Life In A Subprime Ghost Town: Not Paying The Mortgage Feels "Great!"
We've been hearing tales of suburban McGhost-Towns that were submerged by a tidal wave of foreclosures at the height of the subprime meltdown and are now just sitting there, the lawns turning brown one by one.
Tess Vigeland from Marketplace Money found one of these mythical towns and interviewed some of the residents. With so many houses standing empty, one of the few remaining families has decided to stop paying their mortgage. You might expect tears, but the Sinclairs say it feels "great" to be living rent free with a "bank full of money":
Sinclair: If they reduced our interest rate back to 4.25, we might be able to make the payments, but I don't think we're going to.Isn't that something.Vigeland: Now, why not?
Sinclair: We would do it if the equity was there, but in a case where we're already so behind... Imagine that for five years, say, we're gonna pay four grand a month and then we're just gonna be back up at what we bought the house for. We feel like we're throwing away money.
The Sinclairs say they want to take responsibility for their debts, but right now it makes more financial sense not to.
Sinclair: I mean, you ask a good question. Is it really the right thing to do to let the mortgage companies take up the difference? That's a really tough ethical question.
Dan says he experienced the various stages of grief, including denial and anger. Now he's just relieved.
Sinclair: We went through months of being skinflints, because we knew that we were going into the red, so we didn't buy anything. All the sudden, we had a bank full of money and we're living rent-free, but we know that's not really our money.
Vigeland: How does that feel?
Esmeralda Sinclair: Great! Like he said, we were so tight with money...
Dan: It does feel great, because all the sudden, we feel like we have a little margin now where we can go out to dinner, get a babysitter...
Vigeland: But you're not paying your mortgage. You're not paying the biggest obligation you have. How does that feel good?
Esmeralda: We already went through the guilt. This is really what we need to do, not what we wanted to do, but what we need to do.
Ghost Town USA [Marketplace Money]
(Photo:Tess Vigeland)
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Comments:
Seems like a great time to call the mortgage company and work out a reasonable payment schedule. If this really is a ghost town any lender is going to say - hey $3000 a month is much better than nothing....
K.
It will feel "great" when they try to shove their big screen TV (probably bought on credit) in the back of their car. Where they live because no one will rent to them, let alone sell them another house.
when historians look back at the collapse of america in the 21st century this will be the reason. Historians may not be able to figure it out but the fact is that attitudes like this are the reaosn that America will fail. America did used to be the greatest country on earth because of our attitudes but we have clearly lost our way and our values. This is really really sad.
Oh, I am going to be so hated for this, but those people are Douches.
did he skip the bargaining step altogether? cheater
I'm afraid this is the reality..if they wait long enough,the government will cut them a great deal!!
It is no wonder the rest of the world hates "us."
We should bring back debtors prisons for people like these. They are degenerates, plain and simple.
It's just a business decision not a moral one. Don't ever forget that! The banks and big corporate lenders don't have morals you shouldn't either. Make a correct decision based on your situation, and proceed with your business plan. This is not an emotional trip it's a business decision pure and simple.
God forbid you have to cut back on things to pay a mortgage you willingly entered into. No one forced you to buy a house. This is just mind boggling.
Why I don't not pay my rent? Oh yeah, because I get evicted.
@darundal: No, I don't think you are.
Heck, I'm usually against the "blame the victim" mentality that sometimes occurs around here, but these folks are NOT victims.
I particularly like the capital "D" in Douches.
:)
Can't pay the mortgage, but that widescreen has a live cable box on top of it. Nice, motherfuckers.
Um... what will they do when they get a huge deficiency judgement against placed against them?
A mortgage contract is pretty clear cut. There are two options under the terms of the contract:
A) You make the payments
or,
B) The bank gets the house
If you decide to stop making payments, you're not doing anything bad or wrong. You're just choosing option B. It's perfectly moral AND legal to stop paying any time you want.
@Monoplex: Responsibility cuts both ways. If the lender made an irresponsible loan, then why is the borrower suddenly supposed to be the responsible one?
