form the article: "In 2015, Mr. Martinez said, his monthly payments will be $12,000 a month. He laughed and shook his head at the absurdity of it." That's just crazy. He should have known his mortgage would balloon *someday.* I mean when I buy a house, it's for the long term. I mean, I make a tidy six figures, but that's waaay too much for anyone for a house by Tracy even! (I live in the SF Bay).

People having to live within their means for a change?

Gosh golly gee!

@big keytee: I'd be willing to bet that some fly-by-night mortgage broker told him he'd be able to refi before that happened.

For people making six figures they are pretty ignorant or gullible. If you have a low interest rate you lock it in. You dont take interest only or ARM's. If the broker tells you you can just refinance at a lower rate later on then you have to pay refinancing costs anyways, with a locked in rate at least you will be safe if rates skyrocket. This lack of basic thought annoys me to no end.

I could feel sorry for a lot of these folks, but I don't for some reason. I grew up poor and that means I grew up frugal, and no amount of success in my career has caused me to become a spendthrift. But then you can't prepare for everything, especially a global economy that's in the tank. Now these folks are having to live the lifestyle they should have been living all along -- let's hope once we get past this, the lessons will stick. But if recent history is any indication, the answer is no.

I used to live here. This is sad.

Still, they got themselves into this by being greedy and foolish. It's just sad that they have to learn the hard way.

@Blueskylaw: An ARM does sometimes make sense when you know you could afford your home payment even if it increased to the maximum. We got a 7/1 ARM instead of a 30-year fixed because we saved well over 1% on our interest rate and our loan would have to adjust upwards by the maximum amount for five straight years after that for us to end up losing money on the deal.

I feel sick after reading that.

Are we going to see whole towns abandoned?

And yes, I am sure some mortgage broker told him he would be trading up by the time the balloon payments came due. Because prices always go up, Up, UP!

Except when they don't.

maybe that town should start teaching basic math in school. How can so many people live so far ahead of their means? Anyone who buys 50 DVDs a month has some serious problems. Maybe if he got another job instead of spending 5 hours a day watching movies he could make ends meet.

My heart really goes out to Kenny Rogers who can no longer afford his hobbies of scuba diving and flying. He must be devastated that he can no longer buy 50 DVDs a month and is down to one. How horrible is it that he must wait for the Christmas sales to buy an HDTV.

I had no idea that this country was in that bad of shape.

Sadly, these people feel that it's the government's fault for not "protecting" them. Even sadder still is they now expect the government to rewrite the rules of their ill-conceived mortgages. And even sadder than all of this is that the government probably will...only at the cost of freedom.

FTFA:

"He has cut his DVD buying from 50 a month to perhaps one, and is waiting until the Christmas sales to buy a high-definition television. He does not indulge much anymore in his hobbies of scuba diving and flying."

Am I really supposed to feel sorry for these people? Maybe it makes me a jerk, but sounds like most of them are getting what they deserve.

The idea that banks filled with professionals who spend their lives evaluating dozens of loans a day approved someone like that for a loan that entailed eventual payments of $12,000/mo is fraudulent and criminal.
Sure, the family that buys/upgrades a home a handful of times their entire lives - and endlessly bombarded by marketers to ignore common sense - has some culpability as well, but it's mortgage companies' JOBS to say no.
The guy will pay (and pay, and pay) yet the people that approved the absurd loan walked off with six-figure bonuses (at least). Tell me what's more abhorrent.

Man, this story really hits home. To think that Kenny Rogers would be so popular and still have problems like this.

Ladyyyyyyy...

When I first heard about interest only loans when I bought my house in 2004, I wondered who thought that was a good idea.

30 year fixed for me. Nice to be in a home I can afford, and if things get worse for me, at least my housing payment will stay nice and steady.

Oh, and the guy was buying 50 DVDs a month? WTF? That's 12.5 a week. If they were all 2 hour movies, that's 25 hours of movies every week. It's gotta be porn.

I'm going to blame the consumer here and you can yell at me all ya want.

Boo hoo! That is what happens when you go against all consumer common sense and buy a home that anyone with a brain could tell you is a way over inflated price.

Interest-only mortgage loans! Come on. If you only pay the interest on something then you aren't reducing the amount owed. That is the kind of math you learn in 6th grade. FYI: It works the same way for credit cards.

