In Suze Orman’s book The Money Class, she advises her readers to, “Do the calculations everybody. How much is it costing you to actually stay in that house? How many years will it take for you to pay more for that house than it is worth? If it’s 3 years, 4 years, 5 years, are you kidding me? That’s a house you really need to say bye bye to. It’s not worth the money.” Suze Orman advises homeowners who are upside down in their mortgages to get the bank to modify the loan. If that doesn’t work, she suggests that homeowners seek out a short sale or a deed in lieu of foreclosure.
This mindset is selfish and wrong. If you can pay the bank then you should pay the bank because that’s what you agreed to do. If you can’t pay the bank then prepare to lose the house and any equity you had in the house. It’s not the banks fault you picked a property that declined in value and I bet they didn’t hold a gun to your head to force you to buy it either. The banks are in the business of loaning money to people that can pay it back. Banks are not in the real estate speculation business. If you think it’s right that the a bank should suffer your losses, then do you think the bank should be paid more if the house value goes up? Can you say double-standard?
In keeping with Suze Orman’s mindset, why don’t you finance the purchase of your next car, use it for a few months, and when the car’s value is less than the loan, refuse to pay the loan and hand the car keys to your loan officer. Using Ms. Orman’s philosophy, you should ask yourself, “How many years would it take for you to pay more for that [car] than it’s worth? If it’s 3 years, 4 years, 5 years, are you kidding me? It’s not worth the money.”
Here’s another idea. Buy a large amount of shares of stock of a publicly traded company on margin using the broker’s money. If the stock goes up, keep the money, if the stock goes down, let the broker suffer the loss for your actions. Using Ms. Orman’s philosophy, you should ask yourself, “How many years would it take for you to pay more for that [stock] than it’s worth? If it’s 3 years, 4 years, 5 years, are you kidding me? It’s not worth the money.”
The bank is not there to assume the risk of your purchase, you are. Why should you get all the profits and force them to absorb all your losses? Hypocritical don’t you think? If you think banks should suffer YOUR losses then you should consider letting them take your profits too. After all, fair is fair. Think loans are hard to get now? Just wait.
What saddens me is that Suze Orman suggests we profit from the betrayal of our moral obligations. Bad advice Suze.
Yes you make some very good points. Why is it considered to be acceptable with property but not with other kinds of loans or investments?
What I can’t understand is why anyone would recommend profiting at the expense of your honor. When you buy a home, you assume the risk of the house, not the bank. When you sign the documents, you are giving your word that you will repay your loan. If you can’t live up to your obligation, that’s one thing, but if you simply won’t live up to your obligation, that’s just immoral and your word is worth absolutely nothing.
Wow, what surprising advice from a realtor. Stupid advice, but advice nonetheless. Um, let’s see, if the bank was in the same situation, what do you think the bank would do? Yeah, that’s right, it would walk away. What we signed was an agreement to pay the mortgage or suffer the consequences for not paying the mortgage (which is losing the property); we did not sign an agreement to pay no matter what and given that the banks have flooded the market with foreclosures and made property in the Chicago area worth 30-50% of the original mortgage amount, sorry, I have NO SYMPATHY for the banks – they can have my property and just to be safe, I filed BK to make sure they don’t try to go after me for any deficiency judgment. Quite frankly, as far as I’m concerned, you realtors, real estate brokers, big banks, mortgage lenders, real estate appraisers (liars), are a bunch of crooks that created this mess and the banks deserve what they’re getting. Of course, if they had just bothered to work with those who were struggling, then maybe those of us who were paying would have property that had not declined in valued by 50-70%. Suze Orman is right on this one – people who are underwater on their mortgages should walk away and they should walk away in droves. And why should only the ones who are struggling be allowed to walk away? Oh, I see, so the ones who are struggling get the benefit of walking away, but those of us who have jobs should just take it in the rear as we become even more in the hole due to all the others walking away? Hey, you realtors were the ones who sold us the load of crap about how important it was to build equity in a house, how stupid it was to throw our money away by renting, etc… and NOW YOU HAVE THE NERVE TO TELL US NOT TO WALK AWAY AFTER YOUR INDUSTRY ROBBED US OF OUR LIFE’S SAVINGS?!?!? Yeah, um, NO!!! I’m walking away and anyone with half a brain should do the same.
