouble. That's just life and that will always happen. Those are the people that have my sympathy. In this situation it was just plan stupidity on the part of a lot of buyers that lead to this problem.

Now they are crying for reduced interest rates and even in some cases having the government / bank reduce their total mortgage amount so they can keep their houses.

Hey, where's my freebie mortgage reduction?

Originally Posted by Guest

Reading all this makes my stomach hurt.

I personally would scrub floors before I walked away from a debt. That is just plain stealing.

I suppose that sounds stupid in this day and age.

No, Graciegirl, that thought sounds to me like character and integrity which is often missing these days. There's nothing stupid about your statement.

Originally Posted by Peachie

No, Graciegirl, that thought sounds to me like character and integrity which is often missing these days. There's nothing stupid about your statement.

I agree GG, nothing stupid, but not necessarily realistic. In the case of my young couple, they are not now in trouble. They can afford their house on 1 salary. But lots can happen, especially if they can't sell their house without owing $40K. In trying to save for a disaster that they've seen their friends experience, he is picking up all the overtime he can get and working 14 hours a day or more during the week. She teaches for about 6 hours a day Mon - Thurs, works her second job Fri nites, and double shifts Sat and Sun. So when exactly do they wash floors? They certainly have no intention of walking away but they are very scared.

They thing that bothers me is that I believe there are many couples like them. They are part of the baby-boomlet and were just at the age when they were saving their money and buying their first houses. My couple had friends who were transferred out of state. They did walk away and now they will not be able to buy another house for many many years. What were they to do? They couldn't sell their home. I don't see this as a matter of character and integrity and yet the problem is most often referred to in terms of deadbeats.

Yeah, I know life isn't fair, but unless you've been there, you shouldn't act morally superior.

I have been there. I just handled it as I was taught. I am very very careful with my money. I certainly never was given anything in my life and wasn't born with money. We existed with one car for years in our married life with children and eschewed going out when we were dating in order to save the 20% down payment that we needed for our first home that had a 30 year fixed rate mortgage. I cut my hair and my kids hair and sewed and baked. We have always paid off all credit cards at the end of the month. Oh never mind. People do have choices. I have worked hard and so has my husband. I can't remember when he didn't put in 12 hour days, six days a week and even now is still working. I have worked all of my life, starting at my first part time job in a bakery outlet when I was fourteen. It wasn't easy but we never bought anything we couldn't pay for.

Originally Posted by another Linda

I agree GG, nothing stupid, but not necessarily realistic. In the case of my young couple, they are not now in trouble. They can afford their house on 1 salary. But lots can happen, especially if they can't sell their house without owing $40K. In trying to save for a disaster that they've seen their friends experience, he is picking up all the overtime he can get and working 14 hours a day or more during the week. She teaches for about 6 hours a day Mon - Thurs, works her second job Fri nites, and double shifts Sat and Sun. So when exactly do they wash floors? They certainly have no intention of walking away but they are very scared.

They thing that bothers me is that I believe there are many couples like them. They are part of the baby-boomlet and were just at the age when they were saving their money and buying their first houses. My couple had friends who were transferred out of state. They did walk away and now they will not be able to buy another house for many many years. What were they to do? They couldn't sell their home. I don't see this as a matter of character and integrity and yet the problem is most often referred to in terms of deadbeats.

Yeah, I know life isn't fair, but unless you've been there, you shouldn't act morally superior.

"Free to Choose" The couple that walked from their home made a choice, keep their home and change jobs or keep the job and loose their home. They walked away from their home. It's our individual choice as to how we go through life and we all need to make choices as to the path taken. We live with our choices and have no right to complain when we make a choice that is not to our benefit. Yes, life isn't fair.

Originally Posted by Guest

I have been there. I just handled it as I was taught. I am very very careful with my money. I certainly never was given anything in my life and wasn't born with money. We existed with one car for years in our married life with children and eschewed going out when we were dating in order to save the 20% down payment that we needed for our first home that had a 30 year fixed rate mortgage. I cut my hair and my kids hair and sewed and baked. We have always paid off all credit cards at the end of the month. Oh never mind. People do have choices. I have worked hard and so has my husband. I can't remember when he didn't put in 12 hour days, six days a week and even now is still working. I have worked all of my life, starting at my first part time job in a bakery outlet when I was fourteen. It wasn't easy but we never bought anything we couldn't pay for.

High five, Graciegirl! We could share stories regarding lack of income and hard work endured during our married lives and even as children ourselves. Our married children have modest homes and vehicles and will weather this financial fiasco. (But then they ascribe to Dave Ramsey's money policies and learned at the fiscally prudent knees of their parents.) Unfortunately, instant wealth is an illusion, very hard work is required in most instances. I think we need to recoup the simpler lifestyles of the 50's and 60's, a time when all of our 3 sons toys fit in one corner of the garage and the cars could be parked inside because there weren't many "things" stuffed in the garage.

