Financial ruin = nervous breakdown

[punkin]

You NAILED it! That is what has caused the MAJORITY of the issue. Not all, because yes, some people did overextend themselves (which the help of the financial institution that allowed them to do it)


The people who believe 'people bought more house than they can afford' will continue to believe that. It is simply easier to process.

OP - I would like to apologize - I didn't not mean to turn your thread into a debate. The fact is there are many (millions in fact) GOOD, hard working, honest people in this country who have found themselves exactly where you are. You will recover and be better for it.

I agree with you, but I am not in the "blame the banks" camp either. There was a lot of blame to go all around in the housing bubble.

 

[Candlz]

There was a lot of blame to go all around in the housing bubble.

and THAT I agree with too.

 

[ccgirl]

I'm huge on self accountability. Just because someone says you can do something doesn't mean you should. I was a realtor. I would show people houses that were way above what they should be paying. I was amazed at the well educated people that said well the bank is giving me an adjustable rate and I can afford the lower rate. When I asked what would happen when the rate increased they all said, "I don't care, I'll deal with it then...I would rather live in this big new house than a smaller older house". Sorry, but that is the fault of the homepurchaser not the banks. Don't blame others for bad choices. I know far too many people that purchased homes they shouldn't have. I also know those that, to no fault of their own, purchased homes they could afford at one time but could no longer afford.

As for the OP - her situation is different than that. She did not get in over her head. She had bad things happen in succcession that made it impossible to keep this mortgage. Op - I was in the same boat as you, believe it or not. I was laid off, the primary earner and benefit carrier with 2 children. We were charging groceries, gas, utilities. The difference was, we bought when it was good. The price we would pay in rent was very similar to our rent so we decided to keep the house. It has all worked out for us. Both my DH and myself have great jobs, great benefits, and we have a rainy day fund. It wasn't easy. I pray that things will turn around for you.

I just want to point out a statement an earlier poster said that I think is great...You have reached a point where you must realize that your credit can handle the hit it will take, but not your health.

Best of luck to you.

 

[Candlz]

Of course they do. No one is ever going to hold the ceo's of banks and financial institutions accountable for the "made" up derivatives and ponzi schemes. Its so much easier to believe that Lehman brothers went out of business because a janitor brought a million dollar house.
This way they can pat themselves on the back and tell you how they brought a 100 square foot house.

 

[Candlz]

I'm huge on self accountability. Just because someone says you can do something doesn't mean you should. I was a realtor. I would show people houses that were way above what they should be paying. I was amazed at the well educated people that said well the bank is giving me an adjustable rate and I can afford the lower rate. When I asked what would happen when the rate increased they all said, "I don't care, I'll deal with it then...I would rather live in this big new house than a smaller older house". Sorry, but that is the fault of the homepurchaser not the banks. Don't blame others for bad choices. I know far too many people that purchased homes they shouldn't have. I also know those that, to no fault of their own, purchased homes they could afford at one time but could no longer afford.

I need to break this down a little.

Many of these well educated people were told, when talking to the bank, that when the rate went up - they would be able to refinance. The rate went up and they were not, in fact, able to refinance. So now they were stuck. Can't afford to pay for it, can't afford to sell it (due to being underwater)... Whose fault is that? The borrower - yes. The lender - yes. There is lots of blame to go around - for all the good it does.

The fact is - the banks were irresponsible in their lending and then they were irresponsible in their paper keeping (or should I not go there?).

The banks have gotten BILLIONS in their bail outs while paying zero in taxes and posting profits of billions of dollars a month. While we nit pick that Joe-the-Subway worker was greedy.

It baffles me.

 

[crisi]

The fact is - the banks were irresponsible in their lending and then they were irresponsible in their paper keeping (or should I not go there?).

Plenty of blame to go around.

Everyone was making the same bet. Real Estate was going to continue to increase in value. For homeowners, that meant that you could likely refinance yourself out of trouble. For banks that meant that if the homeowner couldn't refinance themselves out of trouble, they foreclosed on a house that was worth more than what the balance on the mortgage was. With this mindset, banks AND homeowners didn't care - they - either end of the deal - were going to be able to sell the house for more than anyone had paper out for.