Wouldn't the responsible thing for the lenders to do be to lower the interest rates back to the level that people CAN make the payments? Again, if the bank doesn't feel the need to act in a reasonable and responsible manner, I have a hard time seeing why the borrow should.
In the end, the borrower is going to lose the house as rates go up and up - this borrower is simply choosing to be responsible to his *family*, by putting himself in the best financial position he can when that happens.
Cry me a river. He wants his mortgage rate back to 4.25. Screw you and the horse you rode in on. The rest of us are working our asses off, paying our fixed 30 year rates on 1,000 sq foot houses. Send in the cops.
This is an example of great parenting. I mean making a choice so you can go to dinner and hirer a babysitter, and then in a few months be homeless or have to explain to your kids why they are sleeping on grandma's couch and no longer have a bedroom.
Wow.
Way to look out for your kids and their well being. Not to mention the excellent example you're setting for them.
I want to blame the victim here but the victim is to blame, this makes my Troll CPU say "Does not compute"
With that said I'm going to take the fall back and blame religion. Yep, this is religion's fault.
(No that wasnt supposed to make sense, any of it.)
so how are they still allowed to live in that house?
Whatever the bank is equally to blame for its short-sightedness. They're all douches.
@Monoplex: well then they can explain the personal responsibility of the appraisers and realtors to do their jobs honestly. if you're getting all your fees up front what's the incentive to not lie about how much something costs if you're getting a percentage? where's their personal responsibility? also, they realize that they're going to lose the house. they're waiting for the eviction notice and probably saving up to move somewhere to rent. that's not irresponsible. they're aware of the consequences they're just making a different choice and giving themselves a way out when they had none before.
i don't quite follow what feels great about inching closer to foreclosure? am i missing something or are these folks completely out of their gourds?
Everyone would feel differently if they did not have:
Kids
Giant TV
tons of money to go out to dinner with
A job
I hope they get evicted and have to live in a homeless shelter and then eventually out in the streets. Let's see how "great" they're feeling then.
Bastards. Seriously.
@toddy33:
The difference here is they're not victims. They signed the docs, whether they should have or not.
If anyone's a victim in this it's the mortgage company.
@novelgirl: but they did cut back and it didn't save them. that was the problem with these mortgages. there was NO way the people who got these loans were ever going to be able to afford them. you can't shove your entire salary into one bill. you need food and utilities and savings and people are people and they do need recreation. no these people shouldn't have taken a loan they couldn't handle, but they were never supposed to get approved for one either.
God help us if our government decides to bail out people like this. Sure, the lenders weren't being the most moral people out there, but they didn't hold a gun to anyone's head.
We need to learn to live within our means, and the only people being hurt by this whole mess are those who do live within their means. My wife and I refuse to buy a home with the way prices are right now because people like this who drove the prices up.
A house is not a guaranteed investment, it's a fairly safe investment but you can't always expect the equality to grow, and then refuse to pay. People like this make me sick.
@wring: There are laws to prevent you from getting kicked out on the curb for missing payments. The foreclosure process is a long one and during that time they cannot kick them out.
The sad part is that there are enough people in a foreclosure process such that gaming the system is pretty well known at this point.
@Monoplex:
It is a good example. Teach them that when the system fails you, that the working and middle classes shouldn't always be the one's holding the bag. Teach them to fight the upper class by handing them their just desserts in the form of a foreclosure.
Teach them assertiveness that says, "If you, Mr Bank, are going to hold the government and economy hostage for profit, insisting that tax payers bail you out, you are going to reconsider our interest rate."
Yes! Teach you kids that knowing that you contract allows you to bail on a stupid investment that assumed neighbors would move in, means exercising that option when it will help your family.
Yes! This is a great example!
We just closed on our condo a couple of days ago. At the closing, our attorney told us in the hey-day of subprime he was doing 30-60 closings per month, and now it's like 10-20. He said that you would see crazy mortgage terms, that freed up like $1K a month and he would say, come back in a year, keep your debts down and we can put you in a 30 year fixed. Where would they go? Straight to Home Depot to start renovating, or purchasing furniture or grand vacations.
@darundal
@toddy33:
The Douches are not victims, so you cannot blame them.
