No Help For 70% Of Homeowners Facing Foreclosure

A new study shows that despite the best efforts of lawmakers and mortgage-service companies, little is actually being done to help homeowners facing foreclosure, says the Wall Street Journal.

The study, compiled by the State Foreclosure Prevention Working Group, made up of banking regulators and attorneys general in 11 states, found that seven out of 10 borrowers who are seriously delinquent on their mortgages aren’t on track to receive any kind of help with their payment problems.

The number of delinquent borrowers working with their lenders has increased, the report found, but overall increases in the number of delinquent loans have outstripped those gains. The proportion of borrowers who weren’t engaged in any sort of loan workout was unchanged from the group’s previous report in February.

“While there’s been a lot of effort put in by mortgage servicers and government officials, there has been little change in outcomes for homeowners,” said Mark Pearce, deputy banking commissioner for North Carolina. “We’re still treading water.”

Some AG’s, such as Iowa’s Tom Miller, are not ruling out litigation if mortgage companies don’t do more for troubled homeowners.

“If loan mitigation and modification don’t produce fruitful results for homeowners, I, for one, would be inclined to look at litigation possibilities to secure help for homeowners,” he said.

States Fault Effort to Stanch Foreclosures [Wall Street Journal]
(Photo:gruntzooki)

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  1. chicagocooper says:

    And why should the government or companies help people that can’t pay their mortgage?

  2. BigElectricCat says:

    FWIW, I’m opposed to bailouts for homeowners, but I’m even more opposed to bailouts for Wall Street firms that traded in mortgage-backed securities.

    No bailouts for anyone. Haircuts for Main Street AND Wall Street.

  3. unklegwar says:

    The help isn’t for the homeowners, it’s for the banks and the investors, duh.

  4. OMG! Ponies! says:

    Well which homeowners are we talking about? If we’re talking about the ones who lied on their applications then I say screw them.

  5. vision646 says:

    Why should those of us who didn’t screw up pay for those who did? That doesn’t seem very “fair” to me. I continued renting because I knew I would be unable to afford buying a house, so now my tax money should be used to help people who didn’t make the responsible decision. No.

  6. laserjobs says:

    Amerika – EPIC FAIL

  7. tkozikow says:

    My $0.02…our credit score has continuously improved over the past few years, but wasn’t so hot in 2005 when we took out a 2nd mortgage which put us in the subprime category. Even with both loans we had an LTV of 72% and the plan was to refinance the second into a HELOC once our finances improved. Fast forward and now our LTV is 102% and we don’t have the cash to buy down the refinance in order to bring this down to 90%. I am not looking for a bailout, but I hoped that my lender would refinance the existing loan at a more appropriate rate given my current situation. It appears, however, that they are only willing to entertain this once I am seriously delinquent which will drive my score back down.

  8. BlondeGrlz says:

    Oh no! 70% of people who were irresponsible are still being irresponsible! Whatever shall we do? Please, someone tell me how I can pick up their slack!?

  9. Throtex says:

    @vision646: Thank you … I’m in the same boat, and hoping to finally buy later this year. It will be disappointing if I get screwed over to help people who made poor financial decisions.

  10. NYGal81 says:

    I’m not a big fan of this whole bailout thing. My husband and I are in the process of buying a house and, although we qualify for an UNHOLY amount of money with which to buy this house, it doesn’t mean we can afford to make the payments. We’ve never bought a house before, yet nobody has had to explicitly tell us that, just because we qualify for a $400,000 mortgage with no down payment doesn’t mean we have to go buy a $400,000 house.

    I have absolutely no sympathy for people who got in over their head through sub-prime lending, ARMs, and 80/20 loans that made it possible to buy McMansions with limited monthly income. On the part of the consumer AND the lending companies, it’s an expression of unabashed American greed.

    On the other hand…what do we do with the folks who bought within their limits, but are suffering the substantial effects of this economic downswing? Maybe someone lost a job, or became disabled? Should that person be subject to the same scorn and finger-wagging as those who succumbed to greed and an “I deserve this” mentality? I don’t know how to feel about that…

    I guess one of the REAL problems I have is this: should the government mandate that lenders assist their sub-prime borrowers if said borrowers don’t seem to care about the mess they’re in? Why should the lenders be forced to help if Joe Forclosure can’t be compelled to pick up the phone and call for some help himself? Although I rarely come down on the side of big business–especially big corrupt business, if you’re buying a home, you better know a thing or two about your finances, and you better make yourself informed about lending practices. The lenders can’t talk all the blame, nor shoulder the full responsibility, when the buyers are at least partly culpable in their ignorance.

