Should we all just stop paying the mortgage?

The situation is infuriating, but it'd be political suicide for any politician to actually allow people to fail. And there's no candidate who's preaching the virtues of personal responsibility so... don't look to the next president for lessons about how to avoid this kind of crap in the future.

I was just discussing this the other day with people: what is our incentive to do the right thing anymore?

If people are given the option to do the right thing or take the easy way and get free money, they will take the free money. Why wouldnt they? It seems that there will just be another bailout when they wear out this one.

It is a downward spiral, and there seem to be no consequences. If you cant pay for your house, maybe you shouldnt have it anymore.

If some of these people living in McCastles end up with lower house payments than I have on our modest house (and mortgage) I will be seriously angry.

This whole idea is going to turn into a nasty mess if certain people are rewarded for bad behavior and get these luxury homes written down to the level of average homes in mortgage total and payments.

I would not make any decision on possibility that the government will help. Any homeowner bail out is speculative at best. From now until the end of January, any funds hot off the Treasury presses will go to bail out negligent lenders, investment bankers and Bush / Paulson cronies who developed the derivative Ponzi scheme.

I'm less angry than you because I've heard stories of people who had done the right thing but then were talked into refinancing by bankers who didn't reveal the terms (except in the fine print). There are people who had decent 30-year-fixed mortgages and were told they should refinance to get lower payments without being told that the payment amount could change and that the number of years remaining on their mortgage would change.

But I'm still angry because it seems like the people who made these mortgages are not having to suffer--they repackaged them and sold them. The idiots who bought them are getting paid gigantic severance pay instead of being fired from the companies they failed. And yes, flippers also should not be helped.

Personally, I don't much care if home values suffer. I heard that the problem is that it's a lot harder to get credit now (which I personally also don't much care about--yes, people will have to use their own money to buy things). But that in turn means that industries that rely on credit (such as car dealerships) are going to be in big trouble, and thus there will be a lot of unemployment. I do care about unemployment, but that just makes me want to spend money on unemployment and maybe retraining, not buying crappy loans and kissing morons.

If it makes you feel better, I suspect that all these folks who are getting help (except the escaping CEOs) are probably having to deal with a lot of bureaucracy and not all the people who could use help are going to get it. I'd much rather be safe having done the right thing than trying to live just on the right side of the edge. So many more things can go wrong using the latter strategy.

You have every right to be angry as hell. You did it the right way and got screwed - that's not supposed to be the American Way. But, I guess that's an idea long lost in the past.

I'm pissed as hell. I stayed out of the market knowing it was a bubble. I rented and will end up paying for all those homeowners who are upside down on their mortgages. No one's explained to me why this is fair.

I think after the election there will be a revolution. Dem's will steal a couple of states through transparent voter fraud. Ohio is shaping up as the best example.

Oh, well, I'll just bend over now.

Someone or some organization should take these hard learned lessons and focus on educating America's next generation about doing it a better way.

There are people who had decent 30-year-fixed mortgages and were told they should refinance to get lower payments without being told that the payment amount could change and that the number of years remaining on their mortgage would change.

I was a first time home buyer five years ago, and I refinanced since then. I was pitched all the same ideas, but it took very little effort on my part to educate myself regarding the basic difference between what I was being offered. I do not feel sorry for the people signing on the dotted line, and I consider them completely irresponsible. They should lose their house if they can't pay.

I was offered a refi deal 3 years ago, and I read everything. When I realized what I would be getting into, I told the representative to leave my home, politely of course. There is never an excuse for ignorance. Bottom line...it's up to you to sign, and read what you sign. This is your responsibility as an adult, and you can't cry foul later because you didn't do your homework.

I completely agree! I just bought a house, responsibly, 30 y, fixed rate!

I pay the mortgage, but Why should we! I love the home, wouldn't trade it for anything, but now I get punished for being responsible.

They probably wouldn't let me renegotiate because we bought in July/aug of this year, and i really don't want to lose the house.

But after being screwed by the country, corporations, and banks the infamous 'they' expect me to be loyal!

At this point i hope the whole country goes down in flames. it would suck beyond all reason, but in the years after we would have responsibility and respect restored.

I am watching from the sidelines on this as well (from up in Canada) and would be LIVID if the Gov't bailed out people who took on too much mortgage and too much credit.

I was listening to NPR the other week while driving through NY state and a woman called in with the same story - too much house, not worth the same, credit card debt so needed another mortgage to refinance and the radio announcers are siding with her saying 'it's not your fault... it's the evil bankers who prey on people like you'

WTF?!?

No one said that house values would go up for ever - it's your responsibility to know that when you apply for a mortgage.

I believe it's all down to entitlement and keeping up with the Jones. Where do these people get off thinking they 'deserve' a $400,000+ home when they make $40,000 a year?

For people who got into new mortgages without knowing the terms... it's their own fault.

You're not being punished - you just aren't able to take advantage of all the benefits offered to the less-responsible.

Me, neither. Like you, I bought a home before the peak of the bubble (in 2000), have never missed a payment, etc. I have been pre-paying my mortgage, which basically means that I've been throwing money away for eight years, equity-wise.

However, we are on track to own our home outright in another eight years. The value of the house doesn't matter for that - we will own it whatever its value is.

We won't be able to move into another house, which is particularly unfortunate for us, as my husband and I bought a large(ish) place thinking that we'd be starting a family... and now have decided not to have kids. We have 2000 sq ft, but need only slightly more than half that. Energy prices are rising, and we're afraid we won't be able to take out a home equity loan to pay for replacing the windows in our 100+-year-old house.

It sucks. We want to move, but realistically, we can't. But that's the way it is - the economy is a gamble, and owning property is, too. We lost.

you could quit your job and get:

section 8 vouchers (for housing)
food stamps
welfare cash payments
WIC vouchers (for food for kids)
Medicaid
free pre-school (Head Start)
free methadone clinic services

You don't take advantage of these things either. Other than bigger dollar amounts, what is the difference?

You're responsible; irresponsible people will probably always make you angry.

Who's better off in the long run?

you could quit your job and get:

section 8 vouchers (for housing)
food stamps
welfare cash payments
WIC vouchers (for food for kids)
Medicaid
free pre-school (Head Start)
free methadone clinic services

You don't take advantage of these things either. Other than bigger dollar amounts, what is the difference?

You're responsible; irresponsible people will probably always make you angry.

Who's better off in the long run?

I fear the next wave of bailouts that WILL occur when the government is unable to pay for social security, medicare and other entitlement related services. I am pretty sure that govt will start taxing our 401(k) and Roth IRA's to pay for all this mess.

Yes, I am more than a bit put out -- as a single homeowner who bought two homes alone -- no handout from anyone -- this seems SO unfair

HOWEVER, I think we need to look at a slightly larger picture -- do we only do the right thing when someone is looking? Is it OK to knowingly cheat just because "everyone else is doing it"?

Does your word on an agreement mean nothing?

One other thing to make sure when you buy a home is to be absolutely sure that there is no prepayment penalty. In some mortgages, they will charge you extra if you make additional payments each month.

When I bought my house, I made this clear to the real estate broker and right before signing the mortgage papers, I asked them to show me the line where it says that there is no prepayment penalty. Please make sure that is written into the mortgage contract.

It's in situations such as this that I often have to remind myself of two things:
1. Half of the population is of below average intelligence.
2. The people I hang out with, are generally, well above the average.
Basically, for me and probably for eveyrone else reading this, most of the people of this nation and this world just really aren't very smart by comparison.
This is, of course, not an excuse and not really much of an explaination, but it does help to keep things in perspective and help me understand where at least some of all of this mess is coming from. Still doesn't make it any less wrong but it does make it half a bit easier to stomach.

"...we're afraid we won't be able to take out a home equity loan to pay for replacing the windows..."

Stop pre-paying the mortgage and put that money into a savings account. Then you can use that to replace the windows instead of borrowing to replace them.

-Erica

yes, we are responsible and didn't knowlingly take on more than we could pay for (a mortgage for a zillion dollar house we when we made $20,000!)...etc, etc.

we did the right thing and we got screwed. and we have to pay for these greedy *)*)*)*)&)(.

when do we get to screw them?

@MKB: Sorry, but if the government is taking my money away from me and giving it to other people because they made stupid decisions, then yes, I call that being punished for not making stupid mistakes.

@Guest: Those are different programs that address different problems. Who is responsible for and what causes poverty? That's a big question with no easy answer, and no easy solution. Why did a person agree to a mortgage so large that he/she couldn't afford it? Who is responsible for that person's decision? That's an easy question (or at least it should be.) You can't really lump all that into one category.

I'm livid too. I've been working my way through graduate school through this whole bubble and would have loved to live in a house for a number of reasons, and probably could have qualified for a subprime mortgage, but did the conservative thing and stayed in low-rent apartments. Other people made the aggressive choice, levereged themselves into very high risk-reward situations, and benefitted from the reward of living in lavish homes and having equity to spend as they chose. And I would accept that as part of the risk-reward nature of capitalism, except that now we've come to the "risk" part of the deal, and instead of the negative consequences affecting the people who took on the risk, it's being pushed on people like me through national debt and inflation. Meanwhile I'm still in a low-rent apartment and they're still in a lavish house.

If we're going to be a strict free market capitalist society, then we need to sit back let people sleep in the beds they've made, just like we let them profit from the winning bets. Or we could adopt the Scandinavian model of comprehensive, universal social programs that spread this kind of spending around in a consistent and roughly equitable way. But we need to choose one or the other, because these kinds of narrow, rush-job, emergency bailouts are unacceptable.

Yes, I'm not happy about the bailout either but hey my taxes go to pay to kill people in foreign countries and to teach children to just say no to biological imperatives they aren't going to say no to. So, money is always spent against my will.

I bought a mortgage 3 years ago. It's adjustable rate. But we also bought our house for cheap on an acre of land in an area that wasn't going to really drop that far. And it hasn't. And while we are shopping for a fixed, we are taking our time to get the best possible deal. We've been told by our own mortgage company that we don't qualify for any of their hardship programs because we have never fallen behind! LOL. C'est la vie. If not this it would be something else.

I'll be happy with the day when we spend money on arts, grants for American students to go into math and science, and other things dear to my heart. I won't hold my breath.

Margaret Garcia-Couoh

Wow, are you sure your house is down 15% when you bought 7 years ago? You must have been in a very hot market, no?

I wouldn't say we could know for sure that housing prices have bottomed out. Not at all.

And finally, I think if there is a bailout that helps people stay in their homes, it will be for the overall social good, whether it pisses people off or not. Will it benefit our society if say, 15 percent of homeowners are put out on the street? If we are walking around seeing one or two houses on every block with boarded up windows, getting broken into by squatters, if the banks are holding onto even more houses they can't unload? I'm nervous about the state of the country now, but at least we're not dealing with a massive wave of social unrest, homelessness and crime.

You will always be better off than people who need this kind of help, because you're smarter than they are. Be happy you're you and not them, no matter what they happen to be getting at the moment.

I blog at www.shopliftingwithpermission.com.

Ironically I'm moving out and getting my first condo. In all this turmoil I haven't really had an issue getting pre-approved for a mortgage aside from not having much to put down. But I have an excellent credit score, getting a good deal on a place, and have gone into "lock down" in preperation (cutting down the amount I'm putting into paying off credit cards, not shoveling money into savings, etc). After a few months I'll get a sense of how much money I can put where again.

