Foreclosure Woes Hit Pair Who Moved from WI to CA

Madistan.com ^ | June 2, 2008 | Peter Hong Los

[Diana in Wisconsin]

Amazing! The FIRST article I've read on this subject where the buyers take RESPONSIBILITY for their own actions and are taking steps to dig themselves out of their own troubles. Refreshing!

[2banana]

The foreclosure prevention bills making their way through Congress are designed to keep people in their homes by providing up to $300 billion in federally insured mortgages. But to qualify for these loans, the lenders would have to agree to voluntarily write down the principal on the loan to 85 percent of the appraised value, and the borrowers would have to be able to document their income, along with other requirements.

HEY! Where can I go to get the government to pick up 15% of my mortgage principal? I am going to stop paying my mortgage TODAY so I can qualify! People who are responsible and only buy a house they can afford are FOOLS!!!!

[econjack]

"The banks loaned money to all kinds of people they shouldn't have, including us," Gary said. "This situation we're in is one of our own making. We were not taken advantage of."

What a refreshing view of the problem...and absolutely true. This is why it absolutely pi$$es me off when Congress suggests jumping in and using my money to bail out these parties. It was a private transaction where both were greedy and at fault and I fail to see why this is my problem and why my money should be used to fix it.

[econjack]

Exactly. Congress has no business even trying to fix this.

[passionfruit]

This is refreshing. Because of their attitude, I expect they will land on their feet and build wealth again.

[Just another Joe]

It's only the two of them and they buy a 5 bedroom house.

Some people...........

[CSM]

“They had obtained an adjustable-rate loan to buy the house,...”

Root cause ping. I do have to agree with you that it is refreshing that these individuals are not trying to shift the blame.

[Joann37]

Yes, this was a good read. I’m glad there is someone out there taking responsibility and not looking to blame others.

I’m in somewhat of a mess myself, and it is clearly my own fault.

[ScullysSister]

Great that they take responsibility BUT they were grossing $40k a month at one time and put nothing away? Unbelievable!

[martin_fierro]

It's only the two of them and they buy a 5 bedroom house.

Hey, c'mon.

• Master bedroom
• 1 br for his office
• 1 br for her office
• 1 br for a workout room
• 1 br for the dog's office

See? Not so extravagant.

[gridlock]

While things were going well, they drew $119,000 out of their real estate transactions and another $100,000 in a home equity loan, presumably for lifestyle spending. This left them with no cushion when business turned against them.

If they had simply reinvested their profits in their real estate transactions and not taken out that home equity loan, they would have a quarter million dollar cushion to break their fall.

Moral of the story is that for 99% of the people real estate is someplace to live, not an investment. This expense must be handled very conservatively and minimized at every turn, because the amount of money can swamp the careless quite easily.

This used to be common wisdom, and every first-time home buyer was warned about this by pretty much everyone they talked to. Somehow this common wisdom was lost. It looks like people are figuring it out again.

[Just another Joe]

Ahem, yeh, OK.

Don't forget the two bedrooms for the escort service.

[ottbmare]

It's only the two of them and they buy a 5 bedroom house.

I thought the same thing until, many years ago, the ex was considering taking a job in California. I learned that houses in California do not usually have basements. So you get an extra bedroom or two and store your stuff above grade.

I'm glad we didn't move out there. Beautiful and warm, but the lifestyle is not quite for me.

[NativeSon]

Moral of the story is that for 99% of the people real estate is someplace to live, not an investment.

This reminds me of the "dot com boom" meeting online trading.

At time when investment cash was thrown at anyone making a website about their intuitive cat, a good number of people that I knew began to fancy themselves Wall Street wizards.

And a short time later they stopped boasting about all that easy money

It's greed, trying to make a quick buck

[Just another Joe]

I learned that houses in California do not usually have basements. So you get an extra bedroom or two and store your stuff above grade.

Shoot, I don't have a basement now. I haven't HAD a basement since I was about 13 years old.

If you got more stuff than your house/garage can hold - sell some stuff.

[Eric in the Ozarks]

I noticed that too. A couple w/ no kids shouldn’t need a five BR...

[Reeses]

It's greed, trying to make a quick buck

driven by envy, keeping up with the Joneses. Most herd behavior is inspired by chatter at the watering holes, talking to neighbors, family, friends, coworkers. Keep your ear to the ground to sense when the next stampede starts and the direction it's headed in. Those running near the front of the herd get the most benefits, assuming they don't fall down and get trampled on. Those in the very back get eaten by lions.

[Reeses]

It's really hard to buy a one bedroom Spanish-style house with sparkling pool, a designer kitchen and a nearby golf course. There aren't many of them. I would like to buy a beautifully designed but small house on an extra large lot but there just aren't any. High quality luxurious construction in small volume is very rare. In the more expensive houses the rooms are laughably huge, like having to walk 10 feet from the bed to the dresser. The basic problem is way too much bad taste out there.

[LeGrande]

I noticed that too. A couple w/ no kids shouldn’t need a five BR...

Speak for yourself : ) The point is whether people can afford the house they are living in. If people are using houses as an investment vehicle that is fine too. It is the only investment that I know of where the profits are tax free. Now, it looks like the Government wants to guarantee the investment too. I have a big problem with that. The government should not be in the business of bailing banks out of bad investments.

[ThisLittleLightofMine]

A refreshing look. We all make mistakes and we learn from the suffering.