First of all, thank you for commenting. Please don’t take any of this personally, I’m only responding to a few of your comments.
You can’t just blame the banks for this situation. The Government made banks lower loan standards to give lower-income families a chance to buy a house. The banks were stuck having to give loans to people they knew couldn’t pay it back but they had to follow the new regulations. Fannie and Freddie were buying and guaranteeing these mortgages on the secondary market, real estate agents and loan officers were more than happy to sell houses but the biggest blame in my opinion goes to the home buyers who bought more house than they could afford, financed the crap out of them with $0 down, sucked out equity in additional loans when the market value went up to buy boats and trips, etc., and used interest only loans to lower the payment but not lowering the debt. To me, the stupidest actions were performed by the buyers. Sure they had accomplices like Realtors and loan officers, but I believe that the BUYERS are accountable for THEIR actions. The buyer had the final decision to enter into this situation or not. If they didn’t fully understand what they were getting into by not doing due diligence and still decided to go for it then they get what they deserve. I also apply the same rules for the declining values of my home too. I’m in there with you, but I hold myself accountable for my actions.
The value of the asset has nothing to do with one’s ability to pay for it. Besides, eventually the house will go back up in value once this mess passes, minimizing or eliminating the damage.
I agree, Realtors didn’t do a good job relaying the truth to the public but you have to understand, the National Association of Realtors are first and foremost nothing but “cheerleaders.” They have a history of being overly-optimistic, after all, it’s their job to be. To say the market is getting better while everything crumbles around you is laughable, but they’ve been trying to do that for years. A few weeks ago, they announced that they underestimated the severity in their studies due to tabulation errors. I don’t think anything was done fraudulently and the NAR broke the story themselves.
Banks have tried to work out loans with several people however, most have ended in failure with homeowners not making payments on the new loans. The best thing we could do is revoke all the new lending practices, go to the pre-Frank-Dodd lending practices that required a larger down-payment and do away with interest only loans and ARM loans and let the banks foreclose and sell the houses and we should limit fannie and freddie or eliminate them completely. The government should just regulate housing practices, not participate in it.
You refer to a house as an investment. Do you blame the stock broker when your stock investment goes down? Of course not, so why blame us? You decided to buy a house. You picked out the house. You chose the bank. You even chose when to buy. How you paid for it and who showed it to you had very little to do with it’s value. The biggest reason for the bubble bursting is that people who couldn’t afford a house bought one now can’t pay for it, and this is happening on a large scale.
Personally I think “money pit” is a better description of a house than an “investment.” I only see a house as a big lump of inaccessible money that constantly drains money from your budget to maintain it.
Um, there is a BIG difference between buying a car and buying a house! You expect the car will decline in value, but you have been told all your life (mainly by realtors!!!) that the house will go up in value. You are comparing apples to oranges when you are comparing buying a house with buying a car – the analogy is completely flawed and I can’t believe people still try making that ludicrous argument.
I too can’t believe how many Realtors are stupid enough to believe that myth. While it is true that over 10-20 years, the value should increase, that increase is an average between peaks and valleys over time. However, houses don’t increase in value just because they exist. Value is determined by how well the house has been maintained and updated, as well as the neighborhood’s upkeep and condition as well. Also scarcity and uniqueness plays into account too like is it near a park, lake or highly desirable location. There are also many other factors like school districts, population migratory patterns, etc. that determine value too.
The statement “Houses ALWAYS go up in value” is a big myth. It’s a really silly statement if anyone would take the time to think about it. If houses always go up in value then someday in the future, a 2 bedroom, 1 bath house would sell for $1,000,000,000.00. Of course, if you’re from California or New York, this may already be the current price. It’s a stupid statement, but it’s a statement everyone wanted to hear so no one bothered to even slightly question it or think about it.