  11. Jaysyn was banned for: http://consumerist.com/5032912/the-subprime-meltdown-will-be-nothing-compared-to-the-prime-meltdown#c7042646 says:

    Amerika – EPIC FAIL = mrk?

  12. kittenfoo says:

    if this is an example of our lawmakers’ and mortgage-service companies’ “best efforts” then we are totally screwed.

  13. giggitygoo says:

    No more tax-funded bailouts for people or companies. I’m tired of this all being blamed on “predatory lenders.” I’m sure there are anecdotal cases of fraudulent companies who misrepresented terms to fool people into loans. However, the vast majority of bad loans were honest agreements made by irresponsible people and greedy lenders that willingly disregarded the large risks involved with sub-prime loans. Both these people and lenders should face the consequences. We’re already over-taxed and have massive national debt – It has to stop.

  14. mac-phisto says:

    screw you guys. seriously. we’ve already seen washington basically bend over & drop its pants in response to the bawling on wall street. it’s ok to screw over average americans, but not investment banks (& in turn investors)? bullshit.

    the fed underwrites $30 billion of the riskiest “securities” as bear stearns folds into the 3rd largest BHC in america, but we’re not willing to work with the owners of those homes so that we don’t end up paying out that $30 billion to an institution with $1.5 trillion in assets?

    that’s just garbage.

  15. wgrune says:

    There seems to be two basic of groups of people involved in this “meltdown”: those who were straight up lied to by the banks/lenders and essentially tricked into their loans and those who knew what they were getting into and/or didn’t fully do their homework before signing on the dotted line.

    I have ZERO sympathy for the latter. Why should the banks be sued by the states into helping these people? They knowingly entered into a contract with another party and are now reneging on said contract. If I went to the local Lambo dealer and bough a brand new car quit making payments I sure as hell wouldn’t be surprised when the repo man showed up.

    These bailouts are frustrating to the people who live within their means and pay their bills. I would love to own boats and 4-wheelers and motorcycles but I can’t afford all that stuff and a house and my used car.

    The moral of the story seems to be borrow yourself into oblivion, stock up a mountain of crap you bought on credit, spend like there’s no tomorrow and the government will bail you out.

    For shame…

  16. Sam Glover says:

    Loan modifications are not bailouts. They would prevent a ton of financial waste that affects the entire economy. But with the morass of securitization, loans are nearly impossible to modify. Instead, foreclosures continue to go forward, keeping the economy on a downward trend.

  17. stageright says:

    @tkozikow: You know, without knowing WHY you took out the second mortgage, we all sort of have to assume you did it for the usual reasons – pay off credit card debt, buy new jetskis, get that new flatscreen.

    Poor you – you spent and spent and spent and used your house as an ATM. Now we’re all supposed to feel bad that your perfect world didn’t happen, and what did happen was reality?

  18. JohnMc says:

    kittenfoo, no the folks who took loans they could not repay were screwed the day they signed them.

    A good smell test for whether a loan was ‘acceptable’ would be if the borrower put 10% and no other assets would they have qualified for either a FHA or conventional loan? If they could not pass that then more scrutiny is required against the lender. Otherwise it was a bogus loan. Considering that mortgage brokers are falling like flies that has to tell you that there were some bad deals cooked.

    But it was incumbent upon the borrower to know their limits. And yes I am against any sort of bail out.

  19. JohnMc says:

    “Loan modifications are not bailouts. ” It is when the visible hand of government coercion is involved.

  20. ThunderRoad says:

    Y’know, I bought my house at a not-great time. It hasn’t plummeted in value, but it is slipping, especially with all the for-sale signs going up around us. But I have a fixed-rate mortgage and am responsibly paying my bill.

    WHERE THE HELL IS MY BAILOUT?! You wanna stimulate things? Give me a $3000 “not a financial asshole” credit!

  21. r081984 says:

    Why should they get help???

    They bought a house they knew they could not afford.
    The lenders gave money to those who they knew could not afford it.

