Congratualtions greedy dumb people!!!

I wonder how many of these people view this as a good thing. To some it might be more of a "live here rent free until the sheriff comes" situation.

@laserjobs, I couldn't agree with you more. Thats what drove everything to shit... greed

@keainansen: Isn't that usually the case?

I think its a good thing because perhaps it will shock some people back into reality when it comes to their personal finances. Or that maybe some folks will figure out it isn't a good thing to have the government pressure banks into making loans that they ordinarily wouldn't touch with a 10 foot pole just as another "feel good" program.

The people who really get shafted are the responsible homeowners who lose their income and cant sell the home without owing.

@crabbyman6: The only problem is that I bet most people don't realize that they can be tracked down for all deficiencies for the rest of their lives (including wage garnishments). My experience has been that banks look less favorably upon those who "ride it out, rent-free for a couple months" vs. those who call and explain their situation, asking for a workout or forebearance (ie, turn in the keys and play nice)

Next headline will be "Americans with Garages full of horded rice, can't pay bills"

With the recent decline in rice prices, Americans who horded 50lb bags from Costco can't resell them for what they paid. This is creating a real problem for some rice buyers as they can not afford to pay thier credit cards down that they used to buy the rice hoards. Congress and the Fed are looking a ways to put a floor into the price of rice so that the credit does not go bad and banks have to take losses.

Remember rule #1 in America: Privitize the profits and socialize the losses

@Ash78:
Depends on the state. In many places (including California), residential mortgages are non-recourse - the only thing the lender can come after you for is the house - if selling the house doesn't satisfy the mortgage, then the lender is SOL.

@barty:

I would agree with you if I could believe that this might make stupid people realize they spend too much money they don't have. The truth is many of these people will never take responisibility for knowingly entering mortgages they couldn't afford and they will blame someone else. It's the American Way.

@laserjobs: Next headline will be "Americans with Garages full of horded rice, can't pay bills"

Another case of the Drive-By Media creating a scare when there was none.

I never saw that it went up all that much anyway.

By the way, as for mortgages, it's sad for some but honestly it's just a case of how being stupid is a crime sometimes.

This is exactly what an unregulated "free market" gets us -- short-term profits at the expense of long-term stability. The whole subprime fiasco is a prime example of why lassiez-faire economic policy just doesn't work.

By the time this is all over, I should be in a great position to buy a house.

Paying down debt, renting, and no car payment FTW!!

It was suggested that Canada goes and buys Florida it would be a win-win set up Canadians could live warm on Canadian money and all the homes in Florida would be sold. Oh right Canadian money has been going higher than the U.S.A. currency.

@HeartBurnKid:

You couldn't be 100% more wrong.

The free market is working, Goverment just needs to get out of the way and stop bailing out companies and people.

Home prices got out of control, free market fixes it by crashing home prices.

Gee I hope they don't forclose on my rice. How did we go from housing to rice. Did I miss a meeting?

@crabbyman6: always a good thing for some people when bubbles pop

homebuyers need love too!

Hey, bankers and global pool of ca$h: how attractive does that extra 4% yield look now?

I bought my home (which is worth 10k less than when I bought it now) in the middle of the bubble, and REFUSED anything but a 30 year fixed. The blame for this can be spread all the way up and down the chain, from consumer to big time lender and beyond.

@opfreak:

Agree 100%. The government's teaching the mortgage industry and consumers that if they make a bunch of mistakes, Uncle Sam will step in to make it all better. Politicians need to stop pandering to their constituencies and let the market correct what it has created. Perhaps then there will be a lesson learned by both lenders and home owners.

@nedzeppelin: haha, I agree completely since I'm looking to get a house within the next year. I also know a few people that are extremely responsible with their debts and are seriously considering buying a house to rent out.

I can see how people might be, I don't want to say dumb, silly about the houses they buy. The amount of mortgage my wife and I got pre-approved for with our current salaries would very quickly put us in major financial trouble and that was the bank's "conservative" estimate. Granted we're both graduate students and I'll be done within a year so our income should go up then, but what about the interim time period? Luckily we're smart enough to realize this.

@HeartBurnKid:

This is exactly what an unregulated "free market" gets us -- short-term profits at the expense of long-term stability. The whole subprime fiasco is a prime example of why lassiez-faire economic policy just doesn't work.

One problem never brought up in this mess is property taxes. During the boom local governments followed the inflated pricing and assessed everything at ridiculous levels. Now properties aren't worth what their assessed at but the taxes aren't going down and probably won't until enough people complain.

@theblackdog:

Paying down debt, renting, and no car payment FTW!!

@WhiteTrashLegend: AMEN!

What I'm really hoping is that people will learn that, ya know, if you make a bad financial decision you lose money.

Macro/Microeconomics 101 should be prerequisites to having money.

@HeartBurnKid: The "free market" has gotten us cheaper homes. That'll have quite a soothing effect later on, but sadly won't receive much media coverage at all. As a renter, I see instability as a never ending arbitrary rise in home prices. The playing field will level again after a bounce, and that's free market stability at work.

@theblackdog: Paying down debt, renting, and no car payment FTW!!

Sure beats a car payment and having to move back home ... >_<

Paying down debt is awesome, though. :)

@battra92: But then people would actually put money in savings and spend less. It would make our economy would "suffer".

