I was listening to radio interviews with some of the “occupy our homes” movement players. We all know foreclosures are an emotive subject and we’ve heard of the bank horror stories that, despite their best PR efforts to say otherwise, have a failed mortgage refinancing program. This is a subject within itself made even more complicated as most banks no longer own their original customer mortgages. We the public own much of this worthless debt via our pension plans and mutual funds.
No one considers that had the property market remained steady, it still would have imploded because the millions of mortgagors at the end of the their three and five year ARMs, would not be in a financial position to make their new monthly capital plus interest mortgage payments. While the arguments of fairness rage on, out of all the endless debates and foreclosure arguments, I’ve yet to hear one person actually say: “You know what? It’s really my fault that I’m being foreclosed on. My greatly exaggerated stated income allowed me to buy the home of my dreams at a monthly payment that I knew was not sustainable for the next 30 years”
When a business files for bankruptcy, the bank appoints a receiver and whatever physical assets the business had, these will be sold for cents on the dollar at auction. Mortgagors are millions of small business owners who did not make a 15 or 30 year financial plan and as a result, their home buying business has failed. Therefore the predictable outcome is their foreclosure and bankruptcy with the bank being the home auctioneer.
When millions signed their mortgage contracts it’s expected they will abide by its terms and conditions. If you miss 3 months on your car payments you know its going to be repossessed. Just because home owning events have not turned out favourably, why should millions of homeowners who have missed months of mortgage payments and are now facing foreclosure, be granted any special payment mortgage exemptions or debt forgiveness?
Millions of home owners who did not get on the “liar loan” band wagon, are in neighborhoods saturated with new short-term home owner residents. So should these millions of homeowners who have played by the rules and are still sucking up the pain of making mortgages payments on their devalued homes, because after 16 years they are too far invested to get out of it, also be given the opportunity to refinance or have mortgage debt forgiveness? After all it’s not these remaining millions of home owners fault their home values were decimated by the millions of financially irresponsible new home owners, who have either walked away or been evicted and left these once thriving neighborhoods covered in debt pollution.
As a real estate agent I often deal with upside down home owners, some live in a $400k home on a $40k income and others purchased 4 condos on $30k income….was this ever financially realistic? Of course not which is why these home owners are being evicted. At the height of the market I was approved for an $800k loan on a $120k of stated income that included $50k of expenses, but I did not rush out and buy 6 condos.
Before the supporters of the “I’m sorry because I knowingly signed my mortgage application based on my highly exaggerated stated income” occupy-our-homes cause get back up on their socialist soap boxes, let’s remember those neighbors, who purchased homes before the bubble and got slammed by a category 5 liar loan mortgage hurricane called FORECLOSURE. They are now left unaided picking up the pieces of their devalued home values and 401k plans that are now saturated with trillions of dollars of worthless bundled mortgage bonds. Recovery of both these investments for millions of people that it is going to be too long and too late. Especially for many of the 10,000 baby boomers retiring each day for the next 19 years.
I am tired of the self-inflicted woe-is-me mortgage debt victim attitude and seeing people live in their homes not pay their mortgage for 1 to 2 years, who just wait to be evicted. Yet the family across the street stays quiet, diligently abiding to the terms and conditions of its mortgage.
Whatever next for the lets occupy something movement? Well if they really want to support a worthwhile cause full of social injustices, whose outcomes are often deadly and financially impact more people than those in foreclosure, here is an idea: – Occupy hospital beds because in America today one family goes bankrupt every 90 seconds due to medical costs it can’t afford to pay!
No matter what the arguments and emotions are on what the banks should not have done, those who regulate them knowingly allowed the system to hyper inflate the housing market which replaced the Dot.com bubble investment insanity. Greed and power litter the corporate world and financial markets and someone else, normally the tax payer has to pick up their rubbish. Meanwhile the only homeowner legal fact that remains is: “Did you make your mortgage payment this month?” And we all know the answer to that question.
Bottom line on the foreclosure debacle is this: – “Did you make your payments on time and have you been a good mortgagor? If you haven’t made your payments, then you’re in default. As no one forced you take on the loan then you must face the consequences of your actions”