I found this story from Marketplace over on The Consumerist, I understand the desperation but reading the story just made me ill.
I know that the resetting of interest rates has been traumatic for people and as a result have put many in some pretty severe dire straights…
Without even looking at the fact that prices have slumped and that many are now upside down on their mortgages - something that I don’t think many would have expected, or at least would have expected that prices would have dropped as much as they have - the fact that interest rates were going to rise was something people people should have seen coming.
Lets face it interest rates are volatile, they always are. ARMs are fine options if you go in to them with the understanding (and expectation) that rates at some point will almost definately rise. It was always a huge fear of mine when we had an adjustable rate loan (other than a charge card) that rates were going to rise and I was very happy that we re-financed those loans long before rates went up. The extra money we were paying with a fixed rate over an adjustable rate was worth the piece of mind that we weren’t going to get hit with a rate adjustment.
We were also very careful when we bought our house to make sure that we would be able to always afford our payments it was why we bought the house we did at the price we did. When we were negotiating for our house the sellers agent tried to get us to agree to raising our offer because our loan was approved for almost 60k more than the listed price of the house. We made it clear that just because we were approved for that loan amount didn’t mean we wanted to or felt we could afford to make the payments on a loan for that amount.
But when I read stories where people have an attitude like these folks outside of Stockton it makes me ill. I feel for the fact that they can’t make their house payments, I truly do. But this attitude that they took of - well we stopped paying our mortgage and now we have savings and can go out and spend money again - bothers me. The fact is these folks are going to be evicted. Fine, the courts and such are so backlogged that they’re going to get a few more months in their home before they get thrown out, but the fact is they’re going to loose their home. The money that they’re spending now probably isn’t really their money since the owe it to the bank, and even if the bank doesn’t collect all of it they’re going to need money to find a new place to live…
Maybe the family used a poor choice of words when they said it feels “great” to not be paying their mortgage - but the way it comes across just sickens me.
