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Vic Smith

On Thu, 19 Feb 2009 13:07:16 -0800 (PST), wrote:

On Feb 19, 2:20Â*pm, Vic Smith wrote:

What I haven't heard any of the "talking heads" mention about the
mortgage problem mitigation is whether those who refi-ed their home to
buy a boat or auto qualify.

Those who refi-ed to pull money out of their so-called equity should
not qualify. Â*They were irresponsible and should live with that.
Same with owners of more than one home.

--Vic-

While I loosly agree with your points, you're worrying about a small
fraction of the people in trouble.

Someone who has enough equity to have an equity line of credit and
uses it to buy a boat or car has been in the house for a long time, or
had a large down payment when they bought the house. They have a
sizable investment in the house, and are typically responsible enough,
and tied to the house enough, to not walk away or get in that far over
their heads.

The problem is with the people that got a mortgage for 100% of what
their house was worth when bought, and/or signed up for payments that
they simply can't make. They have no real equity built up, and since
they have no personal investment in the house (down payment), they
feel they have no reason to keep making payments on something that is
no longer worth what they mortgaged.

I struggled for a while to understand why so many people were walking
away from houses. I finally realized they aren't losing anything but
their credit rating, which probably wasn't so great to begin with.

It's hard to get a handle on it. I read about a guy named Frank
Torres who "barricaded" himself in his house for a while in protest of
it being foreclosed.
You can look him up. I don't remember all the details, but he bought
the house in California in 2002 and paid $180k. He refied twice and
when he lost the house he owed $284k. Those numbers might not be
exact, but they're close.
I don't want to bail this guy out. You've probably heard that many
people did this kind of thing as house values appreciated in the
bubble. There's been talk for years about people using their homes as
a bank, buying boats and cars with refi's..
On the other hand I've seen a woman on TV that put down 30k on a 200k
house but not being savvy got in over her head because she was sold
an ARM with an outrageous rate adjustment.
Then you got your flippers.
Then you got responsible people on the edge because they lost their
job.
It's just the biggest damn mess you can imagine.

--Vic