What hacks me off is that our Government is enabling such practices by extending help to such. There is no help for us because we can afford to pay our mortgage – no credit to some of the sacrifices that we have to make daily in order to continue to afford our monthly payments!

I think the banks, government need to take a long hard look at those who are trully committed to upholding the economy and ethics by paying their mortgages despite the loss of equity and communicate a big THANK YOU! Extend a temporary 3-5yr loan modification for ALL on record without them having to call and submit all kinds of paperwork and proof of this or that. If they did that on their own, this will go a long way to appease those that are at the verge of walking away.
We can still salvage whatever is left of this great economy.

Situation #1
Yes, there are those who engaged in the game of flipping and were caught with upside down mortgages and are now paying the price. There are also those who bought too much house for their budget and got brought down by the Taxes and rising costs. However, there are traditional investors that put their money into the RE market banking on long-term investments to secure their future and they are also paying one heck of a price for calculated risk. In this situation one must, of course, weigh in the balances the ups and downs of the RE market which is perfectly healthy. However, what has happened here in the US is that anyone investing here since early 2004 has seen any chances of even breaking even swept away for many decades and maybe even permanently.

Why is this the case? Financial institutions have been given carte blanche to do as they please with our deposits and “creative” financing and have caused, not only the collapse of RE, but of the entire Financial system. This has been REAL Voodoo economics at it’s best. Their cavalier attitudes toward managing the Financial well-being of this Country has resulted in this disaster and, yes, they have been bailed out, in some cases twice! Why???? Where is the help for the consumer (investor)? Nowhere! The investors mentioned above did not have to invest their life savings in our Country to boost our economy but they did. They could have gone somewhere else.

The irresponsible notion that I have heard from so many Politicians and others this year that “RE investors are some kind of demonic entities” is pure rubbish! Investing in Real estate has a positive ripple effect on entire communities as anyone with a shred of economic education fully well understands. Lenders should be held accountable for sucking in unsuspecting investors with predatory lending practices. These are the same demons that are sending your 16 year old Credit Card offers in the mail that are laden with traps that they are currently unaware of. I am entirely against the suggestion that investors are bad people. If these Banks and large Corporations are the Engines that drive the economy as some in high positions have suggested do not forget that WE (consumer/investor) are the Oil that runs that Engine. To simply write off the Consumer is insane and the Economy will NEVER recover without oil in the engine.

Situation #2
I have an Associate who bought a 1 Bedroom, 1 Bath Condo in Miami in 2004, actually downgrading from a 2Br, 1Ba that he had sold in California that same year. He bought the 1Br because he was single and it suited the needs for one person, paying $100,000 less than he sold the condo in CA for. By definition, this could not have been considered an investment as he would either have moved upscale with his equity or bought two for the price of one.

This 1Br was his home for three years. He then got married to a Lady with one child in 2007. Obviously, the 700 sq ft. 1Br was insufficient for 3 people therefore he investigated the possibility of selling it and buying a larger unit. Unfortunately, the Property was now worth half the mortgage so he was unable to sell. Alternatively, it was necessary for him to rent a home. Due to the terms of a second mortgage on the Condo he was not technically allowed to rent the 1BR out, therefore, he was stuck with a monthly rent payment plus servicing a value-less mortgage and inflated Taxes based on the mortgage not the value of the home. What to do? Prior to depleting all of his savings toward the end of 2008 he reached out to the Lender for assistance via a “Loan Modification”. One would think that with all the bailing out going on with Lenders and the like, that this guy could get some help. He didn’t and so was unable to continue paying the mortgage. Now, his credit has been destroyed and he is looking at foreclosure since the Lender is dragging their feet, providing (frankly) the most embarrassing excuses, mixing up the paperwork of different Mortgage holders and generally acting like Abbott and Costello. Again, he feels that he is being treated like a Demonic investor who is getting what he deserved for buying the place in the first place and has no representation in the “System”. What do people like this do especially when seeing real criminals, the Banks, get bailed out? I personally believe that the Banks (Lenders) should be held accountable in this entire process. Banks should be bailed out ONLY on the condition that every one of their Clients be given fair and equitable solutions to the problems that Lenders created in the FIRST PLACE.

We’re not looking to avoid paying mortgages, we just need to see the values of those mortgages adjusted to reflect the new worth brought on by a RE collapse caused by these very Lenders. As Joe Consumer, I will NEVER have faith in this Country’s Banking system again. I’ve seen the pattern of unethical behavior demonstrated since the 80’s with the S&L debacle and it simply has taken a new shape in some other sector as time goes by. I’ll find some place to lock my money away so that I can invest abroad in Real Estate some day in the future, never here! There are way too many thieves in high places in this country making billions through real uncalculated risk taking. Nobody does anything but slap their hands while they have their billions well protected. I have nothing against wealthy people only those that stole other people’s hard earned money.

Long live the economy nurturing Investor and those who simply seek the American Dream!

First of all, you sound very educated and mature.

To clarify, because I’m not sure you understood what I was talking about in my post, I was referring to people who CAN afford to pay their mortgages, and are CHOOSING to walk away from them- with no sense of personal responsibility whatsoever (like the person in the original post). I believe this because if the government does bail out people who are in foreclosure, it is my tax dollars (and probably my childrens!) And, I don’t feel like I should have to pay for someone’s problem when they can afford to pay for it themselves.

Second of all, if a bank gave you a loan you did not qualify for, it is the fault of both parties. There is definite predatory lending out there, but I think people needed to take personal responsibility too. My husband and I were approved a $400,000 mortgage, and I basically laughed in the lender’s face- because there was no WAY we could truly afford that! I think some people just went along with what banks told them they could afford, without even looking at their true budget or anything, and I really do not have much sympathy for those people – its not rocket science! It’s elementary math – Income minus expenses! (Although I admit, I may be naive to how clueless people are when managing money – common sense is not always common! And- some people may have known, but were just greedy and went ahead with the loan anyway!) I’m certainly not saying banks are completely innocent, and they certaintly deserve some of the hit – but in my OPINION, they deserve the hit from people who really couldn’t afford their mortgages, not the people who can afford their mortgages and are walking away.

The reason being, there is no insurance policy on the economy! The the value of a person’s house is not guaranteed to rise, or even to stay the same – no more than an investment in the stock market. As a country, we have been so fortunate to see home values rise – if not skyrocket – over our lifetimes, but that does not mean we are entitled to it and deserve to be free from the risk of an investment that did not go as we planned. Especially when many people were not smart about their investments in the first place.

HOWEVER, I wholeheartedly agree there are people out there who did everything right, and ended up getting laid off and have HAD to foreclose on their houses; and have had no choice. I know many of these people and I know how hard it is for them to make ends meet. In those cases, it mostly just unfortunate timing or bad luck. These people, I definitely feel sympathy for – I just believe there is a huge difference between the two situations.

We are both working and there is not much to invest in now …so we are paying down our debt instead. The 401K’s are not in the stock market and we consider the employers match (we still have that, for now) as our “yield”. I know….silly isn’t it…but there is nothing safe to invest in anymore that yields anything.

The world seems to be getting harder and harder for younger folks to survive in…and the recent political commitments seem daunting to us for future generations….

Michael & Marlene