I personally know someone who bought too big a house with little down and a low-rate ARM.
Stupid to begin with.
Then, when the rate adjusted, she couldn’t pay the mortgage. Someone told her the bank would help her if she got two months behind on her payments, so she quit paying.
My thought at the time and now is that this is absurd.
Whatever happened to common sense? Think before you buy. Don’t buy more than you can afford. Read the small print. Live within your means. Be self-reliant and help others instead of expecting them to bail you out.
Too many bad loans were made to people who had no business owning a home, Jimmy Stewart and `It’s A Wonderful Life’ to one side. As Mark Steyn points out in `After America’ the Obama administration pressured lenders to stand logic on its head and assume that home ownership made people responsible.
The other thing was the serial re-financing. People were treating their home like a Rolex watch and pawning it every few years. The problem is that the new appraised value wasn’t realistic and now they can’t sell without having to write a check, rather than accept one.
We’re grownups so let’s talk facts of economic life: If you can’t make your house payment with your payment being 31% or less than your gross income, then no government program can help you.
Loans to unqualified borrowers with bad credit histories; ARMs; no down payment & `walking around’ money to boot—this was a flying catastrophe that was enabled by Washington DC, Barney Frank and the Democratic party and just looking for a place to crash.