That said, this whole bailout thing has furiated me. I was without a job for over a year, unemployment only went so far. no one helped me out, I plowed through it and working on paying off my credit cards I lived off of for that year... that was 6 years ago. Maybe I should stop paying those, have the government go "here, take this money and don't do it again" and problem solved! Of course, like other financially responsible people I'm not going to do that. but this whole helping people that messed up and punishing the people that did good is rediculous. and one look at the stock market and you can see how well it's been helping.

I don't understand why anyone is angry?

Welcome to the New American world of socialism. What's the big problem? When you pull down that lever on November 4th, if you vote for Obama plan on being angry for the next 4 years. Wait till you working folks with a job see your payroll taxes increase so you can share your wealth with those folks who don't work.

Yeah! Life in these here United States are going to be real good.

Hammer and sickle anyone?

Ha ha ha ha!

...it's McCain who initially presented the mortgage bailout plan, in the 2nd debate I believe. Which I found odd as it goes against the GOP party line.

And Carrie, Colorado was way overpriced. That, plus the silly mortgage deals, meant that house prices skyrocketed here really quickly and then plummeted. We got hit pretty hard, but things look to have hit the low and are bouncing back.

"Welcome to the New American world of socialism. What's the big problem? When you pull down that lever on November 4th, if you vote for Obama plan on being angry for the next 4 years. Wait till you working folks with a job see your payroll taxes increase so you can share your wealth with those folks who don't work."

*sigh*

The financial, which could certainly be called socialistic in many respects, is happening under a Republican administration, with strong support from congressional Republicans (and Democrats). John McCain has proposed buying up bad mortgages. And yet, somehow, Obama is the socialist?

My husband and I are both educated, and we both work. We will not see an increase in payroll taxes under an Obama presidency because we, like most Americans, make less than $250,000 per year. (Having said that, I'll be happier with where the tax money I do pay goes under an Obama presidency than under a Bush/McCain presidency, since less of my money will be spent on the Iraq debacle.)

If you can't beat them, join them? I would rather keep my good credit, vote for Obama, and wait for a change.

And once again, a commenter who has no idea what communism actually is.

Also, make sure to vote for McCain. He wants the government to buy these bad mortgages. That will be MUCH better for free market capitalism.

EPIC fail, Guest. You are welcome to try again.

Paul, I feel your pain. I actually don't know what my house is worth right now, and am kind of afraid to find out. I'm thinking of renting out half of it to give me a little more breathing room over the next few months.

can give you a rough idea Andrea, but it's not great. If you add in any upgrades, do your own comps, you can get close. But an appraiser is always better.

Just wanted to clarify who really started this whole subprime mortgage busines: http://query.nytimes.com/gst/fullpage.html?res=9c0DE7DB153EF933A0575AC0A... (Hint: the Clinton administration). I know the Republicans inherited this mess and didn't really heed the warnings of some Congresspeople. But just wanted to set the record straight. Thanks!

First, I'm sorry, Paul. While I chose to rent and not buy during the bubble, despite being offered a 7-figure loan on no documented income (!!!!), I am infuriated by the irresponsibility of the homeowners who did take similar offers and are now getting bailed out.

We have ceased to have a free market because the government insists on putting an artificial floor in place. Econ 101: supply and demand. We need to get back to the appropriate point where the two meet. If the government continues to intervene like this, I think it will only extend buyers' unwillingness to get into real estate, and further exacerbate the recession.

Obviously this is a multifactorial problem with no easy solution, and I don't think transferring homes from people to banks will be any good.

What I would love to see is a requirement for foreclosure "victims" to provide free shelter for the homeless, women and children, and others who are turned away from conventional shelters due to lack of space. There's no such thing as a free lunch, and if you can't pay up for your house, you should work off your debt to the government.

That way our government can put the bailout money into social security, medicare, and other programs that will support taxpayers and our society as a whole.

Why are so many people scapegoating homeowners who can't pay their mortgages? Last time I looked, they are not yet - and may never - get meaningful assistance.

The current Wall Street crisis was not caused by 1) Barney Frank, 2) Democrats forcing Fannie and Freddie to give liars loans, 3) poor people not being able to pay their mortgages.

So what might have caused the massive meltdown of our credit markets? A little gift from our old buddy Sen. Phil Gramm, the insanely hard to value, unregulated market in Credit Default Swaps. A Time Magazine article from March 2008 warned that the credit swap market was going to meltdown because people were investing in CD swaps. These are somewhat like insurance policies that back up other securities such as municipal bonds, corporate bonds or debt backed securities--without having any connection with the underlying security.

US Stock Market=approx. $22 trillion, Mortage market = only $7.1 trillion Swaps market????? more than $45 trillion. Gee, which of these is more likely to have been able to swamp the entire US economy? The biggish $7 trillion wave or the HUGE $45 Trillion tsunami?

h/t Firedoglake

http://tinyurl.com/4627p9

There's nothing wrong with not paying your mortgage. If your house only fell 15%, it won't be financially beneficial without some government handout that lets you remain in your home. If you'll qualify for a handout, you might as well take it since the government is the reason your house was overpriced 7 years ago.

The government isn't exactly taking our tax money and giving it to irresponsible people. The government would basically become the mortgage "bank" for those troubled mortgages -- and would allow the owners to refinance in a way that they can repay the loan. Overall, the government (meaning: us) would make money off this plan (if it buys the mortgages off the banks at their current worth and not the original worth), and far fewer people would be out on the street and throwing the economy (and your own housing values) deeper into a hole.

If someone was able to refinance their mortgage when the value of their home went up, why shouldn't people also be allowed to refinance when the value of the home has gone down? And, yes, it would be good if this were expanded for everyone -- but it's less a bailout for irresponsible buyers (other than letting them stay in their homes instead of becoming homeless) than it is a bailout for the mortgage banks who now want those mortgages off their books.

I was just talking about this to my Mom. Talking about how thankful I am that I am smart and not greedy. Smart enough to do the research when we were getting our mortgage and to buy a house we could afford on one income (knowing I wanted to quit work when we had kids). Not everybody has the same kind of "money education" as others do growing up and usually end up making very bad financial decisions.

Granted, I am not condoning these decisions. They were greed-based. People don't want starter homes anymore. They want their dream home from the get go.

But, I am still thankful that I am not losing my home or anywhere near losing my home. I think the bailout is a stupid idea that will fix nothing, but I still feel better off and thankful that I am not stressed to the max everyday about where I'm going to live or how I'm going to afford the basics for my family.

Just in the NYT today: Home Prices Seem Far From Bottom.

And if you think that letting people get foreclosed on and laid off just to "punish them" for their mistakes is going to help that housing market one bit, you're sadly mistaken.

I do understand the outrage - I'm a renter who hasn't been irresponsible and yet my tax dollars are going for these ridiculous bailouts - but SOMETHING has to be done or pretty soon nobody is going to be able to afford to buy any houses at all and the price of your home will hit zero. There are now houses in Detroit selling for under $9k - $9K! - because everybody is so flat-busted broke and nobody wants to move there because everybody is so flat-busted broke. And if you live in the suburbs, with more foreclosures in your neighborhood you could soon be looking at similar levels of crime & home abandonment.

I did everything right, as well. As a single working woman, when I bought my first home, I stayed well within the guidelines that your housing should cost no greater than one-fourth of your monthly income. I paid on time. I bought a modest home in a modest neighborhood. Then, I experienced a series of unfair circumstances.

First, I was laid off indefinitely from a field that thrives in a good economy and tanks in a bad one (do the math: it equals no job opportunities). Then, I became the 24/7 caretaker for my elderly parents. Then, they died, and I got stuck with not one but TWO extra homes via inheritance. In a good economy, this would be a blessing! But in a tough housing market, they become the three Albatrosses.

One was subdivided into three properties. I put my first home on the market as I was living in the mortgage-free parental home to take care of them (thank God). I now had FOUR properties on the market in this economy, no job, and limited savings.

Lot 2 sold. Lot 3 is finally pending. Lot 1 with house has had offers fall through and suffered a fire (minimal damage, thank God). My own home? In foreclosure, but I'm working on stopping the process. Jobs? Stagnant. I say this knowing it contradicts my commitment to positive thinking and my Law of Attraction Intentions, but let's be real. If I can get myself "rescued", PLEASE. Send it my way. If things shift and withholding my mortgage payments would benefit me, I might consider it.

I did everything right. This wasn't supposed to happen.

So who is going to get away with fraud?

The bankers who illegally loaned to people who couldn't afford to repay the loans?

Or the people who in good faith believed in themselves and thought they could afford the payments and kept trying until they couldn't make the payments anymore?

"Most people" you accuse "most people" of being fraudulent. I disagree, I think most people are trying hard and believe in themselves and wanted to own a home for their families.

"Some people" commit fraud, and you don't think that your bank account with 10K in it would be taken into account when you put a hand out? It would, and you wouldn't get a hand out, they would accuse you rightly of fraud and might even sue you for trying to defraud the system.

I also bought my home 7 years ago but .... mine is worth almost double what I paid; based on what homes here have sold for recently. I'm in a town home. Home prices are not all down everywhere.

The problem is that Americans assume they have a RIGHT to own a home. Why? I bought a home because we had kids and we could not find any 3 bedroom apartments to rent in the area we wanted to live. But ... I did not want to own a home. I never understood the American preoccupation with home ownership. It's not even a good investment over the short or long term. The mortgage is only one of the cost of home ownership. You have insurance, repairs cost, heating etc. Take the money saved by renting and save it and over time that money grows faster than the rate of appreciation on the house.

But no one wants to hear that ... they want to dream.

Get into a field that does well even in a bad economy.

Sell all FOUR properties for what they are worth not what you want to get for them.

Where is the statement of "promise" that you were given at birth that if you did "everything right" it would all work out? Where is your written and signed "life guarantee"?

1. List your house for rent and let it be very reasonable
2. Move out to an apt., when you have a lessee (it would help if he is not the mafiosi)
3. STOP making the mortgage payments
4. ???
5. Profit!

So I decided to deal with my anger through comedy. See how this whole financial situation is explained by the movie "Animal House"

http://watchingmarcitz.wordpress.com/the-financial-bailout-according-to-...

Absolutely!!! Remember last week when congress decided to use 850 billion of your new tax dollars to bail out wallstreet criminals???? It's time for payback. If you bought a house in the past 8 years, stop paying the mortgage. Sit in your home until you get evicted. Trust me, you'll need the savings to weather the next financial storm brewing on the horizon. Don't worry about a place to live either. There is going to be a huge glut of rentals available at great prices in the future. Then again, you might want to use those savings to buy a forclosure in the future for 10 cents on the dollar. The way things are going right now, your savings may be enough to buy that forclosure without another mortgage. Imagine that. A new home in the near future without a mortgage and it's yours!!!

Very interesting... Good read!

Maybe you can help me out:

I'll send you a free report on Lessons Learned from the Great Depression, valued at $19.95, for filling out a 10 minute questionnaire about the current economic crisis.

Please click on the link below to fill out the questionnaire

http://spreadsheets.google.com/viewform?key=p-XlwgJysoV-gV-D6-1d_XQ

Thanks!

I'm still furious about the REPUBLICAN voter fraud perpetrated in Florida in 2000 by GWB's brother and the Supreme Court. That is a bigger threat to democracy than a couple of applications signed by "Mickey Mouse".

Give me a break.

@dixie-chik, government already started mortgage switchovers last falls. $40B by the end of the year.

i am seriously considering getting as risky of a loan as I can and then stopping paying after 3 months. My family and I have lived very frugally over the past 8 years after being laid off in the dotcom and knowing how bad that can be. Now I see everyone who was irresponsible being rewarded. looks like we could have been living in a McMansion and now not even have to pay for it. i feel stupid for being honest and hard-working. the only thing stopping me is the tanking stock market because i figure if it keeps tanking then the government will not be able to sell t-bills so no longer be able to buy up bad mortgages. you know the people will never have to pay now that the mortgages are owned by the government. All they have to do is get some policitian to put a moratorium on foreclosures on houses with mortgages owned by the govenrment. Then the people will live in them for free.