My biggest gripe with the industry is interest-only loans, adjustable rate mortgages and small downpayments. These options give too many people a chance to get into trouble. None of this would have happened if the buyer had to have a 20% downpayment and a fixed interest loan that applied payments to both interest and principle. Sure there would have been less buyers, but I think that’s a good thing.
All Realtors use the word “investment” when referring to a home. If you call it an investment you are insinuating it’s going to go up in value. I’ve yet to hear a Realtor call it a “money pit.” Practically everyone is a renter whether they know it or not. Owners are renting the money for the house. Renters are renting the house itself. How would the market look if a Realtor could make 6% of the appraised value by getting someone to rent?
Using the term “Investment” makes the medicine easier to swallow. For most people, it’s their biggest purchase but it can be a happier purchase if they think they’re going to actually make money off of it. My wife likes to refer to jewelry as an investment but I have to remind her that it’s only an investment if she’s willing to let me sell it when the market dictates. She no longer considers jewelry an investment. A home is rarely a profitable purchase. Rental property can be if done right but your home rarely is. We spend money maintaining it, improving it, filling it with stuff, paying the taxes on it, etc. To consider it a profitable investment the purchase price minus ALL expenses (including furnishings bought because of the house) must be less than the sale price. Rarely is this the case. Or, if you are able to sell your home for more than everything you put into it, what do you use the proceeds for? A bigger house with much bigger expenses. It’s only when you downsize from a big house to a smaller house that you could consider it an investment, but whether or not it’s profitable depends on too many things.
I like your perspective on investments. Jewelry, housing, stocks and bonds…they’re only investments once you’re out of the game and have profit in hand. If we were discussing preserving assets, then it would be another story.
I find it interesting that many homeowners are overly concerned with increasing home values, in the case of a lifelong owner of one home I fail to see the benefit. Perhaps incorrectly, but I’ve always thought for lifelong ownership increasing values are detrimental to property taxes, which are arguably the greatest homeowner expense (in high property tax states). Why the heck would you want to pay ever-increasing property taxes, not to mention an increased inheritance tax should whomever inherits it choose to inhabit it.
Increased property values also force some homeowners to sell their home because while they’re able to afford their mortgage, they’re no longer able to afford the increased property tax. Or, in the case of a senior citizen who paid off their mortgage years earlier and whose retirement income becomes insufficient due to increased property tax. It sounds far-fetched, but it happens in formerly depressed neighborhoods that become gentrified.
There are many examples of homes increasing in value to the point that the owners couldn’t afford the taxes and had to move. One example I heard about came from a Habitat for Humanity home that a person bough through Habitat and lived in it for years. However the neighborhood around her was improving. Because she was living on a tight budget, the increase in taxes forced her out.
I agree, if you’re a lifer in your home, property values shouldn’t be anything more than a scorecard. If you can afford to stay, just stay until the market rebounds. They should be more concerned with the condition of their neighborhood. Is it deteriorating, is crime increasing, etc.?
For most people, inheritance tax isn’t an issue because of the minimum level before inheritance tax triggers. Not all improvements increase property taxes. If I upgrade a kitchen with professional grade appliances like Wolf, Viking, etc. then all I’m doing is replacing a kitchen with a kitchen, a zero sum game. The improvements that more than likely cause a tax increase are any improvement that expands the footprint, creates another bedroom, bathroom, garage stall, or the addition of a pool where none existed. If it’s big enough to require a permit, it may cause a tax increase.
Like the other user’s comment, I’ve also never before heard a Realtor label a home as a money pit. Equally interesting is your statement that “A home is rarely a profitable purchase”. Would you please share your perspective on home ownership versus home/apartment rental. I’ve grown extremly weary of home maintenance, but am a victim of the almost universal belief that long-term rental is financially wasteful. I’ve done online calculator comparisons, as expected they indicate home ownership as the better long-term. I’d appreciate any opinion you have on condominium ownership as well. Thanks!
