Homeowners bailed out of foreclosure once, need another bailout

[bozack]

Originally posted by: Mursilis

Originally posted by: NeoV
loans being modified wasn't exactly a bailout

How many of these people really got into homes that were 10x their annual income? I think we are simplifying the problem a bit too much.

Few people bought a home 10x their income, but quite a few exceeded the old rule (3x income). The national average during the boom years crept up to 4x income, with some areas hitting an average of 6-8x income. The foolishness was definitely widespread.

Yeah it really pisses me off, my wife and I followed the 3x income rule and bought into a place we could afford, though we qualified for much much more, now it seems as if we almost would have been better off having gone higher and had them renegotiate our deal as they are doing for so many others, we could have had a nicer place and not had to move in a few years for better schools.

 

[Jhhnn]

Originally posted by: bozack

Originally posted by: Mursilis

Originally posted by: NeoV
loans being modified wasn't exactly a bailout

How many of these people really got into homes that were 10x their annual income? I think we are simplifying the problem a bit too much.

Few people bought a home 10x their income, but quite a few exceeded the old rule (3x income). The national average during the boom years crept up to 4x income, with some areas hitting an average of 6-8x income. The foolishness was definitely widespread.

Yeah it really pisses me off, my wife and I followed the 3x income rule and bought into a place we could afford, though we qualified for much much more, now it seems as if we almost would have been better off having gone higher and had them renegotiate our deal as they are doing for so many others, we could have had a nicer place and not had to move in a few years for better schools.

It doesn't really work like that, bozack. Renegotiation requires full financial disclosure. Only people in way over their heads qualify, and that's only to put them into a position where, if they're lucky, they'll make it through. What the lender thinks is a reasonable portion of your income to use for house payments and what you think is reasonable are entirely different, bet on it. Remember the insane payments you'd have been theoretically qualified to make if you'd borrowed up to what they considered reasonable? That's what people who renegotiate successfully wind up with. They're getting beaten like a rented mule, just not hard enough to kill 'em outright...

 

[Mursilis]

Originally posted by: bozack

Originally posted by: Mursilis

Originally posted by: NeoV
loans being modified wasn't exactly a bailout

How many of these people really got into homes that were 10x their annual income? I think we are simplifying the problem a bit too much.

Few people bought a home 10x their income, but quite a few exceeded the old rule (3x income). The national average during the boom years crept up to 4x income, with some areas hitting an average of 6-8x income. The foolishness was definitely widespread.

Yeah it really pisses me off, my wife and I followed the 3x income rule and bought into a place we could afford, though we qualified for much much more, now it seems as if we almost would have been better off having gone higher and had them renegotiate our deal as they are doing for so many others, we could have had a nicer place and not had to move in a few years for better schools.

It's the same story with us - we bought a house in 2001, when the market was still climbing, and had to settle for a smaller home than we wanted because we decided not to overextend ourselves with some "exotic" loan product. We were constantly getting out-bid by the sorts of people who are now seeking a bailout. It's nice now that our house payment is less than 25% of our monthly net income, but still, it's galling that, yet again, stupidity is what's being rewarded, not prudence. I support NO assistance for people who bought more house than they could afford, and now may lose their home. That's just a free lesson from the School of Real Life.

 

[StageLeft]

Jhhnn is right, nobody who's fiscally responsible would be making off like a bandit had they gotten in over their head; chances are they'd only have qualified for any assistance after their credit score already was shocked to the ground

 

[Mursilis]

Originally posted by: Skoorb
Jhhnn is right, nobody who's fiscally responsible would be making off like a bandit had they gotten in over their head; chances are they'd only have qualified for any assistance after their credit score already was shocked to the ground

That may be true, but why is there "assistance" anyway? Just let the market correct itself.

 

[Gunslinger08]

I'm tired of the bailouts. I'm aware that some people really just hit rough times and got laid off, but they're going to have to suck it up along with the people who got in over their head. Let them lose their houses. Owning a house is not a right of every US citizen.

 

[StageLeft]

Originally posted by: Mursilis

Originally posted by: Skoorb
Jhhnn is right, nobody who's fiscally responsible would be making off like a bandit had they gotten in over their head; chances are they'd only have qualified for any assistance after their credit score already was shocked to the ground

That may be true, but why is there "assistance" anyway? Just let the market correct itself.

Bailout because we should feel sorry for people who got in way over their heads I guess. I have no idea, really. I think bailing out people with crap mortgages is a fool's errand.

 

[ponyo]

Originally posted by: Skoorb

Originally posted by: Mursilis

Originally posted by: Skoorb
Jhhnn is right, nobody who's fiscally responsible would be making off like a bandit had they gotten in over their head; chances are they'd only have qualified for any assistance after their credit score already was shocked to the ground

That may be true, but why is there "assistance" anyway? Just let the market correct itself.

Bailout because we should feel sorry for people who got in way over their heads I guess. I have no idea, really. I think bailing out people with crap mortgages is a fool's errand.

Bailout was for the banks and not the homeowners. You think Cit, Countrywide, and others were modifying home mortgages out of goodness of their hearts? They were doing it so they wouldn't have to foreclose which would cause them to write down bigger losses on their books.

 

[brxndxn]

In Florida, I hear a ton of stories about how people got in entirely over their heads.. For example, I was golfing and I got paired up with a police officer (who just left the force to be a postal worker).. He was maybe 40. He bought THREE houses in the neighborhood I was golfing as investments.. These are $300-450k houses. Then, he bought a house in South Carolina.

A police officer in this area MABYE makes $50k... WTF. He's the problem. He's golfing and foreclosing on three houses and plans to move back to South Carolina.. I wanted to rip him a new one.

I also met a real estate agent who was my age.. At the time, he owned maybe 15 properties (some with renters).. He's probby so far in over his head right now that society gets to eat the costs of his bad decisions..