  22. Throtex says:

    @mac-phisto: What kind of an argument is that? Two wrongs don’t make a right …

  23. tourpro says:

    Probably folks would be interested in this:

    Backlash grows against the housing bailout

    The relevant petition is here:

    Angryrenter.com

    I’ve signed, and everyone else should too.

  24. AMetamorphosis says:

    Boo Fin’ hoo …

    Too many people bought homes on the belief that property values were going to constantly rise and they could use their homes as ATM’s.

    Many of these people had no business buying a home in the first place.

    As an earlier poster stated, I too am approved for an UNHOLY amount of credit but I CHOOSe to live in a modest home that I know I can afford … even if I have to go work @ Micky D’s to make the payment.

    Perhaps I just shouldn’t pay the mortgage for 6 months and whine that someone needs to bail me out …

    I’m tired of this ” No Fault ” attitude that most Americans have.
    Take responsibility for your actions and don’t sign on the dotted line when you don’t know what in the hell your signing.

  25. JeffM says:

    Well the number should read 100% – but there also shouldn’t be any money for the big guys either- both types of bailouts are unethical and fundamentally unfair to taxpayers.

  26. Ninjanice says:

    I’m sickof people getting bailouts for their poor decisions. You know what? I say “too bad”. And I think it’s time we all started saying “too bad” to people who make poor decisions instead of bailing them out. It’s time for Americans to accept resposibility for what they choose to do. I’m sure no one had a gun to their head when they were signing their loan paperwork. I managed to buy a home when I was 22. I was approved for a loan that was worth substantially more than I could afford because of my credit and lack of debt. I made the right decision and stuck to my budget. Shouldn’t I get something for not being an idiot?
    I understand that some people were out-and-out lied to by their brokers, but no one told them they couldn’t read what they were signing. I know I had to sign and initial by my interest rate and loan term several times, so I knew what specific terms I was agreeing to when I signed my mortgage loan. If someone chose to not read their loan or not ask questions, guess what I say? “Too bad!”

  27. Throtex says:

    @TourPro: Thank you for the article. I doubt the usefulness of petitions, but I’m glad to see some people have their heads on straight!

  28. enm4r says:

    I think at this point it’s looking like I missed the “investment opportunity” of buying a house a couple years ago. If I knew I would be getting a coupon fron the govt a few years later I might have taken the plunge.

  29. dragonvpm says:

    Something a lot of folks don’t seem to appreciate is that their homes can quickly start to feel the effects of all those “irresponsible” people they look down upon. Don’t believe me? Just wait until enough houses near yours get sold at auction and drive down the value of the houses in the neighborhood.

    Our homes’ values are only as much as whatever the houses near ours sell for so we all benefitted from folks buying beyond their means (our house values went up) and we all face some tough times if enough people can’t afford to make their payments. So do you want us to look at you and say “suck it up” if your home value slips enough that you can’t sell it next year or the year after that?

    I had an ARM loan when I first bought my house and looking back know, it’s a bit frightening to realize that there was absolutely no way to know what it would reset to 3 years later when the original interest rate expired. Given that I got the loan when interest rates were near their lowest, I knew the payments would go up, but I remember noticing that when I asked for more details prior to closing, there were none to be found.

    It was also surprising how flexible the mortgage broker I dealt with was wrt factual statements on the loan apps. I knew what I could actually afford so I made her stay honest and I didn’t buy beyond my means, but I could easily see how she could have talked someone else into doing some unscrupulous things.

    After all she only cared about making the deal in the first place. Once she got her money, how you pay for the house 3, 4, 5 years later is not her problem.

    I thought about refinancing earlier, but the original note had a prepayment penalty if I refinanced in less than 3 years. Effectively that meant once in, I only had a 2-3 month period to move to something more stable without getting hit for some substantial costs. I talked to my mortage company at the time (Countrywide) and they refused to consider waving the prepayment penalties even if I refinanced through them.

    It turns out that I was one of the lucky ones. My ARM loan reset before the bubble burst, but I was ready for it and I refinanced (taking no money out) into a fixed interest rate loan that was better than I could have gotten three years earlier. My house (a real fixer-upper) is now worth almost 2x what I paid for it (and more than 2x what I owe on it) and it’s likely to increase more as I finish more projects.