If you add up ALL costs, not just the ones Realtors want you to then it’s a money pit. When you rent, you don’t pay for the property’s taxes, remodeling, repairs, etc, you just pay rent. If the rent gets too high, you always have the option to leave. If the apartment complex starts to become run down, you can leave. When you own a home, you fix it, maintain it, decorate it, improve it, insure it, update it etc., and usually put more into it than it is worth. It’s also harder to leave or sell if things go bad or if the neighborhood declines. When I determine costs, I look at ALL costs related to the house. If you’re looking for an investment from home ownership, own a rental property. You get a monthly check, you don’t over improve it because you’re not living there, and everything is based on costs and returns. You can’t have a profitable investment if you’re emotionally attached to it.
Renting? I love renting. If anything happens you don’t like, you don’t renew the lease. You get lots of amenities, and if you suddenly get a job in another part of town, you can move there when the lease expires. It’s great living close to work. I lived in an apartment until I was in my 30’s and didn’t buy a house until I got married. Let me rephrase that. I never bought a house to live in until I got married. I owned rental properties, but I never lived in them. I love rental properties too. They’re profitable each year and they have great tax benefits.
Condominiums? Never tempted to live in one. It’s like apartment living with home ownership expenses and responsibilities. My fear with condos is that you’re at the mercy of the condo association. I’ve seen HUGE assessments paid by condo owners to fix problems related to years of neglect. These assessments come with little notice and some repairs can cost millions like roofing or foundation. I’d never own a condo or a home in an HOA for the purpose of renting because assessments and fees could go up and kill profits. However I currently live in an HOA and prefer HOAs as a residence. The rules keep the property standards up. Sure there are some pains too, but it all depends on the HOA rules that you MUST read before buying. Personally, between an apartment and condo, I like the freedom to flee if things get bad.
Buy a home if you’re willing to live in it for a long time so you can enjoy the improvements you make to the house long enough to justify the price paid for the improvements. If you’re wanting to save money, rent. Everything is a fixed cost and there are no surprises. That makes budgeting easy and predictable. If you want to buy a home as an investment then buy a home when prices hit a 10 year low, maintain it but don’t do too many improvements, then sell when the prices climb to a 10 year high and move into a rental until the market goes back down to a 10 yr low. Any profits made from the sale should be put back into the next home, but make sure the home you buy is the same price as the one you sold. This way you can eventually work towards owning a home free and clear, mortgage free. After that, take all profits from future purchases and either use them to upgrade to a larger house, using cash only, no loans, or put it into investments like stocks, bonds, mutual funds, etc. That’s how you buy a home to live in as an investment.
Perhaps the perception that houses always go up in value is due to inflation. Is todays $200k home actually yesterdays $150k home adjusted for inflation?
I think it’s just a way to justify doing something foolish. People usually justify paying more for a house than they wanted to by saying “it’s an investment.” It’s like saying, “how harmful could eating the 8th doughnut be?” To say that anyone can buy a house at anytime, at market price and expect a profit is just misleading and stupid. What’s worse, its what home buyers want to hear. They’re just looking for an excuse to buy the home of their dreams even if it costs more. But hey, if it’s going to make me money in the long run then let’s go for it. If it were true that houses always appreciate in value then there would come a time that Donald Trump, Warren Buffet and Mark Zuckerberg would have to become roommates to afford the house payment on a small 3 bedroom house while the rest of us could only afford to live in our cars. I’m actually glad that houses can go down in value. I don’t want to live in my car.
The reason the banks don’t get the increase in value is rather simple. The banks made a decision to loan you the money for the house based on the appraised value of the house. The borrower didn’t make up the appraisal. The banks should have had a pretty strong incentive to make sure that the appraisal was not inflated, but from what I’ve heard from those in the RE industry, is that the appraisals were inflated, the banks knew it and turned a blind eye to it. In any event, the banks were the ones lending the money, so they should have protected themselves by making sure that the appraised values were accurate. I’m not going to shed a tear for the banks.