Bubbles pop. Dreams die. I'm sick of feeling sorry for people that made dumb decisions.

@Bahnburner: only at the cost of freedom

Freedom plus our tax dollars.

@Blueskylaw: But the refinancing costs just make the deal sweeter for the broker. Wouldn't most homeowners just refinance through him? You know, since he got them such a sweet deal on their interest only ARM after all. And that just means more money in his pocket.

The first thing we did on our new house was refinance our construction loan (which converted into an ARM with a fixed rate, 30 year mortgage. I don't understand how people don't get it. I'm no financial whiz, but it just makes sense...maybe you have to cut out some of the luxuries to afford the payments on a fixed rate, but better to do it ahead of time instead of when you're facing eviction.

@craptastico: People who buy 50 DVDs a month don't watch them all. They just like to see the shiny boxes all lined up on a shelf in their living room.

@big keytee: You beat me to the "WTF?!!!" comment. :)

I'm hoping the the people portrayed in this piece are the exceptions, and not the rule, because like many others here, it's hard to feel sorry for people making THIS stupid of decisions.

Seriously, what kind of a schmuck looks at a mortgage with a potential $12,000 a month payment, and thinks it's a pretty good deal?!

And they guy who has to cut back from 50 dvds, and his hobby of flying? Boohoo.

@tedyc03: boo hoo. not going out to eat and buying one dvd a month and spending time with the family playing board games? Tough lessons indeed. Come on.

@Bahnburner: Sorry, these folks still have their jobs, just higher monthly payments. They are not the ones suffering from this economy. They're just the ones that helped cause it.

You gotta live within your means. Out of all the people that have foreclosed, I'll bet the great majority of these people simple could not afford the house at the point when they bought it. Forget about after a few months go by and they may lose there job. The money lenders were dumb enough to give someone a loan who couldn't afford it. That's where the problem is. If you can't afford a house don't buy one! Simple as that!

I'm just boggled at the DVDs...I can't think of 600 movies I'd like to watch once, never mind OWN

There are plenty of people that are truly in trouble with mortgages -- but the NYT chose a group of idiots it's hard to feel sorry for.

How can you feel sorry for the guy that has to wait until the Christmas sales to buy his high definition TV? And has to cut back on his scuba-diving and flying hobbies? Seriously? Cry me a river! Sounds just like those millionaire who are crying in their wine glasses as they are being forced to sell off their second yachts because they can't afford to keep both boats.

That $12k/month payment doesn't sound right. It's be good to know how that loan was structured. It's interest only for the first 10 years (article doesn't say negative amortization), so assuming he still owes the same amount in 2015, and assuming the interest rate is a rather high 10%, interest will only be accruing at a rate of $5k/month. It would take ~70 $12k payments to pay off the full principle. That's a pretty strange loan - interest only for 10 years, then pay off the whole house in 6 years?

@alexawesome: That was for the person who bought a home there out of foreclosure, and is still underwater.

Um, buying 50 DvDs a month? Maybe they meant to say RENT 50 DvDs a month, but even so, who has that much time on their hands to watch that many movies in a month? That's almost two movies every night. I'm confused.

@gnortenjones: I think it's worth noting, though, that the article is mixing things--it starts out with the guy who's unable to afford his mortgage, but then goes on to discuss people who aren't identified as having that problem, and who have no indication of being in debt at all. They're just nailed by the pop of the housing bubble, which can happen to you with a 30-year fixed-rate mortgage too. There's no indication that the guy is cutting back on flying because he can't afford his house otherwise, or that he took any actions, aside from buying a house in California in the last few years, that contributed to his current dilemma.

I mean, I get the boo-hoo thing too, but I think it's more that you've got somebody who feels he needs to be prudent despite his income as a result of the housing crash, and that his belt-tightening is just going to tighten the economy further.

@Trai_Dep: I think it's criminal insofar that we're all in a financial mess now because of the banks' actions..even the ones who got into the housing market conservatively by buying good property with a down payment and a fixed rate, or those who didn't get in at all.

However, I can't extend the sympathy to the people who got into these ARMs who are now in a mess. Either they decided to buy a place they couldn't afford, or they decided to game the system thinking they could sell an make a profit before the market fell. There is never any excuse for the former, and for the latter, well, those who play with fire get burned.

