Effor.com

I’ve seen this a couple of times over the past few days, but here’s CNN’s version of a story about “homeowners” simply walking away from their homes.  I say “homeowners” because most of these people put little or no money down, they took out teaser rate ARM’s, interest only - or even negative amortization loans - so they’ve never had any equity to speak of anyway.  They didn’t “own” their homes, they were renting them.

A couple of quotes from CNN’s story - here’s the headline:
Homeowners: Can’t pay? Just walk away
More and more borrowers are watching their house values sink while the cost of their loans skyrockets. What to do? Skip out on the mortgage all together.

Yeah, that’s a good plan.  Just “buy” a nice house which you can’t afford, then stay there for a year or two until your rate adjusts and you can no longer pay for it.  Then mail the keys to the bank (hence the term jingle mail) and walk away.   Next thing you know they’ll be wanting a bailout from the Fed’s…

Another quote: The Los Angeles-based writer bought two properties in Hancock Park, west of downtown, using no-down, interest-only mortgages in 2006. He paid just over $1 million for both.

Often they chose hybrid adjustable rate mortgages (ARMs) that came with low initial payments. After a few years, interest rates on these loans reset higher. But buyers thought they could count on the increased value of their homes to refinance into affordable, fixed-rate loans.

Question - If you couldn’t afford a fixed rate loan on a house 2 or 3 years ago when rates were at a 40 year low, why the hell did you think you’d be able to afford to refinance before the interest only or ARM reset?  Were you counting on a huge raise that never came through?  Or did you just get more house than you could afford on a 15 year fixed rate loan?  If so, you’re too stupid to be a homeowner anyway.

Go ahead and blame it on predatory lending practices, blame it on your real estate agent, blame the economy, blame the house pricing slump, blame your neighbor - just be sure you don’t take responsibility for your own decisions, because that would mean you’re an adult.  And if you did any of the things above, you’re not an adult. 

You’re also not a victim, you’re the cause of the current mess.  You’re the one walking away (or defaulting) on a mortgage that you promised to pay.  You’re the one who is causing banks to lose money because you lied about your income on your application.  And when those banks write down a loss on your loan and their stock price drops, you’re probably bitching the loudest because now it’s hitting your 401k and Roth accounts - although maybe I’m giving you too much credit - anyone who did the above loans is probably not bright enough to plan for their own retirement - you’re counting on Social Security. 

I normally don’t call people names, but if you fall into the category of the people above - you are stupid.

gk