Then, we could get into the whole bail out thing and about how the banks were bailed out and then didn’t do anything to help anybody. The way it should have worked is, hey bank, you help X get current on his/her mortgage and we will give you some money to help that – unfortunately, Congress just decided to let the wolves guard the sheep.
Actually the reason banks don’t get the increase in value is because the loan was made to you based on your ability and willingness to pay the note. The house is just used as security for the loan to act as a remedy for non-payment. House value is only considered for the purpose of collateral.
If you have other collateral, they’ll loan you as much money to spend on a house as you want. Banks don’t care about what you’re buying unless it’s to be used as collateral. That’s why they don’t get the increase in value. However it’s also the same reason you shouldn’t expect them to take a decrease either.
The problem wasn’t inaccurate appraisals. Appraisals are based on comparable sales. Since sale prices were going through the roof and selling for higher and higher prices each time, home values linked to comparable sales went up too. Likewise, the reverse happened during the decline.
Concerning the bailout, I completely agree. The failing banks should have been allowed to go bust. The government should have stayed out of it. I also think the first-time homebuyer credit was a waste of money too. The government should also get rid of Fannie Mae and Freddie Mac too. I approve of government’s involvement in VA loans for veterans as a perk for our military, but that’s about it. They should stick to regulating.
As for my word, hmm, I can’t exactly eat my word, I can’t exactly retire on my word, I can’t exactly use my word to pay my student loans back – on the other hand, if the banks hadn’t flooded the market with foreclosures and I still had equity in my real property, then, hey, I could have used that to buy food, I could have used that for retirement, I could have used that to pay my student loans back. See the difference there?
Hopefully after reading my responses and agreeing with them you will “eat your words.”
Sorry, couldn’t resist.
However, you may reconsider if you convert “your word” into a numeric value, a task FICO is more than happy to do for you. Walking away, filing bankruptcy and other similar tactics of breaking your word are reflected in a lower FICO score, making it harder to get future loans, lines of credit or credit cards with low interest.
I’ve enjoyed your comments and I thank you for your comments in Really Rotten Realty.
The point here is that there are a ton of people like this and the banks know it. They will borrow money if the banks will lend it. The banks will lend it because the CEO’s make huge bonus when they grow huge by making loans like this. The CEO’s just hope the crash doesn’t happen on their watch. But now they don’t care when it happens because they will just get a bailout and get the bonus anyway.Something is seriously wrong here. The bad banks should go out of business next time.
If you’re stupid enough to make such a risky loan, there are more than enough people ready to accept it. I hate to break it to you, but banks are businesses designed to make a profit. I think you should redirect a lot of the blame on Congress’ lowering of the loan qualification standards and all the discrimination lawyers waiting on the sidelines to pounce on any bank whether deserved or not. The banks were given a crappy situation and they were smart enough to make a profit off of it with derivatives. If the old loan standards of 20% down payment were still in effect, the housing bubble wouldn’t have happened. To me the ultimate fault belongs with the homeowner buying a house he/she can’t afford.
I do agree that we shouldn’t bail out any business, homeowner or country. People should suffer the consequences of their actions.
“Banks are not in the real estate speculation business.”
They’re not? Really? And you write a real estate blog?
Correct! Banks are not in the real estate speculation business, they are in the people speculation business. If they were real estate speculators they wouldn’t waste their time loaning us money, they’d be buying and selling houses, taking the risks and reaping all the rewards. They certainly don’t need our help for that.
And yes, I write a real estate blog because I’m a Realtor, not a banker. I’m in the real estate business, not the savings and loan business.