We need to hurry up and get ourselves into a troubled homeowner program so the government can take over and we can live their for free forever. Plus, the government will be a good landlord as they have plenty of money to do repairs.

Actually, it was the Clinton administration that mandated that mortgage lenders create the high-risk subprime loans that are now defaulting. President Clinton beefed up the Community Reinvestment Act, a Carter Administration law designed to encourage minority home ownership. This created the risky subprime loans.

Don't believe me? Go to the NY Times archives and search for this article: New York Times, September 30, 1999
Fannie Mae Eases Credit To Aid Mortgage Lending, By Steven A. Holmes

The changes to the Community Redevelopment Act put new regulations into place that forced lenders into high-risk areas. In areas where sound business practices had previously governed lending standards, lenders now had no choice other than to lower their standards and make loans that they would not have been approved only a few years earlier. The alternative was to face stiff government fines.

I'm not even a Bush fan -- I just think that it's wrong to put blame where the blame isn't due. Yes, it is happening under the Bush administration, but he was certainly NOT NOT NOT the one who started it.

If you truly believe Obama won't raise your taxes, you live in a alternative Universe.

Don't believe a politician's words; look at their record.

I do not think we should NOT pay our mortgage.

BUT....how about our credit cards? What right does a card issuer have to increase your rate from 9% to 30% when you are late for the FIRST time in 8 years by a few days with your payment?

I agree, and THANK YOU for giving voice to what so many of us are feeling! I have never felt so betrayed by my own government. The idea that we would reward people for bad choices, protect them from investment risk they knowingly took on... it's an abomination.

This is precisely what Ayn Rand was getting at when John Galt pulled all the innovators and doers out of society and left the moochers to fend for themselves.

Forget McCain, forget Obama - we need a John Galt in 2008!

This is an old story that sums up the only option that we have to help our children. Of course it involves our own personal sacrifice.

Call the farmer John Galt.

HERE was once a farmer who suffered much at the hands of a money-lender. Good harvests, or bad, the farmer was always poor, the money-lender rich. At last, when he hadn't a farthing left, the farmer went to the money-lender's house, and said, 'You can't squeeze water from a stone, and as you have nothing to get by me now, you might tell me the secret of becoming rich.'

Now this true story shows that a farmer once got the better of a money-lender; but only by losing one of his eyes!

http://www.digital.library.upenn.edu/women/steel/punjab/punjab-26.html

We did the responsible thing too. We put down 20% on a modest home and got a fixed rate, 30-year mortgage. It ticks me off to no end that the speculators, real estate flippers, and the instant gratification, no-money-down crowd are getting bailed out. Sure, there's blame enough to go around to include the dishonest people who wrote out these irresponsible loans, but as you say, no one put a gun to anyone's head and made them take out a loan they couldn't afford.

It makes me sick. I'm going to keep paying my mortgage, along with the extra principle payments. Sure, it'd be nice to not have to pay off the rest of the mortgage, but we got where we are by doing the responsible, cautious, plodding thing. I'd rather *know* I paid off our debt fair and square, so that no one can touch us, than gamble on getting something for nothing.

Loved the article. A lot of people are thinking this way. I too have a good fixed rate on a 30 year loan from when I purchased a very modest home at the end of 2002. This idea sounds great on paper, but so does communism. The reality is the plan will be a lot harder to "live". I wish those who choose to do this a lot luck. Good luck sleeping at night and good luck with Uncle Sam taking care of you. It has been my experience when Uncle Sam takes care of you, it normally does not go so well and certainly not very smoothly...think red tape, long lines, being placed on hold and being screwed over. One way or another the more goverment in your life, the more headaches you will have. When has the government ever run anything well or smoothly? It is actually probably less stressful just to work hard and pay your bills. In the end, what goes around comes around. And if not, at least I can sleep at night. All the money in the world is no good if you cannot sleep at night and be at peace. So fellow payors of other other people's irresponsibility, I say....Sleep Well my friends, Sleep well!

I would encourage anyone, before they make any rash decisions, to become more informed about their options. First, read all your can about the current bill (from the dot govs themslves). Second, don't forget about the HopeNow program, and other like it, that help struggling homeowners.

RefiWerks
HopeNow
FHA Foreclosure Help

Screw the 'struggling' homeowners. Bail out your own sorry asses. I don't want to pay for your mistakes, miscalculations or even your SUV's.

Predatory lending, yes, there was that, but what happened to filling out documents honestly and reading what you sign?

What's happening today will lead to a new American Revolution. Or, maybe a new American Revolution, one that will shatter this nation. There are no modern Abraham Lincolns around.

meant to say either a Revolution or a Civil War. Either one will be painful.

The article is spot on except for the part about the guy who lost his job. When you commit to a mortgage you should know there will be bumps along the 30 year road. Government has no business helping you. That's what friends and family are for! House prices going up or down shouldn't stop you from making payments - you made an agreement - follow through! Stop the effin bailout bs!

Is this really much different than those who took advantage of the U.S. bankruptcy system before its reform? I can't tell you how many times I've heard that people would buy whatever they wanted (whether they could afford it or not) and just file bankruptcy later. Who ended up paying for their spending? The rest of us. But that doesn't mean I'll ever just stop paying my bills.

Karma, good stewardship, whatever you want to call it, being shortsighted on this won't do you any good in the long run. Keep your head up, run a fair race, and you will be rewarded. Maybe not in interest rates or cash, but in knowing that you paid your debt and kept your honor and credit in tact. These things will all shake out in the end. We have to believe this, or our country is a sad place, indeed. (Besides, what are we teaching our kids if we just roll over and give it up?)

Good discussion, Paul!

Linsey

Income money declining, lack of jobs, lack of sales, with less work around more people will be in this situation soon. So many will be in trouble and it is not from signing into a mortage they could not afford. It is our economy that will make it so you will not be able to meet your mortgage or RENT obligations.

From wikipedia, "worldwide CDS market at $58 trillion"... US is around $17 trillion instead of the reported $45 trillion in your response.

"I am mad as hell and I am not going to take it anymore" -Network

We have all been suckered into the belief that we do as our parents have done we'll be OK. That was fine when housing wasn't expensive, or in oversupply or jobs were centric to one area. Mobility, escalating costs and abundance has made me rethink whether an investment is even worth it. And every one is under the assumption that you can sell in 20 to 30 years. But will that be true for the area you are living in? Would it better to rent? Can investing the difference in renting versus buying accrue to more than what you can sell you house for in 30 years?

Yes you always need a place to hang your hat, and housing may get better, but if the economics are not there to begin with, why make those typical assumptions.

I totally agree with you!! I am in Australia and we havn't had it hit us as bad as you in the US, but it is starting to happen and I have been worried about exactly the same thing, why should we pay any extra on our mortgage when the house may be worth less. Prices have already started to go down in Australia and like you we have done the right thing - we don't have credit and our only loan is our mortgage in which a quarter of it is equity we put up when we bought it, we may lose that yet.....sad days and not knowing what to do is frustrating. Good luck with you and yours:) Courtney.

I absolutely agree.
I did entertain hopes of owning a home one day...
Don't see that happening now. Ah well.
I guess there's always RVs, right?
We can all become gypsies!

Hey, I'm a renter. I knew I couldn't afford a house, so I didn't buy one. Where's my free money?

You are absolutely correct. And this is what happens when too much government destroys the values of a strong society. There was a time when we had debtors prisons. There was a time when society, your entire social circle, would shun you for such an event. But now we do it proudly and our social circle does not care. You just have to be careful. If you loan is owned by the government (e.g. fannie or freddie) then I would stop paying. But if your home is in a good area and it's value has not dropped too much then you might not get any help.

It is clear that the innocent, that is savers, are being punished, while the guilty extreme debtors, are being rewarded.

The only solace that the innocent renters have to look forward to is lower home prices.

The over-indebted homeowners can stop paying their mortgage, live rent free for 9 to 24 months and without any tax liability, buy again in 5 to 7 years. The really brilliant, are buying another house like the one they own at 50% off and then walking away from the overpriced house they had.

Yes, all of the ways to profit from this big time are in the hands of the guilty. And before the Great Depression of the 1930’s it was also so. Get use to it. Life is unfair. Mozillo is tanned, rested, and ready and you cannot make ends meet. Nothing new here.

If you vote for McCain, Nader, or Ron Paul expect more of the same. It is a contest between McCain and Obama. With Obama you have a chance. With McCain, you have 4 more years of minimal change but no earmarks! Your 401K cannot stand 4 more years!

The world economic order is being rewritten today in Paris. By the time we have elected a new congress and president, we will no longer or shortly be unable to write our international debts in dollars that we can print. No one trusts us anymore. Cut your spending, smile at your boss, pay down your debts, and get use to it. The age of free money via the home equity loan is over!

bull

This web site is very insightful as to why renting makes way more financial sense than owning a home (read the left hand column very carefully):
http://patrick.net/housing/

I know it's nearly impossible to do, but unless you plan to go with the nuclear option i.e. not paying your mortgage, sell your house now or rent it out until you can sell.

One more thing: you might want to think twice about buying a home. We are a long way from the housing bottom, at least 2 years if not considerably longer. If you buy something now, be prepared to lose 20% value in the long run. That's not a good investment, especially if your putting that hard-earned 20% down on your property.

Welcome to the new reality of American Economics... the "Vow of Poverty" Edition.

Stewart

First, of all Anyone of you true Americans that have gotten that helping hand from Mommy or from who ever should not be opening you’re Big Ass Mouths.
(You can bet your sweet ass that I would miss a couple payments if it meant them re-writing my loan.) Let me see if I get this right, one you will let your credit be ruined and number two, I will be glad to help you pack and move if you loan is denied! Wake-Up
Same old dumped downed American to much Fox News (“if it means missing a few payments, some borrowers would deliberately miss mortgage payments to qualify for a cheaper mortgage.) Looks like I need to get together a few more movers and storage units lined-up for another good old American, (Once those incentives include guarantees of better rates, who in their right mind would struggle to pay on time?) Can this person even read a Newspaper? Rates are Up-Up and away better rates get real give you lender a call or maybe “Hope-Now” you know the little guy’s program with the funny walk that said repeatedly how Home-Ownership is at its all time high, come on you know the guy watching the store. Time to Crash-N-Burn American God help us all.
Singed 20%=Down now -$200,000.00 price drop so far and where is your newfound equity?

I'm in Australia and didn't understand what the "subprime" problem was until I watched this . It seems to me that the genuinely poor and working class really were decieved and taken advantage of just as DebbieM above described. It is those people who deserve the help and I should hope that assistance would be approved based on need rather than any other criteria. Greedy middle class speculators would have to miss out because they don't meet the criteria for hardship.

The wider economic problems are much larger than just the housing market and the bailout is only going to buy time anyway. It's not nearly enough to "fix" anything. It's barely even a bandaid. This is a defining moment in history not just for one generation but probably for the next one too.

it`s a pretty darn good time to buy a home. Granted, it may be a BETTER time LATER to buy a home than it is now, but the housing crash and credit crunch is presenting savvy renters(those who have done the right thing, lived within their means, kept their credit clean and saved up some money) with unprecedented opportunities to finally become homeowners instead of perpetual renters.