@craptastico: Again, there's no indication that anybody but the first family is living beyond their means, just that they're taking steps in light of the plummet of the housing market.

Even in my fairly stable area, many folks who bought a couple of years ago are slightly underwater now because even our modest drop in value exceeds the little they've paid. It doesn't mean they bought stupidly or got a bad mortgage or are spending frivolously. I think commenters are trying to paint this as an "it couldn't happen to me" scenario, but in an economy that pulls down house values, anybody with a mortgage, conservative or no, can be vulnerable to being upside down.

Alex, I was making the point that these people aren't really suffering at all, and are part of the problem...were you agreeing with me?

@LiquidGravity: Thank you! I have no sympathy for people that live beyond their means. Why would you buy a house and pay an interest only loan for 10 years. You may as well rent (unless you're trying to buy a house as an investment instead of buying it for shelter). And as far as the broker giving him a loan he couldn't afford, he could have said no. This guy KNEW what the terms of his loan was. He KNOWS that his payment is going to go up. It wasn't a problem until he figured out that he wouldn't be able to sell his house for a huge profit before the payment went up. He took a risk and it bit him in the ass. Too bad. When I bought my place, I knew what I could afford before I even looked at any houses. When I got approved for my mortgage, I was approved for quite a bit more than I needed for the type of place I wanted. Sure, the broker wanted me to go for the bigger loan and bigger house, but I said no. It was that simple.

@alexawesome: (Sorry, last comment was mine.)

@LiquidGravity: Feeling sorry is one thing, although I'm with you on this one; it's hard to feel sorry for a bunch of people that made hilariously (horrifically?) stupid decisions. It's when we have to *bail out* all these morons that I get a bee up my butt about it.

@LiquidGravity: He was in the market for some common sense, but maxed out his credit card speculating on Beanie Babies and limited edition unrated American Pie DVDs.

@Murph1908: DVD 'collectors' (addicts) regulary drop hundreds of dollars on new DVDs every month and then end up not watching them. I see it happen all the time on a DVD forum I read regularly.

It's insane.

This article is ridiculous. Am I supposed to feel sorry for these people? Buying 50 DVDs a month? WTF? I don't think I even own 50 DVDs total, most of mine are used.

I am trying to understand why the guy who bought the forclosed property is going to have to cut back. WHile they don't mention what type of financiing he had I would imagine his payment is the same today as it was when he purchased the house last year. As long as your income has stayed the same and you have a fixed rate mortgage your monthly expenses shouldn't change regardless of how much value the house loss. If my house looses 10k in value this month, does that mean I have 10k less to spend? No, I can still go out and do all the same things I did before.

Additionally, I agree with most of the people here in that I have no sympathy for any of these homeowners. I bought my first house when I was 24. I knew what my payment was going to be on day 1 and I knew what it would be in day 100. Everyone is quick to blame Wall-Street for this mess, but Main Street is just as much to blame. Perhaps I should stop paying my mortgage so I can get some govment cheese.

Upside down by 100K+ they should walk away. Only a fool twice over would continue that payment.

i LOVE IT how they all turn to drinking at the end. cheers to that!

ARMs...many of these were generated when the prime rate was at 0.5%. Which way did they expect the rates to go?

And 500 DVDs an month? Poor white trash me borrows them from the public library!

Scuba diving? I was really into it. Marriage, house. Kids. I chose my [right] priorities.

@GothamGal: Wouldn't you think that if you're spending $1500 a month on DVD's, you'd already have an HDTV?

@legotech: I have friends like this. 1 guy I know has 3 copies of spiderman 2. The first DVD, the special edition DVD, and the rereleased special edition with 2 minutes of extra footage. Its mindboggling to me.

Looks like a buying opportunity. Suckers. Big Fat Gluttonous Americans living beyond their means. Wake up America, you work at Walmart, you can't afford that 60" plasma TV and that 4 bedroom house.

Being upside-down on a mortage has nothing to do with taking financial responsibility. I am fed up with articles combining the two. Their credit problems will not magically disappear when home prices begin to increase again.

@Scoobatz: Sorry, I meant underwater, not upside-down -- a term that means the same thing when discussing car loans, but is not trendy enough for the housing crisis, I suppose.

And this is my problem, how? Oh, it is not my problem. Boo hoo, another tear jerker housing story. Cry me a river.