Ethically I agree with your viewpoint, but as the American economy increasingly shows us…ethics has nothing to do with capitalism. Americans would do well to model their financial decisions in the manner of the Almighty Citizen—the Corporation. If this was a business decision, minimizing losses would be applauded, unfortunately since individuals aren’t accorded similar privileges nor protections of corporations, the consumer is expected to absorb the loss.
Whom to blame for this mess, everyone involved…politicians, bankers, brokers, and consumers. Aside from politicians attempts to minimizing housing loan discrimination, I wonder to what degree the financial industry lobbied to manipulate the 20% down payment standard (regulation?). Regardless, banks obviously embraced this seemingly profitable opportunity, and as you’ve posted elsewhere, are now walking away from foreclosed properties themselves. Oh, how unethical indeed.
The National Association of Realtors (NAR) should strenuously discourage, even prohibit, Realtors from describing real estate purchases as investments…it’s unethical and technically illegal. While Realtors are in a position to speculate as to rising values, since they’re not licensed financial advisors, nor brokers, and however unlikely, they open themselves to potential legal consequences for unlicensed investment advice in the event a buyer is dissatisfied. Like the saying goes, it’s never happened before, but I’d hate to be the first.
It’s not unethical for Realtors to call home ownership an investment because, like homes, investments go up and down in value. Not even licensed financial advisers can predict what the market will do in the future and they have the small print disclaimers to prove it. But I do think that the people who say houses never go down in value are unethical liars.
I agree that certain limitations should be maintained to control capitalism in certain areas like the Glass-Steagall Act. Experts track the beginning of the subprime mortgage failure to Clinton’s repeal of the Glass-Steagall Act. This act forced banks to keep commercial banking separate from investing activities and once it was repealed, the field was wide open. Subprime mortgage derivatives could not have existed under that law. However I credit Congressman Barney Frank as being the father of the Housing Bubble. He forced lenders, Fannie Mae and Freddie Mac to make housing affordable for everyone, whether they really could afford it or not. Part of the bank’s liberal lending policy was dictated from the government and banks were forced into compliance. You want to know who pushed for the 20% downpayment? That would be Barney. He didn’t do it for corporate payola, he did it for votes. Poor homeowners would be thankful for his efforts and reward him with votes.
Capitalism in It’s Purest Form
Capitalism in the purest of forms is a wonderful thing. You are free to achieve but you are also free to fail. Those who take the most risks deserve the greatest rewards. While I agree that regulations like Glass-Steagall should be placed on certain capitalistic activities I think those limits should be minimal. Where Capitalism gets messed up is when it is controlled or governed by anti-Capitalistic measures to achieve political results or Socialist equalization. Lowering loan standards is anti-Capitalistic, bailouts are anti-Capitalistic, over-regulation to the point of harming business is anti-Capitalistic, etc. Both businesses and people should be allowed to fail and suffer the consequences. If they do something stupid, we should let them suffer the results of their actions.
I see your point and I see Suze’s point. But, lets throw a ringer into it. I bought a Condo in DC in a small 15 unit building. We all know the market tanked. I have done all the right things. I have rented my unit out, I’ve paid my condo fees– yet…. Four people have simply ‘walked away’, four others have stopped paying their condo fees, and two are severely behind (and most likely walking away). That leaves 5 of us keeping the whole association afloat. If one more person stops paying their condo fee, we won’t have enough income to cover the bills (water, sewer, electric are paid by the fees). Are you saying I should ride the Titanic to the bottom?
You’re missing my main point.
Let’s use Suze’s theory in other situations:
1. You get married to this incredible swimsuit model and together you share 5 wonderful years. She gets fat and is diagnosed with cancer. You dump her for a thinner, younger, cancer-free wife.
2. You ask your dad for a loan to buy some stock. You believe that investing in solar energy companies will make you rich. Unfortunately you picked Solendra. One year later, the company closes it’s doors and the stock becomes worthless. Rather than take the loss, you decide to not pay your dad the money he loaned you.