I`ve been renting for 30 years, and this horendous RE market(horrendous if you`re trying to SELL, and not-so-good if you`re trying to get a mortage so you can buy) finally tanked so low, that I was finally able to buy a home 4 months ago, without needing to apply for a mortgage - all I needed to do to acquire this property
was tap into an unsecureed line of credit for about $6k,
so, with any luck I`ll have that loan paid off in full
in about 3-4 more months, and will thus own this home free and clear with no debt.

If the market hadn`t been this bad, and if credit was
still flowing and available like it was a year or 2 ago,
the price of this home would have been far higher, and consequently out of my reach.

This is the proverbial silver lining in the clouds of gloom and doom in the housing and credit market - for those of you who are renters and aspire to own, your ship has come in. Some of y`all just need to recognize
that the ship may look different than you expected, may be smaller than you expected, and may even be docked in
a place you didn`t expect for it to land.

If you`re expecting a REO McMansion for $.20 cents on the dollar(with 100% financing available) to conveniently pop up in just the school district
you always hoped your kids could attend, and ring your doorbell to let you know it`s available, well, you`ll probably have to wait quite a bit longer, but if you`re willing to be flexible as to your expectations, and flexible as to your location, decent forclosures in decent areas can be had for as little as $10k, so instead of going out and buying that new Mini, or Hyundai
Triburon...(you know, ...the one you just HAD to have), go buy yourself a home instead.

You can`t live in a Hyundai, and a car depreciates, so why buy a new car when a home can be had for about the same price? Besides, I think the thrill of driving a new car off the lot, pales in comparison to being *finallY* be able to say things like "my driveway", "my garage", and "my backyard"(in the purest sense of the term) for the first time in one`s life, even if it`s just a small, old fixer-upper of a home.

Right now may not be the *best* time to buy, but it`s certainly a very good time to buy, IMHO.

Paul

I did the right things as well. I saved a lot of my income, and put it into what I thought were safe investments. I have lost far more than most homeowners, even though I've avoided buying a house for so long as I thought prices were too high in my area - and I did not get any shelter in exchange for my loss.

No one will bail me out.

When people stop honoring their promises is where the greatest danger lies for our society. Your home is a place to stay. Your mortgages payments were presumably affordable when you took on the mortage, so the fact the house is worth less now is immaterial. It's the same house, the payments are the same - so nobody "screwed you over".

If you or people like you default on your promises, then this will break the trust between you and the banks, break the trust between banks and their customers, and the businesses that do business with them. This is what is happening now.

We have far more to lose than just money here. If the US cannot start new innovative businesses because banks will no longer lend money to anyone, or if we go through a depression because no one can trust another, things would be far worse.

In short, please don't do this.

Great post with some good ideas.
I guess it is infuriating when on one hand there is a cavalier attitude fueled by greed and on the other hand whimpish attitude when things don't work out!!
Once some one is caught in the position of too much debt and assets that are falling in value, it can be a very scary place. When I stand back and look at it from a country perspective, there is a massive slowdown required to get things back to somewhere normal because at a macro level the whole country has been living beyond its means and now has to tighten its belt so that the country's income can slowly become more than it's expenses. Once that happens, debt can be paid back.
At a household level this happens at completely different rates and the politicians have to try and appeal to every one to get re elected. Not a simple problem and it's going to fascinating to see how they go about doing this.

I understand everyone's anger or frustration about the new bailout or rescue plan. I just posted my blog with the issues of this plan from the point of view as a banker and my concerns over government ownership in my bank. http://wwwfreewebsite4unowcom.blogspot.com/. I am a consumer too but the thought of letting my personal credit report be damaged so I could possibly get a lower interest rate or lower the principal amount of my loan is not advisable.

Banks look at personal credit reports if they are making a loan to the individual or to a business owned by an individual. As a small business credit approval officer I do not recommend defaulting on your current mortgage to try and get a better deal on it.

Individuals not making their payments is naughty and mischevious. Governments and banks knowingly flooding economies with pretend money with no real world wealth is just evil and that is what has happened. It seems they've sold your future to China.

The author makes a lot of assumptions the governemtn will in fact create individual home owner assistance available directly to homeowners. The probelm with these assumptions is the financial recovery or bailout plan is in a constant state of flux. The governents efforts will be to first shore up any systemic risks to our banking system before addressing the unerlying issues which caused the financial crisis, primarly residential real estate loans.

Like so many commenators I agree the savings you would receive during the self impossed payment moritorium would not be worth the damage to ones credit. Borrowing has been relatively easy during the last decade but that has and will continue to change. People will be able to continue to borrow money soon but the underwriting on lending is going to change, and these changes will be impossed by lenders themselves but we also should anticipate congress placing more stringent regulations on lenders. This should result in lower loan to vaulue loans and more emphasis placed on the borrowers credit history.

I've owned my home for 15 years. I've never once been late on my mortgage. However I am one of those close to needing assistance. The potential assistance is not because I want to discount my mortgage but becuase I'm on the verge of not being able to pay my mortgage(s). I have a first mortgage and a Heloc. The first has been in place for 8 years (i refinanced to lower interest during the last recession) and a Heloc which is three years old. The Heloc was taken out not to start a business but to support a business (and my household) which started to develop problems when the capital markets shut down in early 2007.

Now as the capital markets have gone through a melt down, and in the process pulled the economy down into recession, my business has failed. With no business, no income, and no savings, its hard to make the large mortgage payment(s). This month is the end of the line for savings, and retirement account withdrawls (there is nothing left) so yeah, I might need some help while I turn things around financially.

If you want to read my story go here http://moneyfinanceswealth.blogspot.com

I'm just glad we aren't bombarded with seven "refinance your mortgage now to take out a home equity loan!!" commercials every break on every TV show anymore.

"This is wrong. I will, no doubt, keep paying my mortgage. But I cannot help but be angered by this whole system."

This has nothing to do with it being wrong or right and bad or good. If the principal on your mortgage is higher than the value of your house by 20% or more, the rational choice is to walk away. It does not matter if you can make the payments or not, it is an irrational choice to service the debt on a property where the market value is lower than the principal of the mortgage and likely to diminish further. It is not a reasonable proposition to maintain a property where one does not have an equity stake.

This is not personal and should not be viewed as personal. It is a rational business decision. It has nothing to do with morality or virtue, simple and clear.

Adam Smith's secret hand giveth and it taketh away. The laws of economics demand that both lenders and borrowers be held accountable for their "frivolous" and "cavalier" conduct. This is just one part of the equation.

Best regards,

Econolicious

This is ridiculous, people not paying their mortgages is the reason why we got into this mess in the first place. I feel no sympathy for those who signed up for mortgages that they could not afford. Especially those who knew what they were doing yet signed up for 3 home loans so they could sell two of them for a profit of over $100,000 in the span of 3 months. This was the kind of outrage that got us into this mess in the first place, now there are people trying to get out of what they signed up for, either by looking for refinance options if those still exist or not paying and hoping the government will jump in and help them out with a bailout.

I am creating a web-forum to discuss everything in a centralized place. http://www.bailoutdisaster.com/
So that we have a place to discuss articles and news, please join.

Also I have my blog which is tracking articles related to all this mess.
http://www.tranharry.com/

Ralph Nader said something to the effect that we've taken on all the burdens and responsibilities of socialism, but have received none of the benefits. We're spending hundreds of billions of dollars, but we don't yet have easy access to health care. There's no guarantee that if you study hard, you'll be able to attend college, because it's getting expensive.

This is a form of socialism, but it's not the one that the average person wants. We want socialism like we have with the police, firefighters, public libraries, and public parks. These things are all socialist in the way they are funded and administered, and I daresay 90% Americans are okay with it. And when the public system isn't working right, as with public education, there's support for reforms... but not widespread support for vouchers to fund private schools.

If we're having problems with housing and mortgages, maybe the socialist solution would be the way to go.

The socialist solution would be to allow the borrower to default, and then take ownership of the house. The owner could be allowed to rent the house, and also pay a small premium to pay back the bailout -- it would be socialized, public housing. Later, if the resident finds they can afford to buy the house again, they could purchase it.

wildgift & others who heavily espouse socialism:

Please move somewhere where they embrace socialism.

Socialism is the death of the individual. The only ones who are for it are those that can't make it in a competitive society.

Please move.

I feel for you, and am truly sorry that you've fallen on hard times, but supporting a personal business is a risk/reward scenario. If it does well, the rewards can be great - set your own hours, your own working environment, etc., but there are also certainly risks involved, such as the unpredictability of income, and it's not the responsibility of the American taxpayer to fix your HELOC problems. I've considered going into business for myself at times, but without amassed capital, and no desire to take out a loan that I might not be able to pay back, not to mention that I need a -predictable- paycheck, I continue in my little cubicle, corporate world. That's my choice, just like starting that business was yours.

That said, I have no problem with taxpayer dollars being used to aid struggling people, so long as there is sufficient, guaranteed collateral to back the deal. (Not that Wall Street seems to know what that is...) But there should not be handouts, and the public's investment should be repaid with interest.

The government should not be in the role of protecting people from risk they knowingly took on. Without consequences, risk-taking spirals completely out of control and the whole world suffers.

I don't really have a problem with socialism in general, or capitalism. But as someone pointed out, we've got neither. We got some strange-mixture of the two, and we aren't doing either one very well.

I know there were predatory lenders. We bought in '04, and our house is now worth about 18% less than we paid for it. It really sucks, but we'll continue to pay our 30-year fixed mortgage, and still continue to pay our property taxes on a value of a house somewhere in the middle. Hindsight is 20/20, and we could get a bigger house in a better school district for less than we paid for our 2br, 1ba.

The problem I have is this - I see no problem with helping homeowners - transferring their existing mortgages to a 30-year fixed rate of, say 6% (a very reasonable rate). The problem is, I think, that a LOT of homebuyers cannot afford the 6%. They bought a house with an ARM of 2%, and never thought ahead to reality. And for that, I don't see why they should keep their homes.

We *still* get offers to exchange our mortgage for an ARM at the low rate of 5.75%! (Hello, our rate is 5.625! fixed!)

Kelja: I WOULD move to a "socialist" country. (I LAUGH that a 39.5% tax rate on the highest income bracket would make this a socialist country). I've lived in the EU, and would do it again.

If, yanno, any of them wanted American workers.

Or if I could sell my house for a profit.

Orrrr if my husband spoke any language besides English.

Yeah, your solution is real innovative there *rolls eyes*.

"Death of the individual." Yeah, what's so great about the individual? We all like to think we're beautiful and unique snowflakes, but in the end we all basically want the same things. Right-wing politics focus on individual prosperity and say screw it to anyone who can't compete, automatically making a moral judgment on someone who may have acted completely morally. That seems like a real magical system to me.

It's already been said in this thread, but homeowners in distress are utterly the wrong place to put blame in this market. Blame the predatory lending tactics and debt-shifting behavior of the entire mortgage industry, who specifically targeted people who couldn't pay back their mortgages.

Everyone who says mortgages are so easy to understand should try going through the hundreds of pages of paperwork in Chinese, for giggles, since many of these distress homeowners are IMMIGRANTS. In one condo complex near me, populated largely by Brazilian immigrants, one had to app with Countrywide to even buy a unit. They were offering extremely low teaser rates on ARMs. Most took them. Over half are now in foreclosure. Who would you blame here? Hint: imagine yourself buying a home in Brazil without speaking Portuguese before you give an answer.

Remember that change starts at the bottom. If enough people channel their anger into, say, contacting their government representatives, and then remember this issue when it comes time to re-elect, then we'd have people in the Senate and House that would SIDE with us responsible folks. After all, that's their JOB, to represent the rest of us and vote on bail-out bills accordingly.

