Replies

This is how it goes down.......
We sold our home in Ohio and moved to a new home in SC. When we went into our lender for the permanent loan they only counted my husbands SS and none of my income (which was the bulk of the repayment) I pointed out that my husbands SS was $200 less than the payment, she said don’t worry about it, the computeer ok’d it. Thank God we are responsible adults aned meet our obligations, but how many out there just let their homes default because they could?
I blame Freddie and Fannie , who allowed computers to make common sense decisions which scewed results of input;........what a mess

I do bankruptcy law for a living. Many people come into my office to file with the following type of situation: a $180,000 home with a $178,000 first mortgage with an ARM that just adjusted from the 2% teaser rate to 6.5% or 7%. They often have a second mortgage of about $30,000 with a 10% interest rate. The combination of the new monthly payment and the second mortgage payment is more than they can afford.

To compensate, they start living of the charge cards. When the charges get too high, they borrow against their 401(k) to reduce the charge loan. Now they have a 401(k) loan to repay which only makes their financial situation worse, so they start to live off the charges again (after all one must keep up with the Jonses). Eventually, they have run up their charges to the point they cannot make the monthly payments.

Now they have nowhere else to turn and reality sets in. Their upside down on their house, up to their ears in charge account balances and have spent their savings for the future - they file bankruptcy, give back the house, walk away from the charge account debt and get a "fresh start."

Incredibly, most of these debtors have new charge cards in less than 12 months.