Should We All Just Stop Paying the Mortgage?

By Paul Michael on 16 October 2008 162 comments

I've been recovering from surgery recently, so that has given me the opportunity to do a lot of thinking on my sick bed. And with the recent turmoil in the economy, plus a focus on the housing market, I couldn't help a certain thought from bubbling up in my mind day after day. It's not responsible; it's not even fair; but I do have to wonder…should we all just stop paying the mortgage? (See also: How to Refinance Your Mortgage)

From what I understand, the $700 billion bailout plan has some provisions in it that will help struggling homeowners. John McCain also recently talked about using $300 billion of that money to "buy back" bad mortgages to help the struggling homeowner negotiate a decent, fixed rate. They may even renegotiate the cost of the mortgage, so you only pay what your home is now worth, not what you actually owe. Sounds great, right?

But it got me thinking…what about the people who did everything right? Take someone I know well — me. I bought my house almost seven years ago. I stayed well within my means and avoided any adjustable rates or sub-prime loans. I got myself a nice, traditional 30-year fixed mortgage at a good rate. I even got the homebuilder to pay the closing costs without rolling them into my loan.

Now, after being a homeowner for seven years, I am proud to say that I have NEVER missed a mortgage payment. Ever. Sure, times were tough on occasion. Sometimes I would pay the mortgage a few days late because there just wasn't enough cash in the bank. But the mortgage was paid, even if it meant staying home every night and eating Ramen occasionally.

What's more, I never used my home as a bank account. Even when the home was worth more than we paid for it (ahh, remember equity?) I never refinanced. I never got a home equity loan. I just stayed the course, knowing that after about five years my growing family would have some ready funds available to upgrade to a bigger home. (See also: Things You Should Know Before You Buy Your Second Home)

Well, all those plans were shattered. Now, my home is worth 15% less than I paid for it. I will be lucky if I break even when I sell it, considering the dreadful market and the associated costs involved in selling a house. My wife and I are even thinking of renting it out, and renting a bigger place for ourselves. With the market the way it is, we can rent a house twice the size of ours for the same price as the mortgage.

But here's the big question. Should we just stay in the house and stop paying the mortgage completely? An article I recently read by Peter Schiff seems to confirm my thinking. Let's look at the pros and cons. First, if we stop paying the mortgage we know we won't be kicked out. There will be a moratorium put on foreclosures, so we could quit paying our largest bill and put that money in the bank, ready to use to buy a new home.

Second, as we have now stopped paying our mortgage we would fall into the category of "struggling homeowner." Which means, ladies and gents, that the government will swoop in and help us out! Yep, as unfair as it sounds, we'll get help if we suddenly become irresponsible. My mortgage would be renegotiated, probably at a lower rate, and for the current price of my home. Plus, I'll have saved thousands on mortgage payments until that happens. It could take six months…that's around $10,000 we'll have saved.

The only downside I can see would be a tarnished credit rating. But so what? For the amount of money I'm saving, it seems well worth it. And I'll still keep my house. (See also: 10 Surprising Ways to Hurt Your Credit Score)

This is wrong. I will, no doubt, keep paying my mortgage. But I cannot help but be angered by this whole system. It is rewarding people who made bad, bad choices. No one forced anyone to buy a home way bigger than they could afford. No one put a gun to Joe Schmo's head and said "Hey, sign this, take a huge mortgage and do it with an adjustable, interest-only rate." And yet those guys, the ones who bit off way more than they could chew, are now going to get help. They get to keep their big house and pay a nice new low-rate mortgage. They don't even have to pay back the money they didn't pay on mortgage payments.

Now, there are exceptions to the rule. People who lost their jobs and couldn't pay the mortgage, they genuinely need the help. People who got sick and had massive medical bills to pay, fair enough. But for the average greedy speculator who bought too much house with no money down and a sharply rising interest rate…well, in my opinion, that person should have to live with the consequences. I have my own problems, as do many of you. But why should my hard-earned taxes bail out the irresponsible segment of our society? It's complete BS.

