Finance Questions

Archive for August, 2007

Question: Why can no one manage to pay their mortgage anymore!?

What's up with all these foreclosures. I realize ARMs have a SMALL impact on the increased amount, but come on, HOW are people in Cali affording these 500k plus homes. I own two houses in Western NY with a combined value of ~200k I own as investment. I have not even bought a house for myself to live in yet, I still rent! In my opinion if you took out a jumbo mortgage on a house you couldn't afford, then heloced even more money when the value went up, you didnt plan for the value to fall, how can we blame the banks for people that make way too much money (some how), being too damn stupid to understand their finances or mortgage?
on a side note, what do jobs pay out in Cali where these high foreclosures are....the only people in this area with 500k houses own pretty sucessful businesses...

Answer: Well what you are talking about is a small percentage of people. I agree, don't bite off more than you an chew. BTW-- I don't ever recall house values go down the way they have in recent history. I'll never buy another house again for that reason.

Now, what you fail to realize is that a lot, and I mean a lot of people have lost their jobs due to this housing and gas crisis. These people can no longer pay their mortgages either.
Even if they had a savings, eventually the savings will get spent. There are not any jobs to replace the ones they lost and McDonald's or Wal-mart will NOT pay a mortgage.

It is not all a matter of stupidity, it is a mater of economics and our country is really failing in that department.

*All businesses are being affected with our country's economic crisis, even the ones in California.

Edit--Well sweetxgrace, glad to hear you haven't lost your job....yet.. That really helps to pay the mortgage doesn't it...I hope you remain lucky in that respect. Many other people have not had such luck.

The Mortgage Meltdown, The Economy, and Public Policy (Part 1)