    However, it wouldn’t have taken much to end up in a bad situation and it seems clear to me that some mortgage companies are too focused on wringing money out of their vict… “clients” to consider that their actions may be detrimental to themselves and those same clients

    Look at Countrywide now, given how they treated me, I’m not surprised that they’re in the situation they’re in now and as a semi-amusing anecdote. When they weren’t interested in working with me to refinance my house at a good rate with better terms, I went back to my mortgage broker who got me a really good mortgage and guess who bought it before I made my first payment? Yup, Countrywide.

  30. Throtex says:

    Also, how come Realtors® get a free pass on all of this? They’re just as responsible as the brokers and buyers in this whole mess. What kind of irresponsibility is it to keep advertising the soundness of a housing “investment” when anyone with half-a-brain could see the impending meltdown?

  31. Daniels says:

    I’m tired of this all being blamed on “predatory lenders.”

    The other option is for politicians to blame individuals for being dumb. This does not improve his chances of being re-elected.

  32. ChuckECheese says:

    @TourPro: Not trying to be rude or anything, but I just don’t get the point of this website angryrenter.com. What is it exactly that it is requesting?

  33. picardia says:

    @giggitygoo: It’s more than anecdotal — there are plenty of genuinely predatory lenders out there. Are there people who should never have gotten a loan? Yes. Are there people who did not see a change in their circumstances coming, and now have to deal with wildly panicking banks? Yes. And it’s the bank’s JOB to make sure that people who say they qualify for loans do qualify; anybody who doesn’t doublecheck that stuff deserves to go down in shrieking flames.

    For people who made stupid errors, yeah, ITA, the idea of a bailout grates. But it grates a lot less than the idea of your property values plummeting because suddenly there are all these empty abandoned houses around you.

  34. JeffM says:

    @ChuckECheese: Duh, we’re renting, and we’re mad! :P

    I’m on board with the cause but I’ll side with you- that site doesn’t really resonate with me.

  35. tourpro says:

    @ChuckECheese: Well, just to be fair, they are funded by a conservative group. They are saying that certain groups like renters shouldn’t pay for those others that made bad decisions.

    Let’s say your neighbor bought a Porsche, when he should not have. Now it has been repo’ed. Too bad, now you have to give him a free ride to work everyday, plus you have to buy lunch for the lender because the car is not worth what they thought is was.

  36. lightaugust says:

    So, while we’re you’re all pointing the finger at each other for being so financially irresponsible, big banks will be laughing ALL the way to the Fed when it’s bailout time. Do you seriously think when the Fed needs to start bailing out investment banks to keep the whole thing from collapsing someone’s going to stop to think about who was being responsible?

    Don’t even start to kid yourself about how much cheaper and better for the economy an individual bailout will be than the investor/ bank bailout (not to mention how it would keep the value afloat for all the houses that are dropping because of all the foreclosures). I got shouted down last time I said that, and then Bear Stearns came the next week, and I got to feel mighty self- righteous.

    In the meantime, careful up on those high horses!

  37. mac-phisto says:

    fine. you know what? fuck em all. just on principle. b/c that’s always the sign of a rational, functional government.

    i think some of us need to read about the home crises of the 1930’s to fully understand the gravity of the situation.

    it starts with people who can no longer afford to own their homes. banks foreclose (already happening). as banks’ equity becomes tied up more & more in non-liquid investments, they face insolvency & fail (already happening). as more banks face the danger of failing, they begin to call loans due (starting to happen with closure of equity lines).

    then one day, the man from the bank knocks on your door & hands you (a customer with a modest mortgage who has NEVER, EVER made a late payment) a NOTICE OF PAYMENT IN FULL.

    & b/c you can’t get a loan anywhere (since the banks have no liquid funds to give you) & you can’t raise the money needed to pay off your house, you start packing your things, wondering how it came to this. how a responsible person could lose their home when they did absolutely nothing wrong.

    i’ll bet you’ll wish they didn’t let it get so bad when that time comes…

  38. Throtex says:

    @mac-phisto: Uhm … or you could not trigger something that would allow a bank to call your mortgage? Or not sign a callable mortgage at all? I’ll take my chances, thanks … those of us who know how to read fine print will make out just fine unless the government starts helping out the hyper-sensitive.

  39. mac-phisto says:

    & to the renters in the room – don’t be so naive to think you’re immune. when your rental agency goes belly up & the bank seizes their assets, or when your landlord can no longer afford his rental property, guess who else will be on the street looking for a new place to live in a market flooded with prospective renters & inflated prices?

