"Mr. Doyle, 52, is now worried that he will have to file for bankruptcy, because he cannot afford to make the higher variable payments on his mortgage, and he cannot sell his home for more than his $740,000 mortgage.Okay take a look at his words---he took a gamble....he knew what was coming and he took the chance that he was going to be able to sell the property before the higher rates came due but by the sounds of it he didn't make a plan for what to do if it didn't sell right away.
“The whole plan was to get out” before his rate reset, he said. “Now I am caught. I can’t sell my house."
Its not because he lost a job....its not because of unexpected medical bills.....its not because of anything other than the fact that he lost his gamble!
I could have more sympathy if it were one of these reasons, but its not....plain and simple---he knew what was coming and his gamble didn't pay off.
Kenneth Lewis, the chief executive of Bank of America, said more borrowers
appear to be giving up on their homes as prices fall, noting a “change in social attitudes toward default.”
“You don’t mind making a $2,000 payment when the house is going up” in value, said Steve Walsh, a mortgage broker in Scottsdale, Arizona, who has seen several clients walk away from their homes because they couldn’t refinance or sell. “When it’s going down, it becomes a weight around your neck, it becomes an anchor.”
What? no its not---its the same payment....as long as it hasn't gone up its no different than it was before. He may be right though that people look at housing as something to make money from...instead of the fall back.
So people are just letting the house go into foreclosure without even trying to save it? This is just a way of saying that they didn't buy the houses to make 'homes' they bought them as a form of investment....investments are a big risk. They gambled with their houses.
...In addition to the declining value of her home, Ms. Harris, 53, will soon be hit with a sharply higher house payment. She has an option adjustable-rate mortgage, a loan that allows borrowers to pay less than the interest and principal due every month. The unpaid interest gets added to the principal balance. She is making the minimum monthly payments due on her loan, about $2,400.
But she knows she will not be able to pay the $3,400 needed to cover her interest and principal, which she will be required to pay once her loan balance reaches 115 percent of her starting balance. And under the terms of her loan, which was made by Countrywide Financial, she would have to pay a prepayment penalty of about $40,000 if she chose to refinance or sell her home before May 2009.
Wait, let me get this straight. She signed up for a mortgage that gets around the federal interest laws and she didn't see a problem with it...and now she's worried??
The interest laws are set up so that lenders can not charge interest upon interest...that is why credit cards try to get you to keep a balance on their accts...they can charge to continued interest on the balance due (that isn't interest).
Actually looking at the terms of her loan I have to wonder why she would sign a loan that would penalize her for selling her home before a certain period....its not like they will be losing money...even if she refinanced they wouldn't lose money--just the interest.
I do see that it is Country Wide which caused problems for my sister-in-law at her rental property. Country Wide foreclosed on the property she was renting, and tried to evict her after half a year without ever asking for rent on grounds of unpaid rent....when my FIL tried to buy the property they wanted way too much for the property as it stood (it would have to be an "as is" sale); I don't know how a realitor can be allowed to make mortgage loans on their own property---its seems like a conflict of interest to me. My understanding is that in order to buy the home, he would have to go thru them...he was not allowed to bring in a second mortgage company.
....Credit counselors say many borrowers like Ms. Harris were cajoled or pushed into risky mortgages that they never had the ability to repay.
Others disregarded warnings about complex loans because they wanted to be a part of the housing boom, which like the technology stock bubble lured people in with seemingly instant and risk-free profits,
So if this is the case, who is at fault? I remember having a conversation with a mortgage broker on the phone once who kept getting my 'gross' income mixed up with my 'net income' no matter how many times I tried to straighten him out he kept saying I was wrong and he was right--needless to say I did NOT do business with them.....if they can't get something that simple correct what else would be messed up??
But "cajoled or pushed"? No more like "disregarded warnings". They didn't ask questions---they ignored the red-flags that went up---they wanted a house at any costs.
Yes getting a house is the 'American Dream'....house, family, car, dog....but you have to work for it no one can give it to you.
My concern is that if the government steps in to try to straighten this out there will be just as bad a back lash as there was to banks foreclosing on farmers in the 1980's. It will bite the rest of us in the ass no matter what....I said it from the beginning....but if the government gets involved then you will be running into real trouble.