Pity the homeowner who rides out his home's collapse for 10 years
- From: periodistalibre@xxxxxxx
- Date: Sat, 08 Sep 2007 22:28:57 -0700
The Real Victims -
Subprime borrowers are not victims at all. Their debt goes away, they
get a fresh start, and they will buy back that same house for a
fraction of the cost in a few years.
The real victims are the people who count the equity in their
temporarily inflated homes as a major component of their illusory
wealth.
Homeowners will watch their home's values deteriorate over the next
decade. They will suffer in fear, financial insecurity, and despair
for 5-10 years, never knowing how much worse it gets before it gets
better. It hurts to watch their beloved home, which is a reflection
of their self worth in many cases, decline...erode slowly in value.
They will be forced to accept that their house or neighborhood is not
immune from price drops. They'll be unable to borrow against this
home again, for remodeling or college for the kids. And what of the
retirement plans?
Worse, they realize they are upside down and there is no way out.
Unable to sell without bringing big bucks to closing, unwilling to
ruin their credit score in the easy exit of foreclosure or
bankruptcy, chained to their homes, unable to relocate or move up to
another home. Stuck in an upside down house. Now that is real pain.
Those are the people we should feel sorry for.
The people in foreclosure at least will get a clean start. They got
to live in a house they could never afford. They spent hundreds of
thousands of dollars and never had to repay it. Bush will even make
sure they never pay taxes on that forgiven debt. Wow, what a deal.
Where do I sign up?
So in 2013, let's look at two people living side by side in identical
homes that are valued at $600K today, and will be worth about $300K,
give or take $50K. We have Mallory, who rode out the housing
downturn, and Debbie, a subprime borrower who lost her house to
foreclosure in 2007. Mallory is still paying a $600K mortgage. But
Debbie buys that same house for only $250K. Who's the victim now?
All those who have come across this website can act before it's too
late. SELL NOW!
Who's to Blame?
Who is to blame for the mortgage fallout? Like every bubble from
tulips to railroads, it's all of us: those demanding to buy
overpriced assets as a way to easy riches, and the supporting cast
which makes it all possible. The job titles change, but the mania all
rides on the human nature of greed. Later, the human nature of fear
pops the bubble.
We remember the mania, right? It wasn't that long ago. Do you recall
all the TV flipper shows, the real estate infomercials, the stories of
making millions doing nothing. Everybody wanted a piece of the
action, and they did not want to pause to read any damn loan
documents.
I want it, I deserve it, so gimme that loan or I'll find someone who
will
"Where do I sign?" was the only question that mattered. "Don't slow
me down with showing me loan documents. You are making me late to
start on my life of riches." "Oh, you won't give me a loan at 10x my
liar income? Fine! I'll go find someone who will...I won't let
anyone stop me on my lifetime of easy riches!" And off they
went....
People wanted to get a house, no matter how much they had to lie on
their loan documents to do it. So don't give me any sob stories about
being misled by your lender. There were plenty of people who used
common sense and did not join the "sheeple", the blind followers of
anything popular at the time.
I already spent it!
Consumption happy yuppies turned to making the equity in their homes
"work for me", and pulled foward decades of consumer spending into a
few high-powered years. The economy on steroids... Did they
remember to perhaps put some of that home equity withdrawal into a
savings account? Probably not - the boom would go on forever, and
someday their $200K house would be worth $1 mil, $ 2mil, go to the
moon. Why save, when your house is growing money for you? Interest
rates were under 1% for years, and after taxes, you were better off
just spending it all.
I never saved enough
Then we have the elderly, who turned to refinancing to substitute for
a lifetime of living paycheck to paycheck. This time when a financial
problem hit, instead of filing for bankruptcy, they pillaged their
tempoarily inflated house. Others used the crutch of basically free
money to cover costs of divorce, going back to school, paying off
credit cards. Sure, some of this is due to high inflation and a poor
economy, but really these people never saved enough. Come on, do you
really need cable and a cell phone?
Crying in their beer
Besides consumers, who benefitted most from all this economic
activity? States and cities, who are now crying in their beer about
lower revenue. Oh, should I feel sorry for a state that saw a huge
jump in revenue from property and sales and income tax, and now is
back to income from 2 years ago, still higher than it should be?
Hopefully they saved some for a rainy day too. Hopefully they kept
back a tiny portion of obvious "bubble money revenue", to deal with
the inevitable foreclosures, housing counseling, lower income
assistance programs, crime, unemployment effects. Did they save, or
did they spend it all, thinking that good times last forever?
You lucky duck!
Ultimately, every borrower was desperate to join in the ride to real
estate riches! And they got a chance to do it, regardless of income
or ability to pay. Everyone was invited to the real estate party. No
outcasts. Everyone was a lucky winner in the real estate road to
riches.
Everybody made temporary inflated money. Those who cashed in by
selling their homes or borrowing against them have already spent that
money. Many of them will give up their debts in foreclosure. They
are really the lucky ones - they had their cake but never paid for
it. Why should I feel sorry for them? Many lied on their loan
applications. They lied about their incomes, so they can not sue
anybody for loan fraud.
The lender can say, "What, you're gonna sue me for selling you a neg-
am loan? Didn't you, hmmmm, lie on your loan application? You
know, that space where I wrote in that you work for ABC Design and
earn $60K/year, but you really are a cashier at Vons?" Believe me,
that is the reason we will see very few lawsuits out of this!
Now I'll cry in my beer
So between the lucky ducks, the non-savers, the yuppies, I think
everyone who pillaged their temporarily inflated homes with money
financed by European and Chinese banks made out like a bandit.
So let's cry in our beer for the people who heroically hang onto their
homes.
.
- Prev by Date: Re: What's With Cuban Health Care & Michael Moore?
- Next by Date: Re: Senate rejects cut in Cuba aid
- Previous by thread: The US Debt Reality
- Next by thread: George W. Bush: "tengo el hombro de Dios para llorar...y lloro mucho"
- Index(es):
Relevant Pages
|