There are legitimate hardworking families caught in the current financial sewer but they are the ones who have lost their jobs and income, not those who bought homes beyond their means with small downpayments. Sadder yet is the story of the retirees duped by the Wall Street guru's, therefore, losing a huge chunk of retirement income representing wages that can't be earned again or recovered.

Thanks Peachie. I shouldn't have reacted so heatedly, but this is a very worrisome time for everyone financially. Merry Christmas to all. Forgive my hot head.

Originally Posted by Peachie

High five, Graciegirl! We could share stories regarding lack of income and hard work endured during our married lives and even as children ourselves. Our married children have modest homes and vehicles and will weather this financial fiasco. (But then they ascribe to Dave Ramsey's money policies and learned at the fiscally prudent knees of their parents.) Unfortunately, instant wealth is an illusion, very hard work is required in most instances. I think we need to recoup the simpler lifestyles of the 50's and 60's, a time when all of our 3 sons toys fit in one corner of the garage and the cars could be parked inside because there weren't many "things" stuffed in the garage.

There are legitimate hardworking families caught in the current financial sewer but they are the ones who have lost their jobs and income, not those who bought homes beyond their means with small downpayments. Sadder yet is the story of the retirees duped by the Wall Street guru's, therefore, losing a huge chunk of retirement income representing wages that can't be earned again or recovered.

And that is exactly my problem with the whole way this issue gets framed. You assume that the only people who are facing hard choices are the ones who have already lost their jobs or have bought homes that they couldn’t afford or spent too much money on toys and on and on. And I’m saying that there are lots of young couples who have saved up their 20% down, have a 30 year conventional mortgage on modest homes just like we did. But those homes are now worth a fraction of what they were. As long as they don’t have to move or sell the house, no problem – they just hang on. But what do they do when they have to sell?

And everyone has choices? Let me tell you a story about another couple. She bought a condo when she was single (yes, she could afford it!). He bought a house when he was single (and yes, he could afford it). They got married and moved into his house. Tried to sell condo and couldn’t. Not a problem as she was still working. Wanted a family. Saved money so she could be home for a couple of months – longer if condo sold. Problem pregnancy and ordered to bedrest. “Chose” to try to work a couple of more weeks until had saved enough. Had miscarriage. Problem solved. Yep they had choices. Very sad.

Can it really be that I’m the only one who knows these young couples? Can it really be that the rest of you only know the deadbeats? Hard to believe. Well, I’ll continue to stand up for the ones I know. They are good people and just as hard working and moral as we ever were. But they are facing issues we never had to face. Doing their own haircuts and baking won’t help them.

Originally Posted by another Linda

And that is exactly my problem with the whole way this issue gets framed. You assume that the only people who are facing hard choices are the ones who have already lost their jobs or have bought homes that they couldn’t afford or spent too much money on toys and on and on. And I’m saying that there are lots of young couples who have saved up their 20% down, have a 30 year conventional mortgage on modest homes just like we did. But those homes are now worth a fraction of what they were. As long as they don’t have to move or sell the house, no problem – they just hang on. But what do they do when they have to sell?

And everyone has choices? Let me tell you a story about another couple. She bought a condo when she was single (yes, she could afford it!). He bought a house when he was single (and yes, he could afford it). They got married and moved into his house. Tried to sell condo and couldn’t. Not a problem as she was still working. Wanted a family. Saved money so she could be home for a couple of months – longer if condo sold. Problem pregnancy and ordered to bedrest. “Chose” to try to work a couple of more weeks until had saved enough. Had miscarriage. Problem solved. Yep they had choices. Very sad.

Can it really be that I’m the only one who knows these young couples? Can it really be that the rest of you only know the deadbeats? Hard to believe. Well, I’ll continue to stand up for the ones I know. They are good people and just as hard working and moral as we ever were. But they are facing issues we never had to face. Doing their own haircuts and baking won’t help them.

Another Linda, the term "deadbeats" is yours, not GG's or mine. We talked about choices. The time frame of the couple you mentioned most likely spans more than a years time, the length of the "deep recession" which was named as such this week. Assuming they met, dated, engagement period, wedding planning and event and then planning a child prior to the sale of the condo in a weak job market is a risk and they took it. Did they reduce the price immediately or make attempts to rent the property prior to marriage? Would you have planned a pregnancy given the information about their financial position you provided here? These are not evil people caught in these circumstances, it's about their choices. There is a plethora of situations that can be described for every distressed mortgage. Extremely difficult times are upon us and the results won't be played out for a long time. Citing haircuts and baking as the only possible way to make ends meet isn't fair. I can guarantee the couple you presented has never walked in the financial shoes many of us endured until they hit this mortgage mess. This couple will, mostly likely, overcome the obstacles in their path as the economy recovers it's footing in the next year or two. The lost savings of the retirees depending on the income now for quality of life in their final years will not be recovered as easily, if at all.