The one reason I've been given is that we need to help these people, or our home values will suffer. But the market has pretty-much bottomed out anyway. So, that's no consolation to me. No, I'm mad as hell and I just can't think of a better way to prove it than to stop paying my mortgage and get in on this nationwide handout. How about you?

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Guest's picture
Marcia

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!)

Guest's picture
Lise

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.

Guest's picture
Joanna

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.)

Guest's picture
AmyB

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.

Guest's picture
Guest

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.

Guest's picture
Jim

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.

Guest's picture
Guest

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.

Guest's picture
SBT

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.

Guest's picture

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?

Guest's picture
Guest

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?

Guest's picture
Kit

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.

Guest's picture
AnnJo

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.

Guest's picture
Guest

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.

Guest's picture
wildgift

@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.

Guest's picture
Golfing Girl

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.

Guest's picture
Ridenour

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

Guest's picture
Guest

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.

Guest's picture
wildgift

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.

Guest's picture
AmyB

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.

Guest's picture
AmyB

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.

Guest's picture

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.

Guest's picture
MACscr

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.

Guest's picture
Guest

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

Guest's picture
Guest

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

Guest's picture
Guest

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!

Guest's picture
Guest

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!

Guest's picture
Microsofty

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.

Guest's picture
pragmatic

"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.

Guest's picture
Microsofty

"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.

Guest's picture
Guest

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.

Guest's picture
Guest

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.

Guest's picture
Guest

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..

Guest's picture
Andrea

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?

Guest's picture
Guest

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.

Guest's picture
Caroline

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!!

Guest's picture
Guest

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.

Guest's picture
Guest

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.

Guest's picture
Guest

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.

Guest's picture
Dee

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.

Guest's picture
Guest

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

Guest's picture
Guest

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.

Guest's picture
Guest

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.

Guest's picture
Guest

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.

Guest's picture
Guest

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.

Guest's picture
Guest

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.

Guest's picture
Guest

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.

Guest's picture
Rich

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! :)

Guest's picture
Guest

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??

Guest's picture
Responsible1

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.

Guest's picture
FlyGrl

People in this country are pretty unsophisticated about what they believe and what they sign. If someone is telling them these are the terms of the mortgage they believe it. You shouldn't have to have a master's degree to figure out all of the implications of buying a property and getting a loan. It's way too complicated for the average person.
If you "did everything right" then congrats to you. But the folks who really screwed up, through pure, unadulterated greed, were the mortgage brokers, the banks who make the ridiculous loans and the oversight agencies who let it go for years with virtually no regulation. People want the American Dream. They are not bad people. They wanted a house and they were finally able to get one. In my neighborhood, many of my neighbors going into foreclosure are not native English speakers. Do you think for a moment anyone told them "what they were getting into"? Probably not. Houses always go up. Now they are virtual debt slaves who will probably have to foreclose anyway.
So I am sure all of you feel angry, but maybe you should be angry that this type of fraud was perpetrated on the most vulnerable part of our population, the undereducated, non-English speakers and people who are not as financially well versed as all of you.

Guest's picture
Steven Church

I stopped paying my mortgage 18 months ago to stockpile cash.
I could afford to pay, but had little left over. If my wife and I had run into a situation (if either of us got sick or hurt) we would have lost the home. So for the past 18 months we have been not paying our mortgage payment ($1827) and have stock piled $32,886 into our safety deposit box. We just negotiated a new interest rate and put the 18 months that we did not pay on the back end of the loan. The lawyer we hired to go through a "fake foreclosure" as we like to call it cost us a flat fee of $2000. So now we are starting fresh. We used $15,000 of the stock piled cssh to pay off our car and credit cards. Our credit score lost some points, but we don't care. We can now make extra payments on our principal and have a $15,000 emergency fund. We should have our home payed off in 7-10yrs.

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Guestbob

good idea

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frustrated

#144 sounds like a plan.

We live in a depressed area in Ohio and I lost my job in August 2009 I have paid my mortgage on time with no late payments ever for the past 10 years. I originally financed through countrywide and never had an issue with them nor was my mortgage subprime.