People think that they have no power in any of this, and that's why they get angry. But we the people DO have power, we just have to exercise it at the appropriate time in appropriate ways.

Taxes? Well, we can't help what they do with our dollars at this particular moment, but at re-election time, you all had better study up and KNOW which person will spend your tax dollars the way you want them to. That's your right, and that's your responsibility as a citizen.

Please, everyone, take the time to write these comments in an email to your Senator or House Representative (or both!). You'll do much more good that way.

Lise:

I feel your pain regarding how difficult it would be to understand a legal contract in another language. I, too, have lived in a country whose language was not my first, and it is certainly challenging. However, I guess that's why I wouldn't buy a house in Brazil. Because I would not understand a contract in Portugese. Or, more likely, I would learn Portugese, and once I had an understanding of what I was getting myself into, I'd go for the purchase.

I'm not sure that requires a great deal of intellect, either. Seems like common sense to me. Although perhaps I too am "smarter than the average guy" as several have stated in earlier posts. (That's sarcasm in case you missed it. I actually think that's a bunch of BS given that I feel confident that our intellects are more like a bell curve. E.g. we're all more or less of similar levels of intelligence.)

I seriously doubt that the government will renegotiate the principal on home loans directly with the home owners. Thats going way too far and I seriously doubt it would happen. I can see them refinancing loans for homeowners at a fixed rate, but eating the loss in equity really wouldn't accomplish anything but a giant handout.

I really don't understand why so many people think they deserve to be bailed out.

My husband and I could have gotten a sub-prime mortgage, despite our huuuuge student loan debt. We chose not to! We had been there, done that with student loans, signing on the dotted line without assessing the consequences. We are took care of those debts and suffered the consequences of being foolish. I really don't see how buying a house you can't really afford with an adjustable rate mortgage is any different.

I'm sorry, those of you who bought houses you couldn't afford can post your sob story online and make it sound like I should have compassion, but I know several of people just like you in real life, and to a person they are spoiled little princesses who just had to have a house bigger than their sister's or cousin's or best friend's, no matter what it cost.

Forget the starter house, they wanted the mansion right after the honeymoon. They all think they are Paris Hilton. Their sob story doesn't mention how their houses are filled with expensive furniture and electronics, also bought on credit. Driveways with brand new cars while they are online whining about how someone should fix it for them. They can't make their basic needs because they have to pay for their TOYS

Why should the government bail them out of the mess they created? The government didn't bail me out of the mess I created, nor did I even think anyone should. I put my nose to the grindstone and took care of business.

I don't blame you for being angry. I'm angry too!! We all make mistakes, but part of being a decent human being is taking responsibilty for those mistakes.

For all the fussing about the mortgage bail-out that is going on, it's frustrating to me that we're talking about individual homeowners, and not the only people who have actually been bailed out so far, huge financial institutions. Certainly, if anybody should have been able to see the problem, it should have been these experts.

One big part of the problem here is that banks had more financial institutions who wanted to buy mortgage-backed securities than they had people who wanted to borrow money for houses. So lenders came up with crazy gimmicks like the liar's loan (we don't actually check your income) and the choose your payment loan (we'll just add thousands to your principle) and the low interest rate, then huge interest rate (gotcha)loan.

Another big part of the problem is that the actual loan officers dealing with home buyers had great financial incentives to get deals done without regard for the quality of the loan. They were rewarded on sales volume and dollars loaned. These loans were quickly sold to third parties, so the bank making the original loan took no risk. As a result, many lenders became willing, even eager, to give loans they would not have made if they were planning to hold the that loan until maturity.

I know of one retired man of modest means who walked in to take out a $15,000 home equity loan (to fix his roof) and walked out with a $300,000 second mortgage with a balloon payment. Was he smart to get talked into it? Of course not, but he was leaned on pretty heavily. When he asked about the balloon payment, the answer was, "Don't worry, you'll just refinance it then, and the loan officer started hammering him with "low initial payments." "You've worked hard all your life, and you deserve a break." And "Wouldn't it be nice to take a cruise?"

He would have been all right, too, if the market bubble had not burst, but when it did, he was unable to refinance, the balloon came due, and he lost his house. Sad AND stupid. Yes, his fault. Yes, also the fault of the unscrupulous loan officer who saw a big bonus in his future, and nothing else.

Yes, of course the people taking out the loans should have known better, but many were not adequately informed about the terms of their loan. (Did you read and understand every last line of the contract on your last mortgage? I didn't.) Unfortunately, many people still think that if the bank is willing to lend you the money, then you must be able to afford the loan.

So far, not one single home owner has been bailed out, only the financial institutions. They may never get any help, and as I understand it, most will only get a chance to renegotiate so that they can afford to make their payments. That sounds good to me.

I don't want to hear any sob stories. We all know that we need to plan ahead for an emergency. My husband lost his job last year and was out of work for 6 months. At the time, we had a 10 month old baby.

However, we also have a little thing called COMMON SENSE and we had an emergency fund. 4 years ago we bought our house, and bought less than what we could afford. The bank wanted to loan us $280k. We borrowed $120k instead. At the time we had one car and it was paid off. We recently paid CASH for a second car. We do without a lot of things. I grew up in a poor household and we got WIC but no foodstamps or welfare.

Somewhere along the line, Americans became greedy little bastards thinking we deserve this, that, and the other. It's not the little guy who's going to be helped by the bailout. It is yet again another example of those of us who are repsonsible for ourselves, also having to be responsible for everybody else who has no brains. From the people who bought McMansions they couldn't afford to the CEOs who ran off with hundreds of millions, they are all responsible for this mess. We ought to, as a country, seize ALL those assets in the name of the government and redistribute the wealth to those of us who are responsible.

Why not reward those who do it right?

just like you and most the people posting, i have my own sob story.
my wife and i bought our house 2 1/2 years ago, using the bubble to sell our 1600 sq ft house that we purchased at 123k for a tidy sum of 255k, we paid off all debts, credit card, car...etc. and then purchased a nice home, 2400 sq ft on a corner lot, for 207k. fast forward to the present, in the middle of a divorce, was in a motorcycle accident 1 1/2 years ago and now am on disability (not ssi, through a policy from work) and i looked a couple days ago and within a 1 block radius there are 8 bank owned for sale signs and 11 short sale signs. i had a real estate agent pull comps and my house that we bought for 207k, and owe 180k is now worth roughly 130k. and since we did everything right, even with the spousal support ordered by the court and being on a fixed disability income, i can still afford the mortgage. can't afford to go to the movies, but can afford my house. so what the hell do i do? i've thought about trying to purchase a 70 to 90k house somewhere else and then letting them foreclose on this house, thought about finding a rental home that takes pets (i have 3 dogs) and letting them have the house, doing what you have mentioned in the article, or just plugging along without enough money to even travel the 250 miles to see my parents. i don't know if it's a moral decision to honor my obligations, a matter of pride that i would prefer to just struggle along, or just stupidity, but i'd prefer to stay. am i a fool? should i accept a bailout? or help pay for other morons? right next to me, across the street and within 5 houses each way are 6 houses for sale...any suggestions?

Yes! We need a puerile simplistic libertarian solution! Too much thinkie-thinkie going on in government!

Before anyone goes and follows this advice, keep in mind that we are in an election year... Politicians Lie. Obama and McCain will say anything to win but I guarantee you not one red cent will go to any struggling home owner ( and it shouldn't ). People want to blame greedy banks for what happened, just remember it was Bill Clinton's plan that made these sub-prime shark loans possible and ultimately, it comes down to the homeowner to know what the hell they are signing for.

The fact that my retirement investments have dropped nearly 25% in the last three months, essentially wiping out the last 4 years of my contributions, interest, dividends and gains, didn't scare me. I always knew there was no guarantee of perpetual growth, and I'm still far better off than if I had never invested at all.

The fact that my home value has probably dropped 15-20% from its high of 18 months ago didn't scare me. In four years it'll be paid off, it's still worth at least three or four times what I paid for it, and it gives shelter to me and two relatives who have fallen on hard times (in lieu of them going on welfare).

The fact that my rental house has been on the market without an offer for over six months doesn't scare me. It's rented and not over-leveraged.

The fact that my business is facing some growing receivables and lower demand doesn't scare me. My business expenses are lean, and my household can live on less than $3,000 a month including private school tuition for the teenager, who has a weekend job, and help for a kid in college who also works nearly full-time. I'll have to keep working longer than I had hoped, but that's life.

The fact that so many people commenting here seem to think that we would be better off by adopting even more socialist policies than we already have - that DOES scare me.

We've had several decades of relentless anti-business, class-warfare rhetoric from the Democrats and a fair number of Republicans, and abysmal economic education at every level below graduate school. That, plus a normal amount of human self-regard, has given us a high proportion of our population that is convinced that it has a moral right to a comfortable middle-class existence no matter how foolish its choices or whether it contributes anything useful to society or not, complete with McMansions, new cars, daily "fair trade" lattes at Starbucks and produce worth its weight in silver because it's "local" and "organic." A sizable segment believes the only thing keeping it from that existence is racial or ethnic prejudice and/or greedy businesses (as if its own sense of entitlement wasn't just as greedy).

These are the kind of people who, like Al Gore did a few years ago, demand that the government pay for their parents' prescription drugs or their kids' college educations instead of pulling out their own often well-padded checkbooks. And they are the kind of people who don't see a "moral issue" in walking away from a mortgage because their house declines in value.

This social divide, between the "leave me alone unless I'm starving" crowd, like me and my family, and the "as long as there's a single rich person left alive, we're all entitled to share in his wealth" crowd, like Obama and his followers, is not a recipe for a slow, gentle economic decline like that which socialism has brought to Sweden, but for a swift devastating decline like the one it brought to Zimbabwe, although granted it will take awhile longer since we have farther to fall.

People who believe that the "rich" people Obama plans to soak will still create as many jobs, invest in new businesses, and keep our economic engine going while Obama screws them, are dreaming. He has promised goodies to so many people, he will have to deliver on some of it, and to do that, he will have to tax the middle class directly or indirectly, because there simply aren't enough "rich" people to pay the piper. So if you are middle class, you can count on one of two things happening: The "rich" people who created the job you now hold will find it in their interest to yank it and you can join the unemployment ranks, or you WILL pay higher taxes.

Socialism is indeed, as Obama promises, about "sharing the wealth" - whatever wealth there is. Capitalism is about creating it. Obama is offering to give you a fine dinner of roast goose, but you only get to dine on the goose once. It's a fine meal, but after that, you won't get any more golden eggs.

I have a lot to say about the mortgage industry. But to put a tourniquet on the current situation would require the industry to put its greed and avarice in check. We need to have an unprecendented rate freeze for current mortgages that are or will be adjusting to a higher rate mortgage. If they adjust to lower rates, let them and leave them alone. Focus on the loans that are putting the balance of the economy in jeopardy. If the current lenders would work with its customers and keep them from going into forclosure by keeping them at their introductory rate terms, or slightly lower rate terms because of job loss or other economic displacment, we've conquered half the battle. We can then focus on revamping the whole industry, and then refinance those loans into fixed rate mortgages.

@SBT - great post.

"Unfortunately, many people still think that if the bank is willing to lend you the money, then you must be able to afford the loan."

That is one huge problem -- people assumed that banks were fiscally conservative.

It's a huge-er problem today, now that people are losing trust in the banks. Trust in banks is one of the foundations of capitalism.

The solution, if you want to save capitalism, isn't to berate people who took on bad loans. Rather, it's to force the banks to be responsible, so that the mass of people can trust them.

