[Petronski]

The premise is false.

[Howlin]

Do you spend a lot of time searching for articles to trash America with?

[Jet Jaguar]

They opted for an interest-only, adjustable-rate mortgage


first mistake.

[stainlessbanner]

Interest-only, adjustable-rate mortgage in an overpriced area.
Couple works three jobs, still can't pay mortgage.

They could buy a $60k home in fly-over country. California dreamin'

[stephenjohnbanker]

"In the Philbrooks' case, John and Karen borrowed almost the entirety of the $244,000 cost of their modest North Highlands home: One loan was written for $195,000 at 6.375-percent interest; another financed the remainder of nearly $45,000 at 9.125 percent. The rate on the small loan was fixed. But on the large loan, the rate was fixed for only two years, and after that it was variable"

There will be a TRILLION dollars in keys mailed back to the mortgage companies. And the fed will bail many out.

[rlmorel]

The bottom line is many people live beyond their means. Period.

[John Galt's cousin]

Did they review the "fine print"(i.e., the terms of the agreement)of the contracts with their attorney?

If not, why not?

[Onelifetogive]

Having not understood the small print of their contract...

I wouldn't rent a movie without understanding the small print of the contract...much less finance a house!

[ikka]

There is a lot that is wrong with this article.

Fact is, these folks did not check out the deals and read the fine print.

[nopardons]

Have you EVER posted anything but outright garbage; EVER?

[nmh]

"They opted for an interest-only, adjustable-rate mortgage and counted on the value of their house continuing to rise as a way to build up equity. ..."

I stopped reading THERE.

An "interest only" ARM is NO way to build up "equity".

[Onelifetogive]

Undoubtedly, John and Karen were staggeringly naive in signing such a contract.

The Federal Government needs to create an "Office of Loan Approval for Staggeringly Naive People"...

[Onelifetogive]

They opted for an interest-only, adjustable-rate mortgage and counted on the value of their house continuing to rise as a way to build up equity. ...

The loan wasn't the problem. Counting on ever-increasing housing prices was...

[nickcarraway]

I for, one, think the supposed crash is exaggerated.

[Lakeshark]

You've been posting this crap for waaaay too long.

Good grief, the "housing bubble" has been there for 5 years according to you and yours.....

Maybe you should be a reverse indicator.

[WhyisaTexasgirlinPA]

You have to factor in people who set themselves up with a large mortgage knowing they will probably fail within years. I've seen that happen right here in my neighborhood with people being put into very large homes that they can not afford. But with deals arranged for no interest payments for a few years, and new homes not owing local taxes for the first year, some families are getting into 5000 sq foot homes for what they might have paid for an apartment. They don't put anything down and don't care if they lose it all in a few years, in the mean time they live in a gorgeous home in a nice neighborhood and let the house go without the upkeep that is necessary.

So not all foreclosures are the result of the interest rates rising or unemployment

[Poser]

They opted for an interest-only, adjustable-rate mortgage and counted on the value of their house continuing to rise as a way to build up equity. ...

So... Some morons buy a house they can't afford with an adjustable, interest-only loan and now they are whining? A fool and his money are soon parted.

[Sooth2222]

"Factor in the payment on the smaller, second loan, and the Philbrooks now were paying $2,250 a month servicing their mortgage. Since Karen and John bring home a total of about $4,000 after taxes each month from their three jobs, this was a crushing burden. Add in two hefty car payments, utilities and insurance bills, and that didn’t leave much left over for such necessities as food."

No, it wouldn't.

[KellyAdmirer]

If there's an obviously stupid thing to do (take out an ARM rather than a low fixed rate when fixed rates were astonishingly low), and it's legal to do so, someone will do it. That's just a fact of life. You see it all around. Some people speed around tight turns and then fly off cliffs, others manage to get lost in the woods in public parks and die - it happens.

So the reporters went out and found such a couple who didn't know what they were doing when any even slightly savvy person could have set them straight. Ho hum. So, sell the house and move on wiser by the experience. This isn't some massive societal failing, just some people who made an obvious financial mistake - like buying an Internet stock in 1999.

[stylin19a]

That fear explains why they readily listed their house for $21,000 less than its appraised value of $300,000.

in the end, they borrowed $260,000--$16,000 more than the initial cost of the house-

I forget.. the point of this story is..what ?