  40. ChuckECheese says:

    @TourPro:

    Let’s say your neighbor bought a Porsche, when he should not have. Now it has been repo’ed. Too bad, now you have to give him a free ride to work everyday, plus you have to buy lunch for the lender because the car is not worth what they thought is was.

    This seems perfectly reasonable to me. I wonder if the lender would prefer sushi or Mexican.

    The thing is, is that the *shenaniganization of the mortgages will most certainly have an effect on rents; indeed I think it already has. People forced out of their homes will enter the rental market, constraining supply (and driving up prices). Moreover, I’ve seen that many an upside-down homeowner and/or mortgagor tries to rent out their property at nearly the same rate as the original mortgage, which is just silly. El Paso is full of 30-year old mediocre homes stripped of appliances, available as “rental homes” for $1200/month–people just want you to make their mortgage payments for them. (BTW, the average home price in this city is only about $100K, which I think is an exaggerated Realtor® fantasy). So in a way, renters will subsidize this meltdown.

    *What do you think–should this be shenanigization or shenaniganization?

  41. ChuckECheese says:

    @mac-phisto: You’re right. But back in the early 90’s during that real-estate meltdown (remember the RTC?), my sister was renting an apartment in Scottsdale AZ where this exact thing happened. The investment/property management company folded, but then just a few weeks later, the S&L holding the note folded too. She got about 6 months of free rent out of the deal before anybody was able to get the place back on track.

  42. WV.Hillbilly says:

    @giggitygoo:
    How about a pandering Congress?

    They bitched and moaned about “poor people not being able to afford a mortgage” and pressured the banks into lending these people money.
    And then what happens?
    They’re outraged that the people who couldn’t afford a mortgage can’t pay them.
    It must be somebody else’s fault.

  43. cubejockey says:

    I see people on this board all high and mighty because they knew better and then I see people in my neighborhood at the opposite end (foreclosed, repoed, etc.).

    Both have a similarity. Bankers

    Oh sure you with the spotless credit record did the right thing and the common sense to not loan more that what was in front of you.

    Meanwhile, your bank didn’t care. They lobbied the government to allow spinnoffs of shady loan companies and took a lazzez-faire approach to lending practices and policies. Just because you got a better education doesn’t mean you can thwack the poor.

  44. tourpro says:

    @ChuckECheese:

    shenaniganization +1

    We have to go with that because I just added it to my dictionary.

  45. mac-phisto says:

    @Throtex: residential mortgages aren’t callable anymore. i was giving a brief synopsis of depression-era home loss to illustrate how the snowball gets bigger the farther down the hill it rolls.

  46. morganlh85 says:

    @chicagocooper: To save the economy. Those people who can’t pay their mortgages will lead to YOU losing your job eventually.

  47. marsneedsrabbits says:

    Good.
    Is there any way we can rip the rug out from under the other 30%?

    I didn’t tell them to buy things they couldn’t afford or fail to read what they signed.

  48. BigElectricCat says:

    @ChuckECheese:

    “*shenaniganization”

    Quick, someone call the people who publish the Oxford English Dictionary. Consumerist has a neologism for them.

  49. Me - now with more humidity says:

    mac-phisto:good comments. There are still some mortgages out there that can be called when the value of the asset drops below the value of the loan. No smart bank would do it, but they could.

  50. picardia says:

    @WV.Hillbilly: Get real, Hillbilly. Congressional pressure didn’t have jack to do with these yahoos offering craptastical mortgages; they were looking for their own profit. No arms were bent behind any backs. Banks believed the myth about real estate always rising in value and capitalized on it 90 ways from Sunday.

  51. cubejockey says:
  52. MyCokesBiggerThanYours says:

    Why do we need to help these people? “Gee, I made a bad decision so now someone else is responsible for my mess?” If you want to live in a communist or socialist society move to Europe.

  53. Snarkysnake says:

    Almost too many villains here to finger any one group…

    A bailout of homeowners is no different than giving a drunk another drink.Few are going to become more sophisticated in their financial lives because their loan gets tampered with. Ironically , this will almost certainly exacerbate the situation by artificially propping up the values of these homes. Many of these loans will fail anyway when reality sets in that they are permanently underwater.This means that the pain will drag out for years.