The solution, if you, like me, wish to see capitalism partially destroyed, and the speculators and bankers punished, by tossing them into prison for a few years, will be to continue to bail out the people at the top, and punish the people at the bottom.

Soon, we'll learn to despise the banks, and how to subsist without credit. The available paths to better employment and wages is radical unions, radical community self-help institutions, and radical politics.

I'm really curious about those of you who say you want to walk away from your home that you're upside down on and instead buy a cheaper home since the prices are so low. How are you going to do this? After you walk away, you're not going to be able to get that other home, or if you get it first, it will be taken away along with your first abandoned home. Am I missing something?? And for those who say it's not a matter of integrity, rather a financial decision, then it's plain to see you have no itegrity.

Greed got us here and if there are no consequences, there will be no correction in society and we're failed to repeat it and more will be tempted to fall into the same trap.

Lise:

I wouldn't be stupid/naive enough to buy a house where the documentation was in a language I couldn't understand. I would also not be stupid/naive enough to enter into an enormous financial transaction in a foreign language without an attorney on retainer. If you can shell out enough money to afford the purchase of a residence, you can shell out a few hundred bucks to pay for an attorney to review/explain the documents for you. If you can't afford that, you have no business buying a house. It's not like, at the height of the housing bubble, there weren't apartments a-plenty.

Furthermore, I wouldn't consider permanent residence in a country when I didn't speak the primary language at least well enough to understand how to translate 'adjustable-rate mortgage'.

I don't think I'm Little Miss Perfect... this is just common sense, here.

You are right on target.

If Obama is elected, this type of government will be standard operating procedure. After all - it's only "fair" to "spread the wealth" since we are home owners, not because of hard work and sacrifice, but because we happen to be more "fortunate" than others.

These are my feelings on the whole thing. I am 26 years old and my husband is 29. Back in 2005 we moved 60 miles so we could afford the smallest townhouse in our neighborhood. We live in the DC area which is on the expensive side to say the least. We did everything right we got a 30 year fixed with an ok rate. We only had 5% to put down. How many people at the age of 23 have 20% of 375,00 dollars just saved away. Not many unless mommy and daddy are helping them out. Since we bought this house our value has dropped 135,000 dollars. My husband was laided off for 6 months in the beginning of 2008. We have never missed a mortgage payment we have done without so much. We can't even afford to have another child. So I pray to god everyday that someone makes this right. Our whole goal in 2005 was to have the american dream not to flip houses or buy something that we couldn't afford. We make a combined income of 125,000 and we still struggle. So for all those people out there that are bitching about a government bailout if it doesn't happen soon you will have section eight housing throughtout nice neighborhoods like we have had hear. In our stripe of 8 townhouses there are only 2 owners left. Imagine having to explain to your four year old why her best friend had to suddonly move out because her parents couldn't pay there rent. This is the third family since we have lived here now we have neighbors that are government subsisized. So really what is the difference.

Have a little heart some people made bad decisions, but I am sure that none of the people speaking negatively about a bailout are perfect. If the money is spend now to correct the problem and there are guidelines in place so this never happens again it is only going to benefit everyone in the near future. The Housing crisis is the bulk of the problem with the market.

For all those people watching there retirements just go away wouldn't you like to see the economy bounce back I hate to be a bearer of bad news but sometimes you have to spend money to make money.

To end things positivly I am happy that I have somewhere that I can call home. If everyone would reflect on all the things in there life that they have to be grateful for all this **** is not worth worring about. It is what it is and it will work it self out things always do. Patience is not always easy.

Good Luck

We could rebel and not pay but I doubt big wig bankers and financiers, who expected a continual pay off from jacking people shystered with pie in the sky get everything for nothing loans, will not get sheriffs and police to start throwing people out and take back property. They also use credit ratings now to prevent people from moving up to get better jobs('records' check with job applications in small print includes credit not just the innocent criminal check), if they ever get defaulting on cards or a loan.
So it's a money shellgame economy where our politicians answer to save the shysters dangling promises of bling and easy unearned money through borrowing what you can never work or earn to pay off. It all comes from China our Daddy floating the government the cash. It's financial servitude and serfdom people! where citizens own nothing and owe their lives to the business/state - modern feudalism.

See what I said? Maybe AmyB can take note.

If you don't help out the people who made some bad decisions, some honest bad mistakes, like Ridenour, you'll end up with people thinking like Guest.

I applaud Ridenour for making so many sacrifices to do the responsible thing, but I still maintain that it is no one's responsibility to protect people from the risks inherent in making basic life choices.

When my husband and I bought a house, we chose a house that we knew we could afford on only one income. We didn't anticipate that either of us would be out of work, but we knew it was a possibility, so we built that into our risk scenario.

Whenever you buy anything of any financial size, there is -always- risk. When you buy a car, it begins depreciating in value immediately. Indeed, just about any asset you buy depreciates. The only exceptions are certain one of a kind items (like fine art). Logically speaking, no one should have expected that real estate would always go up in value. Look at former 'boom towns' like those in the (now) rust belt. All areas have their phases of growth and recession.

My point is that, while my heart goes out to people who have suffered/are suffering, and I appreciate the fact that (it seems like, though we don't know all the details) people like Ridenour are doing all they can, the government should not be in the business of mitigating the risk that people are exposed to when they have a run of bad luck. The effects of bad luck can and should be mitigated by the individual. Rent, don't own, if you don't have a substantial cushion of savings. Home ownership is not a right guaranteed by our Constitution. Put 3-6 months of savings away BEFORE times get tough. Move to a place with a lower cost of living, if you can. What you save on living expenses will more than compensate you for plane tickets to visit friends and family.

What next? Government bailout for bad luck at Texas hold 'em? Life itself comes with a litany of risks. You have to prepare yourself as best you can for those risks, but it is not the government's responsibility (or mine, via my tax dollars) to compensate anyone for bad luck, nor would I expect to be compensated for my own.

Also - to Ridenour's post... I was just re-reading, and I may not be inferring correctly, but it reads like she and her husband, when she was 23 and he 26, bought a $375,000 house. I apologize if this isn't a correct deduction... but in what version of reality is that a reasonable purchase?? I don't know anyone who bought a house at the age of 23, much less one that cost $375,000. Most everyone I know who got married at about that age, including myself, rented for 3-5 years before buying, giving careers a chance to stabilize somewhat, to save up a decent downpayment and still have a savings cushion to cover anything from lost wages to a broken furnace. We bought a house three years after we married, and were pre-approved by WaMu (what a shocker) for $330,000, but we knew that would be absolutely insanely too much for us, and instead bought a house, about 30 minutes outside Boston (another ridiculously high-priced market) for just under $190,000. Consequently, when I lost my job after 9/11, we were still able to pay the mortgage. Had we taken advantage of the full amount of WaMu's offer, we'd have been in foreclosure, no question. In fact, not only did we not go with the $330,000, we dropped WaMu altogether, because I didn't want to have anything to do with a bank that would make such an irresponsible recommendation to a customer.

Wouldn't we have loved a $375,000 house? Instead, we took something smaller and older, in a town that was more depressed, where prices were cheap. My neighborhood wasn't Wisteria Lane, with pretty McMansions and white picket fences, but it was safe, and it was a home for us, without neighbors above and below. We also put off having children (and still haven't had any), because we wanted to be in the most secure financial position we could achieve, in order to provide the best life we could for our kids. I still wonder if that was the right decision - but it was the bed we made, and we're laying in it. I'm not saying this to comment on anyone's choice to have kids or not... just to illustrate the point that we have made sacrifices, too. Life is about compromises, and unfortunately, some people are having to learn that the hard way, the scary way. And I know that has to be painful. But I, and others, are more concerned with the overall role of government, and what it should, and should not, be responsible for doing. This is one of those things that, for me, fall into the latter category.

Whether or not this is Ridenour's situation, I don't know, but it really is irrelevant. I think we all know people who went with the best house the bank said they could afford, without thought of the calamities that could arise down the road, and are now paying the price for that decision. I WHOLEHEARTEDLY agree that we should crack down on predatory lending, but that doesn't erase the autonomy and responsibility of the homeowner to know what they're signing AND to account for their own futures, and what good AND bad things might occur to affect their ability to pay.

Many people are now using a real estate short sale as an exit strategy when they become upside down in equity. Not that I condone not paying your mortgage but if you owe so much more than what the house is worth then it may be a valid option.

Yes, I am definitely upset with bailouts as well, but this "horrible" economy hasn't affected me negatively. Heck, I bought my house 5 years ago and its still worth 15% more than what I paid for it.

I encourage you all to read Ayn Rand's "Atlas Shrugged". Excellent novel and oh so scary how our economy and society are starting to mirror the storyline in this book

1. All those who can't pay apply for help.
2. Determine how much they can pay.
3. Issue a mortgage viability certificate for a mortgage tht reflects how much they ca actually afford.
4. They go and find a home that reflects that amount, somewhere else. If they want to stay where they are they must get the money from their savings or a private lender not a bank (family).
5. Everyone falls from above into a home that works financially.
6. All homes taken at appraised values of a specified date. say June 2006.
7. Result, no bailout, no foreclosures, no unpaid property taxes. no responsible people feeling burdened and unappreciated. People living within their means.

Same thing,
Been very conservative with money for the last ten years.
When applied for a loan back then the bank told us we could afford 400% more than what we applied for, 400%!!!
But we went for the small 1300Ft home and paid a high interest rate, 7.5% fixed because i am self employed i was a risk.
Never missed a payment and still drive driving the same van as ten years ago, never took cash out of the house, never. Our neighbors drive a brand new mercedes with money from the house, their house is double the size of mine, they just got bailed out at a rate of 3% for the next 5 years, they can keep their mercedes. I wanted to take some advantage of this too by selling my house and buying one like theirs. Again my interest rate will be 7.5%. And I will never be able to afford the 2600Ft home, because my equity dropped and my down payment will be too low. I can stay in my tiny home, earning 40% more tan him, not driving a mercedes, and not qualifying for a better mortgage.

Let's unite and collectively skip a payment on January 2009.
Spread the word

Hi,
I totally know how everyone who hasn't missed a mortgage payment feels! I have been working very hard and constantly paying my mortgage. I don't think it is fair to reward those who stopped paying and forget about those of us who kept our responsibilities. I also agree that though some people actually lost their jobs, there are many who just decided to stop paying because everyone else did, or because they felt their profit was out the door; or even worse, because they felt that they will get a reward for not paying.
The bottom line is: If they plan to reward homeowners either by lowering their remaining mortgage or by coming up with a low interest rate, they need to do this for EVERYONE....not just for those who have stopped paying! Any other decision would be unfair and insulting to those who are still paying!

Margaret Garcia-Couoh: Instead of killing people in foreign countries, maybe we should wait until they come over here like on 9/11. Maybe they can enjoy the arts and sex education before they get us first. Clinton tried the leave you alone and you'll leave us alone approach and that didn't work out too well.

I live in Iowa where we didn't have these insane prices. And I watched HGTV and all of these shows where people look all mad because their house ONLY appreciated $120,000 in three years. People weren't sharing their windfalls because they were just rolling them into their even bigger, newer house, but now that sanity is back, they want to take their ball and go home. I say, BOO HOO!

I and my fiancé have a combined income of $175k. I bought my house for $535k just over 2 years ago using a 30 year fixed loan. According to Zillow it is worth $675k right now. According to appraisers, more like $610k. I have never missed a payment and can afford to keep making my house payments. What kind of irks me though is that irresponsible idiots who bought the same kind of house with an ARM and had a bunch of kids and now are facing foreclosure are going to get to stay in their homes and end up with the ability to spend more on childcare than me and my fiancé will when we decide to start a family.

