The mortgage
 

Mom (Katkeeper): They said on the news that they are helping out homeowners who have a job and are behind on their mortgage.

Me: That's just great. I don't have a job, but I've paid the mortgage. Well, this can be addressed. I'll not pay the mortgage this month.

Yeah, I was wondering how this would help us if my hubby loses his job in the near future. Will we be eligible or are we gonna have to walk away from the house.

What was your plan before the news that help might be available, Pico? Was "walking away from the house" always your default option?

Clob...we are not in trouble with the mortgage right now, nor have we been. That will not be the case if GM buys Chrysler and the plants in this town are shut down. My hubby will lose his job. We can float for a while, but there will not be any jobs to get around here, so we will have to move. We wont be able to sell the house (my area is already swamped with homes that have been vacant for a least a year - two are right next to us). So, in terms of survival, yes, walking away would be our default option.

what will you do with all your stuff?

whacha mean?

i'm just imagining you 'walking' away from the house. seems like there would be lots of stuff left behind

ha

Ah, so your problem is compounded by the possibility that the whole town will lose their jobs, not just individual hardship. That makes sense.

It is becoming the default move for most people. One guy we know who bought in the bubble stopped paying his mortgage 3 months ago. He bought a $550k home in a neighborhood way above his pay grade, thinking he was going to flip it in a few years. Idiot. Now he just takes all his pay and puts it in the bank and saves it up until they come and tell him to leave. So he is basically living there scott free saving up for a new place, to rent. His credit is already screwed so he doesn't care. There are plenty of places on the market to rent because people can't sell.

And to think, we are bailing out a lot of these people with our money, the people who did it right and played by the rules are being punished for others bad moves and failures.

I don't have any sympathy for those people either Merc. And I didn't two years ago when I first started to hear about them. I don't think they deserve a bail-out either. But there are innocent victims in all of this. My next door neighbor refinanced her house so that she could get it re-sided. She got an ARM with the understanding that she would be able to re-finance again when her payments went up. Well her payments went up and she couldn't get financing because the value of her house went down. She's retired and living on a fixed income. She couldn't afford her house anymore.

I put much of the blame on the predatory lending practices by mortgage brokers and banks who bought and sold their paper for mortgages. These practices were set up by the Congress and allowed the middle man to prosper at the expense of the transaction, a lot of people got rich off of these practices and they are gone in thin air. The rest of us are paying for the mistakes. More often I think, unlike your neighbor, many buyers have a huge responsibility for the blame for this as well. They were like deer in the head lights. Staring at something they could never afford, guided by greed, or the attempt to leap ahead, and aided by lack of government regulation and greedy lenders. It's a mess that we still may not recover from. (IMHO)

She took a risk. . . and lost. I can see where she was trying to do the right thing. Maybe she really NEEDED the new siding, I dunno. But she knowingly took a risk while on a strictly fixed income"hoping" to refinance at some point in the future. That didn't happen...what was her plan B?

Classic...everybody was doing the re-financing thing. We did it to get some debts at a lower interest rate, but not everybody knew that ARM's were risky or a bad choice. I knew and I didn't get one...I did a 30yr at 5.75%. I dont think she was savy enough to know what was risky for her.

Someone gave her some very bad advice. One part of the equation that got us into this mess, predators.