    Lenders are not stupid.
    Did you know that Citicorp got bailed out in 1991 ?
    That Continental Illinois in 1986 ?
    Long Term capital Management in 1998 ?
    The entire savings and loan industry in 1990 ?

    What do you think would happen if these things were allowed to go down the drain and no bailout was forthcoming ?
    We are in a permanent cycle of these rescues because of the “too big to fail” policy of the Federal Reserve.Tis gives these swindlers a license to play casino games with our money. then if they hit the jackpot,it’s their to keep. Crap out, and we get the bill.

    Congress. Lobbyists are strong and politicians are weak. Our government is for sale 24/7 and we seemingly are powerless to stop it.Wait ’til next year. There won’t be an election then. Incumbents won’t be sweating the details with this fall safely behind them.If they survive the first Tuesday this November,it’s gonna be fine because they are more likely to die in office than get voted out.

    Yep, too many villans…

  54. cubejockey says:

    there’s someone who said “why do we 30 percenters get the rug thrown out below us?”

    Good question. The financial industry was thinking along the same lines. 30 percenters weren’t giving them marginal profits and a limited amount of people to give “legitimate” loans to.

    So for a decade they hammered the government for looser guidelines on lending, and finally got it. This is the result.

  55. mac-phisto says:

    @MyCokesBiggerThanYours: as opposed to hear in the good old u.s. of a. where “Gee, I made a bad decision so now someone else is responsible for my mess?” only works for corporate executives & politicians.

    @Snarkysnake:

    A bailout of homeowners is no different than giving a drunk another drink.Few are going to become more sophisticated in their financial lives because their loan gets tampered with. Ironically , this will almost certainly exacerbate the situation by artificially propping up the values of these homes. Many of these loans will fail anyway when reality sets in that they are permanently underwater.This means that the pain will drag out for years.

    possibly. but it’s also possible that creating a logical solution would solve the problems on main street & wall street at the same time.

    if we look at the loans made, there’s obviously a correlation between the reset dates & foreclosure dates. many of these homeowners are not a day delinquent until they hit the reset. & b/c lending requirements are much more strict today than they were 18 months ago, they can’t refi out of their loan.

    we also have to assume that investors are looking at this information as well [www.bubbleinfo.com] , which is affecting their willingness to invest in MBS until well into 2012. that means a continuance of the current liquidity crisis for another 4 years as well as ballooning commodity costs ($4 gas? pshaw! hello $5 gas!) as investors seek to make money elsewhere in a shaky market.

    why can’t we just fastrack on-time borrowers (in owner-occupied residences) into a program that freezes their current rate? simple paper addendum to the loan. as long as they keep making on-time payments, they can forgo foreclosure. hell, even tie in a recourse clause on the back interest if it makes you happy.

    that should keep a large portion of homeowners affected by this in their homes, lure some speculators back into the credit markets (maybe provide some relief elsewhere in the economy) & get the wheels churning again.

  56. mac-phisto says:

    hear = here

  57. Snarkysnake says:

    @mac-phisto:

    “lure some speculators back into the credit markets (maybe provide some relief elsewhere in the economy) & get the wheels churning again.”

    The wheels churning is what got us here.Speculation (and speculators) drove the price of these places up beyond what a reasonable person would pay.We don’t need the wheels churning again,we need the market to find its natural equilibrium so that both buyer and lender are not sitting on a time bomb.Any kind of a workout that rewards speculation just means that the next round will be bigger and harder to clean up.

    Now. neighborhoods will have boarded up houses. Some people will see their houses worth less (including me), but the fact is that people signed mortgages that they didn’t understand. Investors and speculators bought mortgages based on those loans that they didn’t fully understand. The only party making out here will be the swindlers that packaged this stuff.Do we want to reward them ? Do we want to give them the financial equivalent of a Get Out Of Jail Free card ?

    Sadly,all the blogging in the world won’t stop the big swinging dicks on Wall Street from giving a dump truck full of money to their agents in Washington. All in the name of “good government”,of course.Then,we’ll see this coming bailout packaged as a measure to “save families from foreclosure”.BOHICA.

  58. Silversmok3 says:

    I will stand against anyone who says ‘fcuk em’ to folks in foreclosure.

    Because not everyone in forclosure borrowed too much. Or bought too much. When my Dad inherited two properties from my late grandmother and rented them, he didn’t go out and buy a Lexus. And when we couldn’t find tenants ,the bank foreclosed on not one , but two homes.