I worked hard and was responsible and I want my reward: A better quality of life for myself and my family than those who did not work as hard and were irresponsible. And I want my reward in dollars, not good feelings about myself for honoring my commitment to the bank.

My loyalty and duty is to my future children, not to a bank. If my future children would be better off if I quit my job now and stopped paying my mortgage then I would not think twice about doing so. I can handle the guilt for being a deadbeat because I will know I would have been looking out for my future children's best interest.

So, tell me, what should I do for my future children? What can I do now to make sure there is more money available to take them to Disneyland and send them to college? The only thing I can think of is to earn more, a strategy which me and my fiancé seem to have had good luck with so far but which might not work as well with the new economy.

I agree with the person who said that if loan principal values get modified it needs to apply to everyone, not just those who can't afford their payments.

"I bought my house for $535k "

If you wanted a future for your children, maybe spending half a million dollars on a place to live wasn't the best of moves.

"If you wanted a future for your children, maybe spending half a million dollars on a place to live wasn't the best of moves."

Well, at least they will have an awesome place to grow up in, and get to go to the best (public) schools in the area. Also, by the time I die and my kids inherit the house, I am sure it will be a great windfall to them and be worth much more than what I paid.

I don't have a problem paying my mortgage and will be able to pay for childcare. It just irks me that others who were irresponsible will get bailed out and I won't see any benefit from it.

My point is that if the irresponsible and the poor and the lower and middle middle classes get a handout, then so should the upper middle class. Don't forget about us. We aren't rich, we didn't inherit ****. We've worked harder than most and we deserve to derive some benefit from that.

I really profited from reading this article and comments.

I do not see putting the blame on any one entity or "side" has any meaning or value here.

Here are some things that no one seems to have factored in to their "decision tree."

What if our economy totally tanks and we have a long-term full blown severe depression ?

What if we have another world war?

What if we change from being the sovereign USA to the North American Union region of the one world government, with no more national economies or philosopies and no more regional money systems, but only a one world system?

What if there are a group of moneyed people at the very top who have controlled our economy for decades and who have deliberately brought about the current economic "downturn" and have plans, at the time of their choosing, to totally bust out the USA?

What if having a fiat money system, fractional reserve banks, IRS and Federal Reserve is always bound to end up like we are now?

What if people start fighting each other in the streets and martial law is instituted and people are carted off to "detention centers"?

What we can do via our own bootstraps is much more limited than what seems to be being discussed here. The wealth has been redistributed for the last century and it has gone into fewer and fewer hands of the super internationalist elites.

Share insights, experiences and ideas and pray for guidance and the ability to do right.

Obama is no change from the last 20 years of horrible presidential administrations. All of them are puppets of the trillionaire globalists who want a one world death and slavery system for all.

Paul,

take it easy there bub, you are by no means joan of arc becaue you pay have paid you little mortgage for 7 years on time EVERY TIME, wow. rednecks like yourself whom wear levi jeans and ugly shirts, flip the bird on a blog and feel as if they are obligated because THEY are bailing everyone else out - because they are paying on time for their little house? also, you are such a smart barterer, you EVEN got the builder to pay the closing costs?? wow, you truly are a businessman like no other - considering builders always do this today-- country, they usually always pay your closing costs - beause they build it into the price of the home.. please, your little mortgage is such a small peice of the puzzle that you would not even qualify to sit in peanut heaven at the super bowl of the bail out kings, you would not even be able to stand across the street at the waffle house parking lot and watch the big screen at the stadium - because so many others are in front of you at such a higher rate.. Look dude, you are no saint or no better then anyone else out there... Yes, I do know people who have stopped paying there mortgage for over a year now and are still in there home!! // Now taking more trips to Disney and going to the movies and eating out - yes, what pathetic people they are.. and now, they look to be getting bailed.. But dont point the finger so quick..
myself, i own 3 homes, all of which are a total of $750,000 upside down. yes, according to you i am an "idiot" because i bought all of these in the 2004-2006 mortagge boom - where we ALL would be able to buy (interest only/subprime) and then flip them in 3-5 years.. however, as you know, this is not likely, unless you want to short sell, which is a pain in itself. now i am faced with the question of "walking" from all.. why should i even pay the payment anymore to watch the balance stay the same or go up, and then to watch the market continue to fall? you Paul, by paying for your trailer have by no menas helped me. and the few dollars you pay a year in taxes from your job as a sidewalk cleaner have not helped me at all - nor really anyone else.. continue to pay for your house, like you should. some made bad decisions, like my self, by you do not have the right to look down on me because I may walk.. because i wont get that 700 billion, i am just out..
// I have never been late on my $10,000 in mortagges either, EVER, wow, .. just figured i would stop in and straighten you up a bit..

My husband and I also did everything right in buying our home but two months after getting our mortgage, the company my husband worked for went out of business with very little warning. Leaving us struggling. That was 2006, my husband has worked off and on, here and there. But you can't even buy a job now so we live on 309.00 a week unemployment and that's the extension. Not sure what to do after that. Yes, we paid our mortgage every month since, albeit, there have been times when we were behind but we've always managed. Sold jewelry, household items, used our savings, our children's savings and even used our children's gift cards they'd received for holidays and birthdays. Now what? Our mortgage lender did do a 6mo modification and we are grateful, but it resets to it's original monthly payment in February. Struggling has hurt our credit rating immensely that I don't think we'd be approved for anything and especially not a rental. So what do we do?

I have been up to date on my Mortgage,until my company started to down size. I was a Supervisor and was asked if I would step down,that it would be to my advantage.I knew I was either going to loss my job.So I stepped down and took the offer,lower pay but I still have a job.With that in mind,I called Country Wide and explaned to them what had happened and if they could help.They said My account had a Red Flag on it they told me I qualified for the Goverment Loan Program,because of my high interest rate 8.85 persent variable.They started the process,this made me feel better.The Lady's at Country Wide told me that it would take a month are so.But to look out for a package that had the paper work for a lower interst rate.But I could check on-line to see how it was progressing.I did check on-line I did it was pre-qualified.Sounds great,I waited 2 weeks and checked back and it was denied no explanation,just denied.
So the bailout money is not really for the people its for the CEO's who made bad judgement calls.But I am to blame also I should have never taken a high interst loan out to begin with.

My hubby and I are in the same position, we did everything right when we bought our house 3 years ago, and now we can't sell because of all the foreclosures in the area, and we are stuck paying TWO payments every month (one rent, one mortgage)!! Had to move for a job so we rent and we pay the bank. Been that way for TWO G-damn years and I'm sick of it! The system that's helping out those lazy, greedy hoardes is preventing us from moving on. How long are we going to have to be good, responsible Americans and keep making these payments??? Not much longer. We're talking about the "walk", handing the keys back and taking the credit hit. The whole economy is in the tank, so I'm not as worried about my credit (which is over 750) anymore, we just want out!!

Here's why:

Not to insult anyone's intelligence, but we're headed quickly to somewhere between a Depression and a second American Revolution. The value of the dollar is about to crash and when it does the American experience will change forever. In fact, it would be true to say it already has.

Like most people, my prime motivation is to a) provide for and protect my family. If nothing else that includes providing: food, clothing, shelter, and warmth.

At a base level, I can do all of those on a CASH basis. And, if the dollar bottoms out as I feel it will, then my credit score or morals aren't worth much, because just like you, I will take what I need from others, by force if necessary. Any of us would.

That being said, I have wrestled long and hard over this, and prayed more than I ever have about what to do.

Though I am in the minority on this at this point in time, I have finally concluded this is NOT a financial decision, NOR a moral decision .....

It is a SURVIVAL decision.

My family is in no immediate financial danger, however, I'm faced with a choice.

1) Act now by walking away from my debt of +/- $350k and start putting the combined monthly payments of $4500 in to gold, cash, food, non-US investments, etc. while we still have jobs. Upside: Lots of cash and hard assets. Downside: Ruined credit score.

or ....

2) Keep paying into a broken system in which I played by the rules, but now am being forced to pay for the mistakes and or greed of others. Upside: Get to keep my integrity and pride. Downside: I ultimately end up financially ruined anyway because the bad guys outnumber the good guys.

For me, the path is leaning toward the former. Here's my rationale:

If I choose # 1 and the whole thing blows up, I'm better prepared.
If I choose # 1 and things eventually get better, I can rebuild my credit and jump back on the wagon later down the road.

If I choose # 2 and the whole thing blows up, I am caught completely unprepared.
If I choose # 2 and things eventually get better, I'm glad I "did the right thing"

My wife is on her path to making a decision about this, and together we will decide on something.

Whatever we do, I only hope it's not too little too late.

Is it not the fault of big banks for creating all of this. They get bailed out why shouldn't I. Its my tax money anyway.

You know, nothing.
So shut up.

Yeah! I'd move back to France or Sweden any day! At least my kids would get a great (college) education and won't come out in debt $100K like me...Europeans enjoy a much better quality of life. I'm really not sure what capitlism has to offer society any more having lived on both sides of the Atlantic. I tried reading Atlas Shrugged by Ayn Rand (Alan Greespan's long deceased economic guru) and I could not have been more bored...just couldn't bring myself to finish it. All in all Capitalism is built on a tormented greed (see:There will be Blood)...which is an unfortunate aspect of our human nature if left unbridled and to stew in an anti-social petri dish. Sorry, the government does play a vital role in our lives like it or not and America is like an adolesent finally growing up.

I will be infuriated if the government comes in and simply hands out money to permanently allow a person to live in their $1,000,000 home that they never could afford and pay the same payment as the person who was responsible and bought the $200,000 home that they could afford. However, I can also see where the fact that so many are in this situation is creating a real catch-22. If we do nothing, we're screwed and we'll all suffer the consequences. If we do something, we're also screwed. I think the best compromise of all would be if the government does do something to help; but instead of a perpetual handout, it needs to be temporary. Yes, the irresponsible ones will get to stay in their home longer; but there needs to be something that makes them pay back this money in the future or allows them to be foreclosed on in the long term - after there aren't so many foreclosures at once and the number is more manageable. So, that way, we are sending the message that they are still doing the wrong thing and aren't being rewarded with a no strings attached handout. Rather, we are helping manage the foreclosure rate so that they all foreclose over a 5 year period instead of all this year; but eventually it will catch up to them but the ripple effect into the economy will not be so great. Likewise, I think any of these people that receive such a benefit and subsequently earn alot of money on other investments, etc. should have this remain as a liability on their record that will be paid back via garnishment of future wages or earnings over a specified amount equal to what they previously had (with a reasonable adjustment for the inflation rate). That way, at least some of it will be paid back and those who were responsible and paid on time will be better off not having that garnishment of future wages looming over them.

I am so happy to find someone who says what I say. My husband and I have lived in our house for 10 years. Never missed a payment. We also bought what we could afford. Are association fee already went up because of the foreclosures. I saw this mess comming and I am not an economists. The banks want us to be at their mercy. All part of the New World Order. If we stop paying as a country, they as well as politician would be brought to their knees.

Most Americans make about 50 thousand or less and a couple 100. If your at 200s, then cry me a river.

Why should my taxes that I have paid for years go towards bailing out the people who did stupid things with their money.

Did they really need to spend 50 grand on that GMC Yukon XL to haul around their two kids? Or would a 25 thousand dollar mini van have done the trick, and saved them money in gas. Whats taht? Its not my business how they spend their money? IT IS NOW.

I want a list of everybody who has taken part in this bailout that lives around me. Why you ask? So I can go and use their house whenever I want. So I can use their trash cans when mine get full. Things like that. I have a right to do so now seeing as how I have equity in “their” house.