I love all these comments. If you have a mortgage that's twice your home's value, and legally you can just walk away from it, you should keep paying because of some vague moral obligation? Hah! Not one of you people would keep paying. You'd be stupid to do so.
This is a financial obligation. Not a moral obligation. If I decide I don't want to pay my car note anymore, I stop and the bank takes it. That doesn't make me a jerk.
"All the sudden, we had a bank full of money and we're living rent-free, but we know that's not really our money.
Vigeland: How does that feel?
Esmeralda Sinclair: Great! Like he said, we were so tight with money..."
They make me sick!
Nice cat.
I live in an apartment. I eat hot dogs for dinner. I cannot afford to eat in a restaurant, but that is just the way it is. I am not bothering anyone.
Not paying for what you bought is simply stealing, and someone will have to pay for it eventually. As the result, hard earned money is worth less and less everyday.
Blame the banks. They should just give people the lower interest rate they can afford. People keep paying and keep their homes and the banks don't lose money.
@missdona:
? Goodness...how many times must I point out that I said they are NOT victims?!? Sheesh. I even all-capped NOT. I agree!! Honest!! I swear!! Really!!
@friendlynerd: The Mortgage company isn't the victim here either. They offered the couple a loan knowing full well they wouldn't be able to pay it back. Both parties are equally to blame for the situation, just the Sinclairs are benefiting more from it right now. Of course, the Mortgage company got years of high profits out of the deal.
@thirdbase: So what you're saying is that it would be fine for the banks and mortgage companies to not do their part if they suddenly decided that the contract wasn't a good economic decision? What if they decided to sell your house out from under you because the values had skyrocketed and they were stuck collecting a measly 6.5% on this uber-valuable property? Just because something makes business sense doesn't make it ok. It IS a moral issue. It's doing what you agreed to.
These people make me sick.
Reply to thirdbase at 10:26 AM, "It's just a business decision not a moral one."
I say ... SPOT FREAKING ON. Businesses make business decisions all the times. United Airlines files for bankruptcy and cancels employee pensions which the government then takes over. BUSINESS DECISION. But, that's okay. Circuit City lays off > 3,000 employees in an effort to cut costs. BUSINESS DECISION. But, that's okay. United Healthcare denies medical procedures to people who need them in order to save money. BUSINESS DECISION. But, that's okay.
But, Mr. & Mrs. Smith at 123 Main Street decide to stop paying their mortgage because their house is worth 30% less than when they bought it, they're upside down on their mortgage, their interest rate just reset to 9% and they can't refinance because the house is worth less than the current balance. So, they decide to stop paying the mortgage, let the bank repo the house and get on with their life. BUSINESS DECISION. Oh no, but THIS will cause the downfall of American Society.
GIVE ME AN EFF'ING BREAK. thirdbase is one of the few people commenting on here that has half a brain.
It'll sure feel great when they get foreclosed on and have a black mark on their credit record for many years to come.
Isn't it exactly this sort of "satisfaction now, ignore problems down the road" attitude which caused the subprime mortgage crisis in the first place?
@mknoll1: I agree, what made America a powerful nation was a populace that worked hard and had a idea of making things better, now it seems like everyone wants a free ride.
Sometimes, I like to walk into a fancy restaurant, eat a delicious meal, sit my bloated rear on their beautiful toilet seat and then just stroll out the door without paying.
It feels great, and it's really the restaurant's fault for charging $95 for a steak in the first place. (Even if they did clearly indicate the price on the menu before I ordered it.)
@cybercjh:
Heck, my apparently less thna half a brain thinks United Airlines and Circuit City and United Healthcare are Douches, too.
Jeez, if you're pro corporate why are you people reading consumerist? These people are victims of the same situation as all their neighbors. You know, if one person doesn't like you its their problem. If 20 don't like you its probably your problem.
If one person can't pay the mortgage they're douches. If the whole neighborhood can't pay, if the whole country can't pay then its the bank's fault. If one couple figure out how to work the system a little better than the rest hooray for them. Fuck the banks, all of them everywhere.
What a great example to their children of what "personal responsibility" really entails.