    Not only could we not refinance, but because of the credit score damage, that means no loans, no apartment, no nothing. And all because my dad committed the crime of renting his inheritance .And the bank’s response to our tenant situation ? ‘Tough Sh!t’.

    And the unfortunate reality is that unless a ‘bailout’ happens, all of us, rich, poor, responsible and irresponsible, will eventually be standing together in the bread lines.

  59. elanne says:

    It gets harder and harder to feel good about the US of A. Despite what anyone says, the culture is a ‘top down’ thing. The government sets the tone for the people. And, unfortunately, we are discovering that this government is rotten to the core. And, yes, it is leaking down into the people. But not all of them, of course. It is just very hard to fight the oppressor when world banking and mega-corporations are pulling all the strings. As George Carlin said, “They don’t care about us. We don’t matter.” And … most of us are in their way which is a little something they are going to take care of any way they can.

    Yes, indeed, good folks turn to God and faith.

  60. ChuckECheese says:

    @elanne: Post of the day–boy am I cynical.

    @Silversmok3: I sympathize with anybody who has had to experience foreclosure. And I’m a bit curious–did your father inherit 2 properties that had mortgages? If they didn’t have mortgages when he got them, did he take out mortgages, and why?

    And even though I don’t know the circumstances of the fact that your dad was unable to rent out two houses, I am very curious why.

  61. Do_They_Get_It says:

    I am soooo torn.

    Okay, I’m responsible, always have been, have always qualified for best rate and always went safe route of fixed mortgage. I invest wisely and I work hard and take great pride in all I have been able to provide for my family.

    My husband’s ex and her husband are planning on abandoning their $129,000 house (yes, that is what they built it for 6 years ago, and it was a great deal as it is very undervalued for neighborhood they are in even in today’s real estate market.)

    Now, I am a realist, she has never worked, never will. He is a retired career military man with a good pension and does work occassionally to help make the bills (nothing steady). He sold other real estate worth more to build and furnish this home but because they are not even close to be responsible, they only qualified for (matter of public record, they just refuse to pay bills) they only qualified for an ARM that has balooneed and of course they have have not investments or savings. (Quite frankly, I was stunned to hear they qualified for mortgage in first place.) I also know, our monthly child support (which is not my gripe, so do not get defensive), paid their mortgage payment 3-fold each month before their baloon. What has me the most concerned is that they think in abandoning this home in foreclosure (and yes, they waited till the very last possible minute), they will turn right around and get a mortgage.

    You know, I could say..you reap what you sow, but my stepchildren are in the middle of this and what gets me is they actually think their mom is good with money.

    The truth of the matter, we are all going to pay for their home now, one way or the other. This instability my kids now have to face is an example of the blight the mortgage industry brought upon us all. These weren’t people wanting a chance and willing to work for it, they were just given a chance to take. It makes me think, “what a fool I was” that I did the right thing. Now we are thinking we just might become landlords for people with a public record of not paying rent so my children can be where they feel secure. It is worth it but boy does it rub me raw!

  62. stanfrombrooklyn says:

    here’s what i can’t figure out. some dude got a dumb mortgage and now he owes $500,000 on a house that is worth $400,000. but because he can’t pay the $500,000 mortage the bank forecloses on him even though there is no way the bank could sell the house for anywhere close to $500,000. yet they won’t renegotiate with the dude that could perhaps pony up for a $375-$400 K mortgage. So the bank forecloses, the house sits empty, and the homeowner is gone. i can’t figure out who wins in this situation.

  63. OsiUmenyiora says:

    Fcuk them. Your dad too. Just sell the stupid houses if you can’t find a tenant. What kind of stinkholes are those houses anyway.

  64. JeffM says:

    @stanfrombrooklyn: A winner? There doesn’t necessarily need to be a winner. When a stock plummets and a company fails there is no winner- is there? Sure there are guys there to pick up the pieces but the bank needs to hold people accountable for what they signed up for. Do you know how many times you need to sign pieces of paper to buy a home? It isn’t like buying a Slurpee.

    The winner in this situation are future real estate owners. (That includes people that currently own now). People that get foreclosed can rent anyway, so I don’t see what the problem is. We all make mistakes.

