Eh… We’ll Keep the Car and Lose the House

Hmmmm....

Now, however, some mortgage borrowers who stretched financially to buy a home with temporarily-low “teaser” payments and no money down - and haven’t owned it long enough to gain any equity - are taking the position that it’s hopeless to try to save the house. They’ll await foreclosure and use their money to try to keep up with other monthly bills instead.

“We see people coming in who say, ‘We’ll just let the home go. We don’t have anything in it anyway,’ “ said King, who has been a consumer counselor for 15 years.

That change in attitude helps explain why there is a subprime mortgage crisis and why banks - who analysts say made credit too easy for too many - have had to set aside billions of dollars in reserves to cover potentially bad loans.

You mean that the “mortgage crisis” could be because home buyers knowingly made bad choices and can deal with the consequences? 

1. The mortgage crisis was partly caused by poor consumer choices, but also by lenders making it easy to get loans, especially ARMs, which can adjust every year. You need a vehicle to get to work, and it’s been a challenge for many in this economy to make ends meet, so giving up the house is a huge sacrifice, but a necessity for some.

   Posted by on January 13, 2008 at 1420 hrs




2. The mortgage crisis isn’t just because of home buyers made bad decisions. Home lenders also made bad decisions to lend to people who have crap for credit. Actually, I’d say it is more the fault of the lenders.

   This really shouldn’t be a crisis because people had been predicting the housing bubble to pop for a number of years before it did. It was pretty obvious this was going to happen, smart companies should have been preparing for it.

   Posted by Matt on January 14, 2008 at 0856 hrs