@Sucko-T: So the taxes don't get paid... police/fire/municipal workers laid off... pensions payments not made... infrastructure crumbles??? Soylent Green??

@opfreak: The free market is what caused these dodgy and ridiculous loans to be made in the first place, which increased demand for houses, which drove prices up, which led to speculation, which increased demand for houses, which drove prices up... and basically inflated the bubble while ensuring that anybody who wished to actually own and live in a home would have to take on ridiculous debt to do so. Yes, the market does correct itself. Eventually. And hard, in this case, leaving millions in debt and possibly homeless.

There should have been regulations in place to prevent the damn loans from being made in the first place. They are pollution for our economy, and should have been stamped out, or at least minimized.

@InfiniTrent: Nice strawman.

Yea for lower home prices. I hope home prices keep going down, I'll be able to actually buy one then! Where I live (NW burbs of chicago)home prices are still off the charts IMO. I don't have the money to spend $230,000+ on a 2 bedroom townhome. They are also doing a downtown renovation, forced eminent domain on all the long standing residents that lived near the lake to build new townhomes & condos that start at the low $400's over half are sold wonder how many of those sales have gone belly up. Sure I could move out to the boonies but I don't wanna have to spend half my paycheck on gas just to get to & from work.

@HeartBurnKid: right, poor decision makers are part of the free market too. that means you have the right to go try to buy more house than you can afford, not understand the terms of your loan, then whine when you end up giving it back to the bank

I don't see how honest people wanting a house was greed. Greed was builders, realtors, and flippers milking the houes market. I mean the housing market & refinancing basically propped up by Bush & Co. kept the economy afloat his whole presidency but now its time for everyone to pay.

I'm not saying all buyers are not at fault, but surely you must feel sorry for those that simply bought a house and now due to a divorce of job loss are simply unable to pay.

Those the refinanced and bought a new car etc should be severely punished.

Ash78: Wrong, wrong, wrong. It varies by states. In California, for example, purchase loans are non-recourse -- the lender CANNOT go after the debtor for any deficiency. And if the debtor goes through bankruptcy, there is no deficiency.

@HeartBurnKid: My strawman was no more ridiculous than your demonizing comments about free market economy.

@LJKelley: because the ones out on their butts tried to buy more house than they could afford, to keep up with the joneses and the sense that everyone should be entitled to a mcmansion

the ones who didn't default on their mortgages and are just "sad" their houses are devalued don't matter much. as long as you're living in it and not selling it or tapping it for a reverse mortgage for retirement, you haven't really lost anything. anyways, such is the nature with investments.

if house values went up forever, eventually nobody would be able to buy them because they'd all be ridiculously priced

@nedzeppelin: if house values went up forever, eventually nobody would be able to buy them because they'd all be ridiculously priced

Exactly. The free market works in cycles and it works best when it works in cycles. You need corrections to weed out the ills.

When I bought my home last year I thought that things wouldn't get that much worse. These days it looks like I will be stuck there for a good long while just to break even. That really sucks. I bought a foreclosure so it was already cheap. Damn I'm depressed now.

@Rupan: i think before all this mess started happening, the general rule of thumb was something like you should stay in a house at least 5 years to make your money back

i think that's pretty safe.
5 years from now you won't know the difference. as long as you aren't selling today, then whatever your home is assessed at is kind of just an arbitrary number.
and don't forget, if you were to sell today and buy another house, the prices on the one you would be buying would also likely be lower

the only people truly hurt by falling home prices are the elderly who relied on their home equity to fund their retirements and such

It's greed for sure, but more greed on the side of the lenders, brokers, and dealers in CDOs than on the individual homeowners.

WhiteTrashLegend, opfreak, you guys are actually arguing that the CDO debt market doesn't need regulation? I guess you'd be happy if the repealed Sarbanes-Oxley and all the anti-trust legislation, too?

hooray for the free market! WOOHOO!

man, some of you guys really need some pom-poms.

@Mr. Gunn: how can it be more greed on anyone's side?

both parties enter a contract mutually and voluntarily..

@LJKelley: I agree completely.

My husband and I are currently looking at houses to buy, predominantly foreclosures. There are of course flips gone wrong, but there are also a lot of cases of people that have owned the house for years falling on hard times or of barely cursory-english speaking immigrants conned into thinking they had found the american dream.

wanting something you can't afford and doing whatever it takes to get it is the definition of greed, isn't it?

This is sad but maybe this is what it takes for people to reazlize if you make $75,000 a year you really CAN'T afford mortage payments on a $500,000 home!

Of course it would not be news if the headline were to read "97.5% of the mortgages are being paid off on schedule by responsible owners" or "Over 44 million homeowners are not defaulting on their mortgages"

@nedzeppelin: Yes, and do you see what happens when people at every level (banks, brokers, and consumers) make bad decisions on a systematic basis? Everything falls apart. And this is why a certain level of regulation is necessary: to keep people from doing things that may seem like a good idea short-term, but kill our economy in the long-term.

@InfiniTrent: Demonizing? Is it demonizing to look at the current situation and say, "Oh, damn, maybe some regulation actually is a good thing?" Every time I've seen something de-regulated, it's eventually caused a disaster, whether it be California's energy de-regulation that caused us to have rolling blackouts back in 2000-2002, or the whole damn subprime mess. I'm not saying that the government should control everything, because that'd be just as bad; however, we should step in to prevent the worst abuses of the system before they kill the system.