Bank of America took over my mortgage when countrywide failed. I contacted them about "O'bummers" loan modification program to see if I qualified. They said I could only qualify if my mortgage was over 30 days late, all I wanted was a reduced interest rate so that I could continue to pay my mortgage on time. It is currently 8.375% Yes I could have lowered it a couple of years ago before all this wallstreet meltdown happened. Anyway, Per their instruction I let my mortgage go over 30 days late.

I filled out all of their paperwork and sent in the necessary documentation. I get a letter about a month later saying I do not qualify for their loan modification problem and if I miss more payments they will foreclose on my property.

Until now my credit has been perfect, never a late payment in over 15 years. Bank of America can eat it. There are multiple houses in my neighborhood that are in foreclosure. I would be better off keeping my monthly payment and living in the house until the sheriff evicts us. Then just rent somewhere.

Wallstreet can do it, why can't I?

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Maifriend

Here's my point of view.

1. I keep paying my mortgage but my neighboors didn't and as a result the valueof my home plunge 50%. Basically good money is going down the drain each time I make a payment.

2. Now that we've seen the home owner's side, let's take a view at the lender's side. There are banks and financial institutions who go out there doing business, trying to make money. They make bad decisions and lose money, tons of money. First question is: why do we have to bail them out? If bailing out a home owner is wrong then why do we have to use "tax payers" money to bail out banks? After all, a home owner buy a house, things don't go as expected and he loses money. The same goes for the banks. One difference however, home owners get bad credit, corporations don't get anything. GM, for instance, wiped out their share holders, started fresh and plan on ... selling stocks.

Next question is: why can banks and financial institutions look after themselves and we, home owners, can't?

Sound outrageous? Wait, now that banks are making tons of money, they pay their executives hundreds of thousands if not millions of $$$ in bonuses, the same people who drove their banks to the edge of bankruptcy.

Now ask yourself what is fair and what is not.

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Juan A. Befree

"The one reason I’ve been given is that we need to help these people, or our home values will suffer. But the market has pretty-much bottomed out anyway."

Bottomed out? You think so?

Guess again. Many people who bought in the last few years are going to be DECIMATED in the next leg down.

Anyone care to explain to me how the median home pice in many areas could rise >100% in five years...even though the median family INCOME was basically FLAT?
AND even though median home prices in the U.S. have only averaged about 2-3% annually (at best)?

So, the market has "bottomed out"...with home prices down only about 20% from their bubblicious PEAK? During the nastiest recession (arguably a depression) in modern history? With "official" unemployment still at nearly 10% (and "unofficial" unemployment + UNDERemployment closer to 25%)? Yeah, sure, the RE market has bottomed out. And who exactly will be "paying up" homes in the next three to five years? All those folks who were just laid-off and/or foreclosed on? All those college grads who can't seem to find a job? Who, exactly?

Yes, there are SOME reasonably-priced homes out there, no doubt. But the era of mega-borrowing to buy Mcmansions in the suburbs is OVER. The few who even qualify for a mortgage these days will be the sensible folks...you know, the ones who weren't stupid enough to overpay for a house in the last ten years...and won't be likely to overpay now.

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Guest

Seems like a plan Stan!! Apparently its NOT so Good to be Good! Interesting reading, I like you have struggled to ALWAYS make my morgage payment, my husband and I took out a fixed rate for 2 years ( 1 year ago) because, in our opinion, that's all the time we think the system has left. Everyone should start preparing for a VERY different way of life to come, the more I read the more convinced I am and unfortunately I dont think its going to be good.

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Bunned

Our situation:

- 30 yr mortgage, fixed rate
- Been tight since the start... but never missed a payment
- Discovered we were victims of mortgage fraud (house was intentionally overvalued by $90,000)
- For the last six months tried working with DOS, HUD, FBI, OAG, our Bank (BAC), and many other acronyms.
- Got absolutely NO WHERE! They all said they can't help us because we pay our mortgage.
- Went to lawyer, he said, "Yeah you've got a great case... it'll just cost you $30,000 to win."

