I like to think I’m capable of understanding other people’s problems. Heck, by trade, it’s a necessity that I ask others to put themselves in the shoes of my clients. And I realize that this post will come off as being written by someone incapable of empathy.
But let me repeat it anyway:
It’s not your home.
There, I said it. If you are upside down on your note: it’s not your home that you are losing. If you lost your job, and can’t pay your mortgage: it’s not your home that you are losing.
You may be moving, voluntarily or otherwise, out of the bank’s home… but you won’t be moving out of your home.
Why the diatribe? I’m going crazy listening to newscasters and reading newspaper articles about folks “losing their homes”. That’s why they call it a “note” or a “mortgage”. Because it’s owned by someone else, most likely a bank.
Here’s a ridiculous, but absolutely true, example:
The property was purchased in January 2005 for $1,157,000. The combined first and second mortgages totaled $1,156,730 leaving a down payment of $270. Let's just call it 100% financing.
$1.1 million home: less than $300 down. Read the whole entry for details, including the refinancings (plural), but here’s the punch line:
These owners will probably just walk away. I doubt they have any assets. They never put any money into the deal, they pulled out $333,000 in cash, and they got to live in Turtle Ridge for 3 years. Not a bad deal -- for them.
Very few of the “homeowners” about to “lose their homes” started off with quite this extreme an example. But arguing from the extreme is not a logical fallacy, it’s allowed. And more to the point, this is literally just an extreme example of what folks caught up in the subprime mortgage default crisis are going through.
- They took out a loan they couldn’t afford.
- They got an adjustable rate mortgage which allowed them to pay less now, more later.
- They put very little and sometimes next to nothing down.
- They lived for X amount of time for about what they were paying in rent before.
- They can’t make their new higher monthly mortgage now that the rate has gone up.
And now… “they” are losing “their home”.