Realistically, consumers should have never taken out loans that they couldn't afford. BUT, banks should have never taken the risk to lend to them. Banks were basically lending money to "that no good brother in law of yours" - now, if any of us loaned money to our high risk brother in law and then came here griping that we weren't getting paid back - plenty of people would point out "well, gee, what did you expect."

 

[ccgirl]

I need to break this down a little.

Many of these well educated people were told, when talking to the bank, that when the rate went up - they would be able to refinance. The rate went up and they were not, in fact, able to refinance. So now they were stuck. Can't afford to pay for it, can't afford to sell it (due to being underwater)... Whose fault is that? The borrower - yes. The lender - yes. There is lots of blame to go around - for all the good it does.

The fact is - the banks were irresponsible in their lending and then they were irresponsible in their paper keeping (or should I not go there?).

The banks have gotten BILLIONS in their bail outs while paying zero in taxes and posting profits of billions of dollars a month. While we nit pick that Joe-the-Subway worker was greedy.

It baffles me.

In my experience, they were told that when the introductory rate period would be over their loan would go up to x% (always higher than the introductory rate). People didn't want to think of that x rate, they just wanted to live in the here and now and get the bigger house. My BiL and SiL were perfect examples. I was trying to show them smaller homes that they could afford. They wanted to look at the bigger homes and eat nothing but mac and cheese instead. WHy? To keep up with the Jones's. It's just like credit card debt. Cards will give you a certain limit. If you are late, they will raise the limit. Just because you have the credit available does not mean you should max out the credit card. If you max out all of your credit cards and can no longer afford to pay, is that the fault of the credit card companies or your own fault? I say it's your own fault. Everyone knows what they can handle to pay. Some people don't want to admit to it.

Know, if you are responsibly using your credit and all of a sudden a layoff or medical issues occur that no longer make the payments possible that is a different story. That is to no fault of anyone. Same is true of the OP. It is to no fault of her own they are in this position.

 

[Candlz]

Crisi - I agree.

I will say I remember getting call after call to refinance before the bubble. I mean like 4 - 5 calls a day from banks offering less than 1% interest, cash in my hand now for remodeling, vacations, anything I wanted and other amazing things. The temptation was there (We could spend a week at the Contemporary!)

But the reality of how irresponsible we would be to take a loan to finance a vacation etc was not lost on me.

I can see how people fell for it though. When you hear enough times that you can do something, you start to believe it (esp when you want to believe it). Also - when you see your friends/family and neighbors doing it - it makes it that much more appealing (gotta keep up with them Jones') It is human nature, even though it's wrong.

And yes, I know it is wrong.

 

[richmond282]

OP, I'm sure this is avery stressful and heart-rending decision. I just wanted to give you a word of encouragement and reiterate what some have already said. You have to take care of YOU first- food, clothing, utilities, rent, transportation.

I know I was raised to always pay my debt and not borrow what I couldn't pay back... yadda yadda. And I think that is good advice, but in your case, life temporarily got the better of you. It's OK. It doesn't make you a bad person. It doesn't mean life is going to pass you by or you won't ever be able to own another home or have children. It's difficult to see that sometimes when we're in the midst of dark times, though.

Money isn't everything. Credit scores aren't everything (no matter what some PP's say.) You have your health, your husband, a job, a roof over your head. Say a prayer, perform a ritual, meditate... do something to let it go, and then let it go. You have a lawyer, let him or her handle it.

As for your BFF, if she really was a true friend she would understand the situation she put you in and either offer to help with expenses or let it go.

 

[eliza61]

I agree with you, but I am not in the "blame the banks" camp either. There was a lot of blame to go all around in the housing bubble.

The dis is like the "7 degrees of Kevin Bacon" game. No matter what the topic eventually you will be told that:

1. Every one here seems to "know" some one who is on welfare while living in a mansion and going to wdw every year thus causing all the problems of the world.