3. You want to go to college so you can earn a degree and get a great job. You get a student loan, go to college, graduate and discover that your lifestyle of drinking and non-studying hasn’t brought you the job you think you so richly deserve. While working at the local 7-Eleven, you decide to stop paying your student loan because you didn’t get your dream job.
4. You get an auto loan and become the proud owner of a 2006 Audi A3. You drive it off the lot and think life is good. And life is good until you wrap it around a tree. You didn’t have time to insure it but who cares. It’s not your problem. You walk into your local bank, toss the keys on the desk and show them on Google Maps how to get to the tree their new car is wrapped around.
5. You get a loan to buy a condo, the real estate market crashes and your condo is worth less now than you owe on it. Now that it’s a poor investment, you decide to dump it on the bank so you can make a more profitable home purchase.
Do you think any of these examples are the correct action? If you follow the Suze Orman school of thought, they all are.
I’m not saying you should go down with the ship, but I don’t think you should start tossing small children out of the lifeboat to save yourself. Do everything you can to get both you and your bank out of the mess. That’s the correct option. It may end badly or it may not, but it’s your responsibility to try.
1. Comparing cancer to a mortgage? OK, what if that once hot thin model has a $5,000,000 life insurance policy and you are the beneficiary? Wouldn’t it be in your best financial interest to stick it out until she dies? Of course you would; now it’s just a good investment.
2. If you are going to lend someone money, shouldn’t you be prepared not to get it back and have to write it off? Should you not, from your own financial standpoint, never lend money you can’t afford to lose?
3. You should know that student loans are almost never forgiven, even in bankruptcy. They can one day take what you owe out of your social security check.
4. A car loan is both recourse and triggers cancellation of debt tax consequences. If you can afford an Audi, surely you have assets or income that can be attached.
5. Banks dump poor investments all the time. Banks make strategic decisions in their best interests all the time. Mortgages, credit card applications and personal loans are denied all the time. It’s just business.
In short, your 5 examples aren’tvery good. Surely you can do better.
1. Most definitely. Mourning the loss of a loved one is one thing. Mourning the loss of a loved one from your newly purchased beach house on an exotic beach is quite another.
2. Yes. Never loan what you can’t afford to lose and always expect to get screwed if you’re loaning to a relative.
3. You’re right, I may have to rethink that one. Good thing student loans aren’t forgiven. If you could bankrupt to avoid paying them, they’d hand out bankruptcy kits at graduation when they handed you the diploma.
4. Car loans have become easy to get and I’ve never had to add extra security to the loan. Nothing screams overpriced like a car that can’t appraise for the sales price.
5. Yes, banks repackage and sell-off bad investments all the time. Why shouldn’t they do things in their best interest and the interest of their stockholders. Sadly mortgages, credit card apps and personal loans aren’t denied enough. The easing of credit allowed for consumers to make foolish decisions in buying things they couldn’t afford.
Would be interested in hearing your examples. I’ll try to do better.
We’re upside-down with our mortgage and miss one payment due to medical reason. We would like to re-fi but no one will help us. Not even the government or Obama! What if we miss another payment, then ( I heard) some might help. Is this true? We love this house and would like to live the rest of our lives here. We are both in our mid-fifties. Any advise would be greatly appreciated. Thanks
I’m sorry you’re in this situation. Unfortunately, I don’t think this is the proper type of format to get advice. You need someone to sit down with you and look at the numbers to see what’s possible. Personally, if I were in your situation, I may consider either selling the house to get rid of this mess, or selling as much stuff as possible to raise money, or not paying other bills to keep a roof over your head. Either way, I’d try to raise as much money as possible and cut my lifestyle down to almost bare existence to free up as much cash as possible to get back in good graces with the bank. However all of this general info is useless because I really don’t know what your financial situation is nor should it be discussed in this forum.
One thing’s for sure. The fix is going to involve hard choice and steadfast dedication to the path chosen. I wish you the best of luck but I think this discussion should be had with an accountant or financial counselor.
I hope things go well and you find a solution.