Actually, the causes for their (and a lot of other people - they just don't know it yet) are amply covered in the article. If you are thinking of buying your first home, I would wait until at least late next spring.
She is an accountant and didn't read the papers? What will a foreclosure record do for her future employability?
Mistake #1
Being stupid can cost you a bunch of money. Details at 11...
That's insane. And interest only, to boot. Doubly insane.
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." -Manuel II Paleologus
The borrower is truly the lender's slave (Proverbs 22:7).
The Weisels avoided the extra cost of private mortgage insurance by getting a so-called 80/20 loan — two different loans that equal 100 percent financing.
so why didnt they buy a cheaper house???
The Atlanta Journal-Constitution (AJC) version of this sob story ran several months ago in a 5 part series which questioned Georgia's foreclosure statutes. Georgia's law on residential foreclosure is know as "non-judicial" foreclosure in that no trip to the courts is necessary to foreclose. The legally prescribed process is a series of steps which, in theory could be completed in as little as 40 days. What the AJC didn't mention is that the 40 day period does not typically begin until a debtor is at least 4 months behind in mortgage payments. Most lenders have no desire to hold real-estate acquired by foreclosure, since they typically lose money in the liquidation process. So, they tend to work with debtors as much as possible to restructure the debt, move payments to the end of the loan term, etc. - anything to avoid classifying the loan as non-performing or written off as in the foreclosure process.
>>Some house payments went on their few credit cards. <<
I'm guessing that "few" is more than "two".
I am thinking they will try to include that in the bankruptcy.
Actually, my sympathy goes out to these guys. I would just really like others to learn from this.
The overpriced home. The big tv. the multiple credit cards.
What they should have had instead was a "starter" home and a lot of savings/investments.
There is a reason my heart goes out to them. In a 21st century way, they are me when I was their age. But you can get into far more trouble, and quicker and easier than you could back in the day.
No need to blame mortgage companies, blame those who purchase beyond their means, and who do not plan for emergencies.
I spent many years as a mortgage loan officer. People just don't want to accept that they can't afford a particular house. There is always a loan officer out there that will put them in a dangerous loan in order to get them to closing. Just because you are approved for the loan doesn't mean it's a good idea to buy that house.
Pam acknowledged she didn't carefully read all the documents and hadn't fully realized that for the first two years, they would pay just the interest on the loan, and that the interest rate would reset this coming spring.
I guess even idiots can become accountants these days.
Ah, leverage. It cuts both ways.
Another factor that is going to provide a double whammy out here is that the tax bills are about to go out, and the average residential assessment increased here on 113,000 homes an average of 30%. Last year that same group went up an average of 15%.
Climbing taxes from extreme reassessments adds another monthly increase to mortgage payments, at least for those who pay taxes via an escrow account.