These people should have to go around with signs that say "I spent your tax money on my bad decisons".

Now those of us who are responsible have new rights. We have the right to tell you how to spend "our" money. So the next time you decide to get rid of your 27 inch plasma HD TV because it does not take up enough space in your "status symbol" that you call a home, we get to say "NO".

Guess what... we OWN YOU. So get used to it.

Now those of us who are responsible have new rights. We have the right to tell

Why should my taxes that I have paid for years go towards bailing out the people who did stupid things with their money.

Did they really need to spend 50 grand on that GMC Yukon XL to haul around their two kids? Or would a 25 thousand dollar mini van have done the trick, and saved them money in gas. Whats taht? Its not my business how they spend their money? IT IS NOW.

I want a list of everybody who has taken part in this bailout that lives around me. Why you ask? So I can go and use their house whenever I want. So I can use their trash cans when mine get full. Things like that. I have a right to do so now seeing as how I have equity in “their” house.

These people should have to go around with signs that say "I spent your tax money on my bad decisons".

Now those of us who are responsible have new rights. We have the right to tell you how to spend "our" money. So the next time you decide to get rid of your 27 inch plasma HD TV because it does not take up enough space in your "status symbol" that you call a home, to get a 50 inch HD TV we get tell you "NO".

Guess what... we OWN YOU. So get used to it.

Why should my taxes that I have paid for years go towards bailing out the people who did stupid things with their money.

Did they really need to spend 50 grand on that GMC Yukon XL to haul around their two kids? Or would a 25 thousand dollar mini van have done the trick, and saved them money in gas. Whats taht? Its not my business how they spend their money? IT IS NOW.

I want a list of everybody who has taken part in this bailout that lives around me. Why you ask? So I can go and use their house whenever I want. So I can use their trash cans when mine get full. Things like that. I have a right to do so now seeing as how I have equity in “their” house.

These people should have to go around with signs that say "I spent your tax money on my bad decisons".

Now those of us who are responsible have new rights. We have the right to tell you how to spend "our" money. So the next time you decide to get rid of your 27 inch plasma HD TV because it does not take up enough space in your "status symbol" that you call a home, to get a 50 inch HD TV we get tell you "NO".

Guess what... we OWN YOU. So get used to it.

I can't believe the pity party I just read in this "blog", how you have obtained the readers you have is beyond me. I came across it by accident, how? By looking up what type of help there is available for someone like me. I don't recall anyone contacting me and offering me any part of the 700 billion dollars that is being handed to corporations and CEOs.

Do you actually think most people just decided on a whim to stop paying their mortgage? I would like to think not. Do you think you are going to get "help" from the government just because you stop? Hell no, that's not what help is for. I didn't just wake up one day and decide to not pay my mortgage.

I became a single mother after 18 years and made it through nursing school to have a great income. I then met and married a wonderful man who helped me raise my teenagers. I moved up from a smaller home at a time that I thought would be my last to "invest" in real estate to try to protect my future, but kept it within my means and put a large down payment down from my previous home. There is no way I can get that down payment out of it now. And what else happened since the move? My daughter had brain surgery from a bleed after a life time of migraines, my husband is fighting his second brain tumor, and I have Multiple Sclerosis and some other mysterious autoimmune disease that they can't figure out which is destroying my tendons (spontaneous ruptures, the chronic pain is nearly unbearable). I have been off work now a year and up until a few months ago I was still doing everything in my power to pay my mortgage and maintain the excellent credit I worked hard for.

I didn't just decide to stop paying. I called my mortgage company in August and told them what was going on and asked if there was any help for me. Their reply was, "You are current on your loan, we can only offer help to you if you are 3 months behind in your payments". I thought I was being a great client by calling them ahead of time and telling them I may have trouble paying, I've always paid my bills, and felt like throwing up at the thought of getting behind. The stress was killing me.

I didn't know the market was going to change so much, I was in an area that was growing rapidly and it was considered a safe investment at the time. I didn't know I was going to get sick, I didn't know my husband was going to get a brain tumor, I didn't know my daughter would need brain surgery. I'm not talking colds and flu here I'm talking total disability. Should I have had mortgage protection insurance? Sure, I should have, but I didn't get it. Even if I had it some lame cold-hearted idiot would accuse me of being the reason for increasing insurance premiums and state that they are "paying for my house", there's always someone who doesn't care enough about fellow human beings to spout off in such a callous way. Look in the mirror. If you are ABLE to pay your mortgage, it does not give you an excuse to just quit! People like you probably whine about disabled people getting better parking or getting to cut the line at Disneyland, too.

You think that you waking up one day and saying "Wahhh, I can't pay my mortgage" would make you feel better? I'd give anything to be in your position and be able to still pay my mortgage. You don't know what it's like to lose your independence and watch your dreams crumble before your eyes and be scared every day for your life, for your ability to fight back to even being able to stand on two legs literally let alone financially. Have you even stopped to consider the price of COBRA health insurance when someone is in the limbo of the disability red tape? It is 1200 for just my husband and I, and that's without dental or vision!

There are a huge number of people out there like me. I guess I should be thankful that if I had to get sick it's happening at a time when so many other people are needing help so that I can tag along. But that doesn't make me feel better about my circumstances and I'm one of the lucky ones because I still have people who care about me.

IMHO I feel so much luckier than any of you who think you are footing the bill for everyone else. I know that if I lose everything I worked for, I'll be okay, somehow, because hopefully I'll still have the people I love around me. Every day none of us are in the hospital is a good day, can you even relate to that at all? You started out saying that you were thinking things over while recovering from surgery...why not think "Wow, what if I couldn't recover from this?" and try putting yourself in someone else's shoes who are worse off instead of whining about "poor meeee, I'm paying for your loss". Sheesh, if I had it to burn I'd be more than happy to help out my fellow citizens. In fact if the "haves" gave more to the "have-nots" it would all balance out without anything from the government stepping in.

Next time you feel like sounding smart in a discussion and say 'Ya , I should stop paying my mortgage, too" try thinking about my family and ask yourself if you'd like to trade places or trade problems and shut up. I still wouldn't trade with your pathetic life even if I lose all my material items. I've been a good mom, I raised two wonderful children, one of whom is in the Army protecting your freedom to have your stupid blog. I showed them both that education is important as they watched me finish nursing school with an IV in my arm, I wanted them to know that hurdles shouldn't bring things to a stop and that it's possible to succeed if you fight for it. And I will show them that in this time of turmoil and/or financial ruin I will rise above it and be okay again, without any support from you or any of the other people whining about their taxes going up.

You are making some HUGE assumptions about people who are in a bind right now, I hope you will consider reading the comment I left on this blog. For now I will only reply briefly, but think twice before you judge people, it could happen to you, too. Catastrophic illness came to visit my family, paying COBRA health insurance is a nightmare, and no, we didn't over spend. I drive a Chevy Trailblazer in great shape with a salvage title, it was a 1 year old rebuild for 10,000 which most people wouldn't even consider. I did it so I could pay cash for it. I thought I was making all the right decisions, then illness happened to all of us. Before you sit there thinking you "own" me, try to ask yourself if you'd like to trade places with people who have gone through a type of hell that you can't even reach in your worst nightmares.

That sucks. People like you who have done the right things, the things that you are supposed to do in this life should get help with what you are going through. I hope that it all works out for you, I truley do. As for myself, my family have our own problems to deal with.

I do not think that it is fair that people are getting bailed out when they made bad decisions. Such as agreeing to a buy a $500,000 house when they can only afford half that. They deserve no bail out.

I dont want my taxes to go towards somebody who has to drive and live in status symbols, when they should have lived within their means. It is not fair.

Spending half a million on a house? You want a pity party?

Well, if you can easily and truley afford the payments. Then I am happy for you. You should decide how you should spend your hard earned money and I agree with you.

But for the people who have spent what you have on a house, knowing thta they should have lived within their means, and cannot afford it because of a stupid decision, I have no pity.

If I have $500,000 to spend, I can ell you right now that I would spend no more than $100,000 on a house for my family of four. Why? Just because I can buy a house for $400,000 does not mean I can afford it, and it does not mean it is a good idea.

My wife and I pay our mortgage on time every month, but our home value is HALF what we owe. We're just throwing our hard-earned money down the drain.

Enough is enough. We're also considering drastic measures to get out of this mess. It almost makes no financial sense to keep paying the mortgage.

Here's the long and short of things...

The government bailout to banks basically provided them with income, enough income to allow them to not need to lend money out anywhere near as much or take any kind of real risks. So, the bank bailout was the biggest scam this country has ever seen, facilitated by congress men and women who were bankrolled, by the banks. It resulted in the economy worstening, and of story. Don't believe the crap you hear about how if the some of the banks failed, it would have been much worse had we not bailed them out. BS. These kinds of banks would have either had layoffs (like all of the other sectors of the economy have done to deal with tougher economic times), or the failing banks would have been bought up by more fiscally responsible and financially sound banks. It would have made little to no difference to your average Joe.

Instead, what we have is irresponsible banks continuing to thrive on our tax dollars, just to continue to make ignorant decisions and contribute to this faultering economy.

Worse yet, not only are the banks now being far too tight with credit, they are also helping the housing market to continue to tank, because when they can't use your credit and debt to income ratio as an excuse to not give you a HELOC or 2nd mortgage, they lowball the appraisal - thus destroying the housing market further, spinning the downward spiral faster and faster.

So, for us responsible folks, who have paid our mortgage and all other debts as we should, there's no incentive for us anymore. Your credit rating is meaningless, your home value continues to tank, so you can't use the equity in your home, or even sell it because you now owe more than it is worth. So, it does only make sense to me to just stop paying your mortgage. Regardless of whether you get bailed out, what is the worst that can happen? You are evicted from your house? Doubtful, but even if you were, please, take it! It's worthless to me anyway! I'll just rent.

I'm in the middle of negotiating with my mortgage lender right now about giving me a pretty small HELOC. They have of course come back with the BS that my house doesn't appraise high enough to give me enough equity (since they also only are considering like 80% of the total value to calculate my equity). I'm going to tell them that it isn't wise for them to lowball an appraisal on an asset that they have a lein against. I'm also going to let them know that they either give me this small HELOC, or they have received my last mortgage payment. I have a feeling they might be willing to negotiate. I figure it's worth a try to see if they play ball. If they don't, I guess I don't need the HELOC anymore, because now I'll be able to save what I need in cash with the money I was using to pay the mortgage. Either way, I win!

Thanks for reading. Power to the people! :)

so hi my name is melanie and i must say u people are all rude...u know what i am a responsible homeowner and i agree that when you have a mortgage you should pay it but when your husband gets laid off work and all you have money for is food to feed your kids all responsibility go's out the window ..have any of you ever sat and watched your kids eat and wondered if they were gonna be homeless the next day..it's a horrible feeling...and no the government did not swoop in and help us at all! we just about lost our home and had to get 2 title loans to get the money we needed the money to save our home and our lenders did nothing to help us and on top of all of it we were scammed 4g by a loan modification company !!! i dont believe that it is fair for iresponsable people to get help but what about the responsible ones who aren't looking for a handout?
we did not buy a home to big for us to handle it's actually to small for us and now we cant by a new home because the forclosure process was started on our existing mortgage and our credit is ruined ...what do you have to say about that??

They are loosing their houses. They are also keeping the mortgage payments until they get kicked out.

I think you are trying to play the part of the victim...**** happens, get over it and move on. Next time be more prepared. So if it isn't your fault who's fault is it? Probably going to blame it on the responsible people aren't you.

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