So, last resort, stop paying the mortgage. I will not throw my money for ten plus years because we got cheated and our state agencies are too crippled to do anything about it and lawyers are too damn expensive. So for me, in our situation, walk away is the only way.

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Guest

I agree with your article. Why should the people that were irresponsible get a handout?

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Becca

The banks screwed all homeowners when they turned our mortgage into a security, like a stock. Now no ONE bank owns my note but several "investors" therefore, when stuff happens like losing my job or my business going under, the banks cannot really work with me on any modification because technically they do not own the note. Additionally, I was duped into thinking my 30 year fixed at 5% was a stupid idea. Predatory lending mortgage brokers who got paid a ton in commission told me it was "stupid" to keep a 30 year fixed and did I "really intend to stay in my home longer than 7 years", they said I would be "crazy" to keep my 30 year fixed @ 5% when I could re-fi into an adjustable and take all the cash equity out of my home to reinvest into income property. It all sounded good back then. Lesson to be learned: trust your inner voice!

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Angel

Totally understand. We were in the same boat - took out a conventional home - looked at what we could afford to pay each month - not the huge amount we were pre-approved for - stayed in our means - didn't overpay - never missed a payment (until this month) for six years - we did it right. I lost my job three years ago - and we still didn't miss a payment. My husband didn't get a raise since 2004 (and we have four small children) - and we still didn't miss a payment. Living of mac n cheese (and we have five college degrees between the two of us - two associates - two BS - and an MBA) - but we still paid our bills on time.

Well - in Feburary my husband was offered a job out of state - one where we wouldn't have to eat mac n cheese - one where we could actually take our kids out for ice cream a couple of times in the summer. We put hour home up for sale (we are underwater of course). We even have a buyer that put in a fair offer - not a major low ball offer - but a fair offer on the home. But - since we never missed a payment our bank won't work with us. My husband has been living in Florida since April 1st - working - we just joined him this month and since we can't afford a large rent payment (rent is expensive in the Tampa area) and our mortgage payment we had to miss our first mortgage payment ever. Feels like crap - we really tried - we did everything right - but since we never missed or were even late on a mortgage payment the bank wouldn't work with us on a short sale - now we have no clue what will happen.

We have no family that could manage a home 1400 miles away for us if we were to rent it. Rent would be about 600 less per month than our mortgage, taxes, and insurance payment on that home (property tax and insurance goes up a lot once you are renting the home!).

Terrible situation to be in. Never - EVER thought we would be looking at a foreclosure - again - we did everything right. Conventional mortgage on a home that wasn't too much for us - payed our payments on time (usually the just automatically came out of our bank account) - and the bank wouldn't even talk to us about a short sale.

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Angelia

Why not put a program in place for those of us who were responsible and did what we had to do to ensure our mortgage was paid on time every month? Let RESPONSIBLE HOMEOWNERS refinance to lower interest rates and only have to pay what our houses are currently worth. Let the banks incurr the cost of the refinancing - not Federal bailout money!

I have a friend (an EX friend as of last night) who decided that she wasn't going to pay her mortgage since January 2011. With the money they kept, they bought a travel trailer, four wheelers, new laptops for everyone in the house, went on vacations, etc. Yesterday night she told me that CitiMortgage has agreed to refinance her house at a lower rate and arranged for her payments to be what SHE told them that SHE could afford ($850 per month - half of what her initial mortgage was). She has no penalties for not paying since last January, doesn't have to pay for refinancing, still gets to keep her house, and owes LESS than what she signed for the intial mortgage. But the bank is getting kick-back money from MY FREAKING TAX DOLLARS to pay for this CRAP!!!

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Guest

I agree with you. We have made all of our house payments (13years) and have raised 4 kids, and live within our means. My husband works insane hours (out of town), for less pay while I finish going to school to become a nurse. We are now living paycheck to paycheck... after being RESPONSIBLE, contributing adults for many years (who have taken a hard hit in this economy), we're wondering why we can't have our mortgage rate cut?