  65. side says:

    This is one of the most depressing bunch of posts I’ve ever read. I’m embarrassed to be called an American, if this is how “we” act. We’re at war, in a recession and some people who are in need, need help. And what are our answers? “fcuk them”? How very patriotic and “christian” of you a-holes. I’d much rather my taxes (I paid 6 f*-figures in taxes this year) went to fellow americans who need help, than some BS Bureaucratic laden program, or grant to see which came first the chicken or the egg. You make me sick.

  66. mmstk101 says:

    @side: How much sympathy should I have for people who bought WAY beyond their means and now can’t afford their wildly inflated lifestyle?

    Now, an “f them” response may be a bit strong, but you know what? There were a ton of people in desperate need before this crisis too, and how much help or sympathy did they get from us? Not a heck of a lot.

    Why should homeowners be so different?

  67. BigElectricCat says:

    @side:

    “This is one of the most depressing bunch of posts I’ve ever read. I’m embarrassed to be called an American, if this is how “we” act.”

    I speak for myself and no one else. And you’re entitled to your opinion, but so is everyone else here. Clearly, that’s upsetting to you.

    “We’re at war, in a recession and some people who are in need, need help. And what are our answers? “fcuk them”?

    1) So if we weren’t at war, you’d be okay with the ‘f-em’ attitude? Is that what you’re saying?

    2) As I’m sure a wealthy person such as yourself recognizes, the current desperation in the credit markets is *rooted* in excessive investments in subprime mortgages. One might make a cogent case that subprime mortgages may have been the tipping point that *put* us into a recession.

    3) I’m sorry if you don’t like my opinion, or anyone else’s, but things are what they are.

    “How very patriotic and “christian” of you a-holes.”

    I’m a disabled vet (DD214, VA rating letter and everything). And I’m not a christian. So what now, pal?

    “I’d much rather my taxes (I paid 6 f*-figures in taxes this year) went to fellow americans who need help, than some BS Bureaucratic laden program, or grant to see which came first the chicken or the egg.”

    Then perhaps you should make some tax-deductible donations to charities that deal with that sort of thing, Mr. Millionaire. With your massive wealth, I’m sure you have enough financial resources to help quite a few people out. But not all of us are in your fortunate position.

    “You make me sick.”

    Allow me to return the favor.

  68. mmstk101 says:

    @BigElectricCat:

    well said.

  69. hejustlaughs says:

    @BigElectricCat:

    The problem it’s not because the majority of these people are down on their luck and need help.

    A lof of these people fall into their categories (some one or more):

    greedy – They probably knew zilch about the housing market but decided to jump on the bandwagon and buy a house assuming it’ll appreciate 10% a year forever. They can always sell it later for a nice profit. You won’t read too many profiles on these people in the NY Times because a sob story sells better.

    stupid – People buy more house than they need. This wouldn’t be a problem if it was a house they could actually afford. There are literally tons of stories about people that fall into this category. Single guy making $70k/year. I guess I’ll impress everybody and get a huge house. The payments are only $3,000/month!

    really stupid – Some people bought a house because they didn’t like renting. however they could only afford payments on a interest-only mortgage which means they’ll be paying that sucker forever! Way to make the bank your landlord!

    I’m proud to be an American. We don’t need to bail out people who take outlandish risks or extremely stupid decisions.

    We’re in a recession? The problem is most Americans can’t remember the last time we had a real recession instead of these mild economic slowdowns. When a real recession hits people will really be in for it.

  70. hejustlaughs says:

    my last post was meant to be @side.

  71. hejustlaughs says:

    @stanfrombrooklyn:

    They auction off the properties. Not too many bargains around my area. I don’t live in the middle of nowhere where a housing “market” shouldn’t have formed in the first place.

  72. BigElectricCat says:

    @hejustlaughs:

    Not a problem; thanks for the clarification.

  73. gibbersome says:

    Some of the pretentious comments here never cease to disgust me. Yes, many borrowers signed up for mortgages they shouldn’t have, but the lenders were equally responsible for loaning that money. Why? Because they resold those mortgages to others. However, unlike the borrower who will have his credit ruined, the lender has little of the same consequences.

    So enough with how stupid people are and how much they deserve to be homeless. We’re here now, whats the point of letting all mortgages go into default when banks can save a large majority by offering better terms or reduced loans to those willing to work to pay it off?

    It’s only a matter of time when the shoe is on the other foot, so get off your high horse and show some humanity.