Stressed borrowers use plastic to delay default

Al Rueters ^ | Sun Oct 28, 1:59 | Nick Carey

[ikka]

I make 100% commission too...does that mean I shouldn’t buy a home?

No. I was pointing out that working on commission means variability in monthly take home pay.

[M. Espinola]

"Kudos to you for seeing the mess in 2003. I didn’t notice until late 2004 when prices were so absurd, I knew it was due to tech-bubble like funny money and “greater fool” behavior."

I fully agree. It was ex-Texan who was the main research source, consistently issuing repeated, detailed warnings concerning the coming, market problems with the overinflated housing market (worldwide), coupled with exposing the brazen crookedness of the sub-prime banking-linked-=real-estate industry.

The lowlife cowards which attacked 'ex'Texan', even after being suddenly exposed on FR as commission greedy banking & real-estate industry shills, continued attacking and also stalking 'ex-Texan' due to the fact truth was being posted dealing with their underhanded dishonest & deceptive practices.

Bravo to ex-Texan' for posting the truth, no matter the vicious attacks by that lurking dishonest element. We can only hope they have already been fired by their very own discredited industry.

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[Hardastarboard]

Mr. Reeves needs to go out and get a better job.

BINGO!!!! And, Duh!!!

But of course, you'll NEVER see that solution in the MSM. It's like people are stuck in amber, they can't change jobs and better themselves. Which is what will happen if we ever let socialism totally take over in this country (we're pretty close now).

[Fairview]

I make 100% commission too...does that mean I shouldn’t buy a home?

No. But just look at this guy's situation. He is selling in a field which is dependent on the housing market. He must have noticed before he and his wife bought their house that the market was slipping; furniture stores were already having financial trouble before August of 2006 when they bought. Common sense would dictate that if he was getting a bargain house because the market was going away, his housing-dependent income might go away, too. And you see that they were having trouble making the payment from Day 1.

[meyer]

If they are using credit cards for “essentials” then they didn’t have any room in the budget to buy a house to begin with.

I always cringe when I see somebody nonchalantly using a credit card to buy groceries. What exactly is wrong with cash?

[meyer]

1.6-1.8M of these humiliated/pained families should not have been provided a mortgage IMHO.

It takes two to tango - they should not have applied for the mortgage in the first place. I wonder how many of these people falsified on their loan app....

[meyer]

Payment too high for 214,000. Must have had bad credit...should be about 1200.00

yep - 214,000, 30 years, 6% interest produces a monthly payment (P&I only) of $1283. Their $1636 payment puts them around 8.4% unless that payment includes taxes or mortgage insurance.

[RSmithOpt]

Well, roll the dice. If self employed and the single worker's salary is increasing an average of 3-5% per year over a 5 year period, then the 35% of net is not too bad with respect to risk for making the mortgage payment. The breadwinner best know his long range market conditions (expectations for growth / stability) too. However, the SAHM, without a doubt, with one child, had best be the frugal one with good budgeting skills and discipline; then, the 35% to get into a good piece of property in a good area (stable, good schools, low crime) is worth the risk.

Many areas of the economy with construction toping the list is cyclic. Most couples are too into the instant gratification thing and aren't willing to sacrifice status and lifestyle in the short term to win financially in the long term and that's where they get into trouble. It seems odd that so many (younger generation of buyers - first time) in today's mortgage industry / housing fiasco cannot do the math for their budget, do their own taxes, and especially perform manual amortization of any loan, but they can surely tell you what's going on with Survivor, Temptation Island, J-Lo, Paris, Brittany, Rosie, Matt, and what's in vogue for the upcoming fashion season.

[DaiHuy]

You know, I paid 100 bucks for Dave Ramseys “Financial Peace University” kit and attended the classes. It was the best 100 dollars I have ever spent. I am $87.00 away from being totally debt free, and I have gotten rid of all my credit cards.

Never again Visa/MC/Amex. or who ever you are.

[zek157]

I bet you won’t have any copper wire, light fixtures, appliances & copper plumbing in the house.

Sorry to hear about that. I hope the owner lost a lot of equity in the house.

[zek157]

That’s great that you have no debt, but I believe some debt is not a problem. It has much to do with your age & income. We will be having a period of inflation similar to the 70’s in my opinion and the loans I have will likely be paid in worthless $’s.

I have a 5 3/8% 30 Y fixed on my primary house, a 5 1/2 30 Y fixed on the beach house and 6% 30 Y fixed on a rental. I sold a couple rentals 2 years ago when I thought it was time. I still have a 60% loan to equity ratio on all the houses and could ride 2 1/2 years without a paycheck with savings. Also max out my 401K every year with an additional 60% match from my employer.

It would make no sense to pay these fixed loans off from savings due to both the coming inflation factor and tax write-offs. When I retire in 15-20 years I will pay them off.

[RockinRight]

I agree totally. My income is also dependent on the housing market...but I still make twice what I could in a salaried position even when the market is slow...so for me it’s worth it. For this guy...a different story.

[RockinRight]

Many times it’s actually a debit card and for me...I just never have cash on me. It annoys my wife. I could have 3 million dollars in the bank and still not have cash on me.

[RockinRight]

Either it has MI or the rate is higher...being a 100% loan it could be either or both.

[RockinRight]

Good luck with that. Sounds like you might have a scrapper on your hands. I’d beware of missing fixtures.

[RockinRight]

Very good position to be in...and very sensible!

[Landru]

Wonder what they're driving, wearing et al ad nauseum.

There's a reason for the *stereotype* image I get of these two: Deadbeats driving a Beamer & Infiniti dressing in designer everything from glasses, jeans, shoes, cell phoneSSSS, jewelry, the whole magilla.

Why if one didn't know better?

...they'd look prosperous!!

[Joan Kerrey]

Help me understand this, please.

---

Easy...they’re victims of unscrupulous lenders who preyed on them, tricking them into taking on a loan they couldn’t afford. They’re desperate people who need the help of government to rescue them from this terrible situation.
Vote democrat before it’s too late. /sarc

[AD from SpringBay]

Short-sighted idiots make house payments with credit cards. It would be more profitable to take a second job or pick up aluminum cans.

[Joan Kerrey]

I was raised to think of debt as a shameful lack of character.

---

Both you and I were probably raised by parents who experienced the great depression. Most who experienced that learned really fast how to stretch a dollar and save for the inevitable rainy day so that they would never be caught unprepared again. If it didn’t come you were ahead. If it did come you were prepared. Today having things seems to be ones goal in life. Things, things and more things. Shop till you drop. Buy now, pay later. It’s madness and destroying lives.