2. Every one here knows some one who brought a tiger woods like "mansion" while they were a janitor and are of course causing the entire economic collaspe and had they all been as financially responsible as I am, the country wouldn't be in this fix.

no matter what the topic or conversation all post which eventually lead to these 2 analysis.

 

[eyor44]

Many of these well educated people were told, when talking to the bank, that when the rate went up - they would be able to refinance. The rate went up and they were not, in fact, able to refinance. So now they were stuck. Can't afford to pay for it, can't afford to sell it (due to being underwater)... Whose fault is that? The borrower - yes. The lender - yes. There is lots of blame to go around - for all the good it does.

The fact is - the banks were irresponsible in their lending and then they were irresponsible in their paper keeping (or should I not go there?).

The banks have gotten BILLIONS in their bail outs while paying zero in taxes and posting profits of billions of dollars a month. While we nit pick that Joe-the-Subway worker was greedy.

It baffles me.

Yes, this happened to us in a way. We refinanced to an adjustable rate. We were told we would be able to lock in the initial rate after 12 months or we could see what happened and then would have the option of locking in every other year. When we tried to lock in our rate, seems there was a loophole we were not told about. Fast forward two years (while the rate kept going up) and again we were denied being able to lock in. Fortunately, we were able refinance again to a fixed rate. Expensive lesson, but well learned.

 

[crisi]

Crisi - I agree.

I will say I remember getting call after call to refinance before the bubble. I mean like 4 - 5 calls a day from banks offering less than 1% interest, cash in my hand now for remodeling, vacations, anything I wanted and other amazing things. The temptation was there (We could spend a week at the Contemporary!)

But the reality of how irresponsible we would be to take a loan to finance a vacation etc was not lost on me.

I can see how people fell for it though. When you hear enough times that you can do something, you start to believe it (esp when you want to believe it). Also - when you see your friends/family and neighbors doing it - it makes it that much more appealing (gotta keep up with them Jones') It is human nature, even though it's wrong.

And yes, I know it is wrong.

The shame here is that people like the OP who (I'm assuming) didn't engage in irresponsible behavior, but simply needed to sell a house in order to move for a job AFTER the crash. They presumably bought a house they could afford. They decided to move for a job - which in this economy is sometimes a necessity - now they have a house in a place they no longer live that isn't worth what they owe on it.

This is why "some" of "us" get so nervous over individual irresponsibility. None of us live in a bubble.

 

[HayGan]

Belle - I am sorry - this statement is just wrong. The 'people bought houses they couldn't afford' is a load of junk. If you doubt it than walk into a car dealership and try to get a load for a car that is way out of your price range. They won't approve you for the loan. The banks went after as many people as they could and talked them into these loans that they (the banks) knew full well were garbage. I remember getting call after call after call from companies offering to refinance us at less that 1% interest. We were lucky - not smart - but lucky because we didn't fall for it. I remember the temptation so well though.

What so many people aren't aware of is the fact that so many of the loans were written under stated income guidelines. So many people "qualified" for loans that they really couldn't afford based upon stated income. They could just say what they made and if they had a good enough credit score, they could qualify for the amount even though their actual income didn't qualify. Yes - it did happen and it happened A LOT!!!!

There were so many different programs created to keep fueling the mortgage industry (and the economy!) that it was all bound to fall apart at some point. Everyone is to blame! The banks for their greed and qualifying those who really didn't qualify. The unscrupulous mortgage brokers who lied, cheated and tricked so many customers into getting something that they never should have had in the first place. And yes - the consumer! No one should enter into an agreement for a mortgage without fully understanding what they are doing and if they do - they are to blame for their ignorance. Yes - there were people qualifying for far more house than they could ever afford. They knew it but didn't want to believe it. Not every bank, mortgage broker and consumer was guilty of it - but many of them were! Now they all want to point the finger of blame at someone else rather than owning up to their part in the mess.

I feel bad for those who have lost the jobs and their homes due to no fault of their own. So many people were doing the right thing and lost their jobs due to economic downfall our country is suffering through. Many are stuck in homes that were over-inflated in price but now are underwater because everyone else in their area is going through the same thing. We are all victims of the greed that artificially inflated our economy for so many years. Unfortunately, we are all also paying the price for it (and will continue to do so for years to come!)

