60 Minutes Subprime Meltdown

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<p>That one couple. The wife said, "I borrowed with the expectation that our home price will increase. And now, it's not. So ...umm, yeah we're going to stop paying the mortgage." </p>

<p>Uhh, where in the loan docs did it states that your home price will increase? Otherwise, you can stop paying your mortgage. </p>
 
<em>"That one couple. The wife said, "I borrowed with the expectation that our home price will increase. And now, it's not. So ...umm, yeah we're going to stop paying the mortgage." "</em>





I noticed that one too. It shows just how twisted everyone's attitude toward real estate became. This couple sees no flaw in their thinking, and I imagine they are not alone.
 
<p>IR,</p>

<p>With that type of thinking. We can conclude it wasn't just a purchase but rather a gamble and they loss. And had it been a Vegas casino and they'd decided not to pay up. They'ld be heading to the big house. But oh well, this is real estate for you. </p>
 
Those people make me sick. I hope their forclosure is long and painful. That attitude of irresponsibility and lack of honor is the reason this whole mess is getting worse. Let them burn!!
 
<p>I actually think those people are doing the reasonable and sane thing. Imagine paying a $600K debt on a $200K house for the rest of your life. Saving every penny, no college for your kids, no money for life's pleasure... just paying the stupid mortgage. It's a debtor's prison worse than those in Dickens's time.</p>

<p>It was a gamble, and they lost. But they gambled with the house's money, that was given with basically no strings attached. So why spend the rest of their lives in servitude to that debt? It makes no sense. They are doing the right thing.</p>

<p>It may be a real turning point in our history however. God knows how this is going to end up years from now... complete financial meltdown?</p>
 
<p>I think we'll see more of it going forward in the short term. They have too, it's financial survival. They'll dress it up, they'll put rouge and make up on it, but it will still be the pig in their apartment living room. The morality of it has been beaten to death in other threads. The question will be as greater and greater numbers of the masses opt to give up, how tight will credit get and how long will that tightness last? </p>

<p>It'll spread too. Credit cards are already showing strain. People already complain about the hair triggers the Credit Cards have for universal default and skyrocketing rates. I suspect that will just get worse too.</p>

<p> </p>

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They signed a contract. Honor the terms. Weren't they over 18? Ultimately you and I will pay for their greed and lack of self responsibility. That bank is gonna write off that loss against earnings and we as taxpayer pay the price for all these freeloading fools. You make the bed, lay in it or join the rest of us on this site, wait it out and be responsible, informed, adults.
 
My friend and I had a serious hour long discussion this evening about the 60 minutes piece and more specifically OC. He's in the auto sales business and it is getting plastered right now.



We both agree that OC seems to be within the eye of the hurricane right now. There are many people who already have made this decision, to walk away when their payments adjust. That may by 6 to 12 months from now. Then there are your serial refinance characters who are oblivious to the situation. All in all we both get the feeling that OC is in for something BIG this year. The house of cards is ready to fall.
 
<p>Worrying about the morality is pointless, like having a debate on abortion . Both sides are right, and people will do what they need to do. </p>

<p>If I lived in a Stockton development, where most of the houses are vacant, and I owed 70% more than the house could sell at, I would walk away from it immediately. What if you have a life changing event, or a job loss, and couldn't afford the mortgage? What if the vacant houses are occupied by homeless people or gang members (as some of them probably are) and there is a high risk of crime. At what point does this contract with the bank become more important than the rest of your life? Is it more moral to keep your contract with Countrywide and sacrifice your children's future? Anyway, part of the contract is that the house is collateral for the loan. Turning in the keys is a legitimate end to the contract.</p>

<p>Bottom line in my view - the banks were a big part of this fiasco, and they will pay the price. Prices got way too high, and will have to drop. Individuals acting in their best economic interest is the way to return to normality sooner. But it will be painful for a lot of people, no matter what.</p>

<p> </p>
 
lendingmaestro. Is anybody getting mortgages these days ? Would appreciate it if you could fill us in on what's currently happening out there in lending land.
 
People ALWAYS have life changing events. That is its own issue. However in this case no one put a gun to these peoples heads and told them to overpay for that house. They did it to themselves and they deserve what they get. If I lose money in the market I don't cry foul and demand it back. I pay for my trade and move on. Dont get me wrong I hold the banks equally culpable but these people are, by their own admission able to make the payments...pay them or go BK trying.
 
morekaos, if you lost 300K on a trade, and had the opportunity to walk away from it....you wouldn't ? Even if it meant you would spend the rest of your life repaying it ?
 
C'mon trooper you know I wouldn't be dumb enough to put myself in that kind of a losing transaction. These people knowingly did just that. Like the market this is a big boy game with big boy consiquences. If you can't antey up and pay than do not play or you might end up in the ally with some broken bones..sorry
 
<p>my point is there are lots of shades of gray here... there is no basic moral guideline that can be used to judge people in their position. I'm glad I never bought into the frenzy, so don't need to negotiate those murky waters myself. I feel sorry for those that did buy in at the peak... it's all a real shame, that could have been avoided with some decent regulation. A lot of people will honor their commitments, and will be part of the elderly poor in 30 years.</p>

<p>It's true nobody forced people into this mess, but people need to take postive action for themselves now. Sometimes that means walking away from an obligation. Nobody can make a one-size-fits-all judgement.</p>
 
Morekaos, these people were defrauded. Everybody told them - the realtors, the mortgage brokers, their coworkers, their friends, and their families - that they had to buy NOW. So they did. Very, very, few have the requisite knowledge to realize everybody was wrong. Now, the punishment for *being* defrauded is a lifetime of debt servitude? That's a pretty sick world.



Sticking the banks/brokers, the relevant fraudsters a) hits a group that's more deserving b) prevents this from happening again and c) brings housing back to earth faster. In addition to being more moral, it's better for those not involved in the mess.
 
<p>Wow Fair, that's thebiggest pile of rationalizing BS I've seen in a while.</p>

<p>There are a few that fit that camp. There is a giant horde trying to claim an be in that camp. Then there are those that are just blatantly say the bank took the risk not them.</p>

<p>It's all rampant shucking of responsibility.</p>

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<p> </p>
 
This total lack of self -responsibility is really depressing. Fine, work it out and share the pain with the equally dumb institution but don't cry to daddy government when you lose. Everyone knows when you buy a new car on borrowed money it is worth 20% less the second you clear the sales lot. But we all pay the debt and don't complain. Houses are an even more important decision and should not be treated as lightly as most of these people did in their decision to buy.
 
YLG>Imagine paying a $600K debt on a $200K house for the rest of your life. Saving every penny, no college for your kids, no money for life's pleasure... just paying the stupid mortgage.





If you have to save every penny, avoid contributing to your kids education, and not spend any money on vacations or other luxuries, you were stupid to sign up for something you couldn't afford whether that $600k house was now worth $200k or $1 million.





In life, you have to pay for stupid choices. Real estate isn't the exception to that rule.
 
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