Forum Post: Folks underwater
Posted 13 years ago on Nov. 8, 2011, 10:32 a.m. EST by audiman
(90)
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Many folks here are blame banks for millions of folks being underwater on their homes or losing their homes. I do not. I blame the buyers. Let me tell you why. Every house I have ever bought in my life, at the end of the sale at escrow, you sign the papers. It is very clear at this point of just how much your house payment will be now and in the future. Very clear. You must sign that you understand. So, if you make $50,000 a year and bought a $400,000 house , you very well could have a $3500 house payment in year or two after your special rate expires. It is clear as a bell. Then when that happens, folks can no way make that payment. I know a lot of folks were told that homes would keep going up. To what? A regular San Diego home for $700,000? A study was done here in San Diego a while back that said only a tiny percent of folks could really sfford a $400,000 home. So then you have the bubble. Now, no one can buy a ordinary home. The papers were in front of you. You signed the papers. You know if you paid the $3500 per month you could not eat or anything else. I blame the home buyers. Plain and simple.
That all makes sense, but the home buyers aren't the ones that inflated the market and caused it to crash.
You are right but they still should have never bought a $400-500,000 home. With just a little bit of math, they would know that they could not afford the house. Les say I wanted to buy a 2012 Porsche 911. They cost about $100,000. Even with a few thousand down payment, after tax and everything my payment would be about $1000 a month!!!! There is no way in this world I could have that car. Same thing with a $400,000 house. There is no way. But folks did it anyway.
Simply stating that neither party is solely to blame. It took bad decisions on all facets of the equation. Buyers, lenders, bond ratings firms, all of them.
I agree. But the folks buying the house were the ones who signed the papers. Now, where I live, 1 in 3 folks are underwater. Many walking away. I can't blame them if their house costs $400,000 and now it is worth only $250,000 or less. They feel like they are tossing money into thin air. Kind of like Obama taking money out of thin air for tarp. US debt up to 15 trillion as of a few days ago. What a terrible example!!!
The realtors are also to blame, they want their commissions, like car salesmen, they talk people into it, knowing that people want it, and they will try to figure out some way of getting additional money later on. In the case of homes, they end up renting out part of their house, or taking on a second job to keep it.
Yes, but since when does any reasonable individual make a major purchase based solely on what the SELLER is saying whether he be a bank selling a loan, a Realtor selling a house, or a guy on CraigsList selling a used car ?
They don't make the decisions solely on what the realtor or car salesman says, but those people push them into the final product. In the case of realtors, when they have people who would not qualify for regular financing or think they cannot afford the monthly payment, they offer them the Adjustable Rate Mortgages that go up in five years, and they convince them that they will be able to save money in five years and that they will be earning more when the rate goes up, so they should get the house now.
Right. If people listen to the guy trying to sell them something, they can be misled into making a bad decision. I googled "historical home values" and came up with this link http://www.jparsons.net/housingbubble/ showing that home prices dipped in the mid 7-'s. mid 80's, and mid 90's and, by 2001, had exceeded any realistic expectation of further increase based on historical trends. People got greedy. That's how ALL bubbles are made. Cheap money, salespeople, etc, facilitate the bubble, but in the end, it's ALWAYS greed.
You are right, some need to share the blame. But all in all, they did not sign the papers. Most folks who are leaving their homes just cannot pay the mortgage. It was there in black and white. And with cars, it is true you could have a $500 payment. In a home , you could have a $3500 payment very easy. And it is not just poor folks who got stung. I know many folks who make a good wage and they cannot possibly pay $3500 a month. They are walking away. It is rheir fault bottom line.
Very sound reasoning.
Yea but you're ignoring reality. The reality is that they knew they couldn't afford them and many never made so much as a single payment; they took the banks for a ride.
If you have a loan just don't pay it. No one in American deserves to have to repay their loans. We. Are. The 99%.
Absolutely. Plus there's no disgrace in renting.
You are right. In time, folks can buy houses again. Prices keep coming down. They will get down to where they should be and folks will start buying.