 

[ccgirl]

What so many people aren't aware of is the fact that so many of the loans were written under stated income guidelines. So many people "qualified" for loans that they really couldn't afford based upon stated income. They could just say what they made and if they had a good enough credit score, they could qualify for the amount even though their actual income didn't qualify. Yes - it did happen and it happened A LOT!!!!

There were so many different programs created to keep fueling the mortgage industry (and the economy!) that it was all bound to fall apart at some point. Everyone is to blame! The banks for their greed and qualifying those who really didn't qualify. The unscrupulous mortgage brokers who lied, cheated and tricked so many customers into getting something that they never should have had in the first place. And yes - the consumer! No one should enter into an agreement for a mortgage without fully understanding what they are doing and if they do - they are to blame for their ignorance. Yes - there were people qualifying for far more house than they could ever afford. They knew it but didn't want to believe it. Not every bank, mortgage broker and consumer was guilty of it - but many of them were! Now they all want to point the finger of blame at someone else rather than owning up to their part in the mess.

I feel bad for those who have lost the jobs and their homes due to no fault of their own. So many people were doing the right thing and lost their jobs due to economic downfall our country is suffering through. Many are stuck in homes that were over-inflated in price but now are underwater because everyone else in their area is going through the same thing. We are all victims of the greed that artificially inflated our economy for so many years. Unfortunately, we are all also paying the price for it (and will continue to do so for years to come!)

Agree with this post 100%.

OP, as others have pointed out, your credit will recover. Take care of your health now.

 

[Muushka]

My sister, who I consider one of the smartest people I know, was going through a divorce.
Her son, at the time, was 28 and single and did not have a wonderful job.
He wanted to buy their house.

The house was valued at $369,000 at the time.

My sister told me about their plan. I practically yelled into the phone WHAT????? What are you thinking????

She said that the bank said that he could afford the house. Unbelievable.

Fortunately, the plan fell through. That was when I realized that people were losing their minds during that period of time.

 

[Candlz]

Agree with this post 100%.

OP, as others have pointed out, your credit will recover. Take care of your health now.

ccgirl - I agree with that post 100% also - LOL

 

[Grumpy's Gal]

sending pixie dust Take care of your self.

 

[ccgirl]

I just wanted to clarify something. When the bank gives a loan they aren't necessarily saying someone can afford the house, they are saying they qualify for the loan to purchase the house. Only the homebuyer knows if they can truly afford it. The bank said I would qualify for a 500K loan but I knew I could only afford a 250K loan. I still wanted plenty of spending money, vacation money, retirement etc. I wanted to be able to pay for more than just the minimums on my credit cards.

Again, this was not the case of the OP. She fell on hard times after she got a home she could afford at the time.

OP - I would advise you to just pay for the things in your "new" life and leave your "old" life behind. Best of luck to you!

 

[crisi]

sending pixie dust Take care of your self.

I read that as "snorting pixie dust....."

 

[Rafiki31]

I agree with this.

I don't care what the bank tells you, you were given a brain for a reason, use it.

25 years ago banks told you you could afford more than you really could also but people tended to use their brains more and weren't greedy about getting into houses they truly couldn't afford. We were told we were crazy for not buying more, but we stuck with what we could afford assuming there would be bumps in the road. Very few did this recently.

Buying a house is a gamble and many people gambled at stakes they truly couldn't afford and now that they lost want sympathy BUT when they were making exorbitant gains on these houses then it was great and look how smart we are, you are dumb for not getting into the game.

Sorry sometimes you loose when you gamble. Everyone else shouldn't have to pay for you playing.

I was not trying to gamble and make you pay. I did not buy more than we could afford. We were approved for much higher than we actually purchased and we did all the math. We had an emergency fund, but after the layoff it took longer than planned to find another job and we had not planned on having to relocate to both find work. We had planned to live in that house forever, and I still wish we could.