Foreclosure

OK - this isn't supposed to be a 'political' blog...but there remain some things I need to get off my chest so hang in there while I let loose the other really big thing that's on my mind. Well, there's 'Octo Mom' - the mother of the octuplets who also has six other children...but I've decided to take the high road on that story and just remain mute. There's so much I want to say about that situation - she's ill-equipped (in my opinion) to adequately care for that many children....her mother is clearly a bitter, angry woman (which might explain why this fairly young lady is so desperate to find love by giving birth to so many children).....but enough on that. I wish them well and hope they have a wonderful life. The 8 of them are certainly miracles and there must be a reason...so I'm not going to dedicate a full post to that.

And I will acknowledge that we FINALLY have a state budget - perhaps my post did it. Yeah, right. But it was nice to see a comment from Mr. Organized Crime (Hi!) and nice to know someone out there is reading this besides me. So, the Legislature did their jobs and voted and we have a budget...not sure of all the specific impacts to our district but I have to say it's better (in some ways) than what we expected. More flexibility items that will definitely help district get through these hard times. Still bad. But better than it could have been. So that's good.

No, what has me completely pissed off this evening is our new President's proposal to bail out people to avoid foreclosures. I support the intent behind that plan - but I do not support the bailing out. It pisses me off.

We are an average upper middle class family. We are blessed with good, stable jobs (knock on wood) that pay well - and for that, we work our asses off. Seriously. We do not have 'easy, low-stress' jobs. We work really hard to provide for our kids...and we pay all our bills on time every month. Mortgage, insurance, property taxes, and everything else related to sheltering, caring and feeding four humans, one canine, two felines and a bird (sorry - I don't remember her species classification. I could look it up but I'm too tired).

Our home and our retirement accounts WERE our greatest assets. They are all - ALL - now devalued by at least 50% of where they were this time a year ago. That hurts. A lot. We could probably sell our house now for what we owe on it, technically - and we're glad for that. We had hundreds of thousands of equity a couple years ago - and we don't anymore. And we're OK with that - we owe about what the house is worth and so we'd be 'even' if we had to sell. Which we're not. But we could. We're still paying our mortgage - and we certainly don't consider ourselves in need of being bailed out. We have assets. We are doing OK. Making ends meet. Saving. Paying all our bills, in full, every month. Without fail. We are blessed - and we know it.

But here's a story for you - I just heard this recently from a friend at work. She has friends who are facing foreclosure. And they are praying the proposed bail out will 'save' them. But the reason these people need to be bailed out is because they borrowed up to the hilt of their appraised value at every opportunity. They owe $600K on a house now worth half that. And they owe close to $50K in credit card debt - which is debt they RAN UP again and again after refinancing. Each time they refinanced, they paid off credit card debt and then charged it up again. They now can't afford their mortgage - it's adjusted several times and their income doesn't support their payment. But the problem isn't that they lost a job...their problem is: they are living way above their means. And they have been for a really long time. Every time they borrowed against the value of their home, they 'lived' on that money. Spending on 'things' - things they didn't need and really couldn't afford.

And now, they want us - families like us - to bail them out. To have tax payers pay for their over-spending and bad judgment. Note: if you take on an adjustable rate mortgage, it may very well ADJUST (that's why it's called ADJUSTABLE). Now those loans are great for folks who need lower payments at first and will then be able to qualify for a refi before the adjustment period. And granted, some folks are in a pickle because the housing market tanked and now they can't refinance - because their house isn't worth enough to get a refi approved. Hey, we've been there....read back to our 'condo' years...10 years in a condo with two little boys because the builder filed bankruptcy a month after we bought it...we owed way more than we could get an appraisal for and we stayed - month after month, year after year. We made our payments and plugged away - we didn't walk away, though we sure thought about it. We stayed. And we were careful and frugal and saved and got the heck out as soon as we could.

I have sympathy for a dear friend of ours who lost her husband and really was a victim of 'predatory lending'. She got into a really bad loan - and she was pushed to take it. And she's close to losing her home because of it. But she's staying and she's trying to work it out. SHE is an example of someone I will happily help bail out. She lives very frugally, is doing everything she can to make ends meet (including working three jobs). She just had a bad lending agent feed her a load of crap - and now she's in trouble...

But the other people - the ones who owe close to $700K? No way. Get the hell out of the house you couldn't afford to begin with and learn to live within your means. If you can't pay for something the day you're buying it, don't buy it. You are in this mess because you use your house as a checkbook. It isn't. It's a house. Walk away, be foreclosed, take the hit on your credit score and move on. Rent. Stop shopping. Cut up your credit cards. You clearly are unable (and/or unwilling) to stop spending money you don't have to spend.

And I do not want our government, for which we are all paying, to bail you out. No way. No. Just no.

I don't know how the plan will be rolled out. I haven't read much about it (though I plan to) and I'm sure hopeful that our widowed friend will be helped and the flaky couple living off the value of their now de-valued home aren't.

But what I want to know is: what will be the benefit for all of us who have been and will continue to pay their mortgage? What do we get for being careful? For reading the fine print? For not buying a home we couldn't afford? For living within our means? Do I think the lending institutions were stupid to make loans that required no documentation of 'proof of income' (for example)? Yes, they were. But honestly, the people taking those loans had to realize that they were on the edge of not being able to afford those homes from the get-go. Homes are expensive! Not just the structure - not just paying the mortgage. There's insurance and utilities and maintenance. Surely they woke up a few months into their new home ownership experience and realized 'wow, we really aren't bringing enough home to cover our bills'. Surely they knew....

So what do all of us out there paying our mortgages, living in houses that are (also, like homes heading into foreclosure) seriously devalued. What's in it for us? How about some kind of tax credit - to acknowledge that we've been doing the right thing month after month. Year after year.

I know they say if they don't bail out people, the housing market will tank further. But honestly, I don't care. I really don't. I mean, I don't want that to happen - but we all know we're not at the 'bottom' yet. There's more to come. So just let it happen. People who never should have been home owners to begin with will return to the rental market. People who can afford houses will have many good values to choose from. Starter homes will be abundant - and that will be a good thing. Find well-qualified applicants and return to the days of yore when buying a house meant something. When having a good credit score was worth something.

Think about it - what will all these bail outs mean to credit scores? They'll become meaningless. Our stellar credit score won't mean a thing - or will we get bonus points for paying every month while our neighbor doesn't? Wait - forget that. Bonus points are meaningless to us - we already have a pretty high score (just stating fact, not intended to be boastful). It can't get much higher. So what will we get for being responsible and paying our mortgage on time each month?

I'm still completely thrilled with our President and believe he will do what needs to be done. But I wonder....I just can't wrap my head around bailing out irresponsible people. So I sure hope they figure out a way to be careful about who they're bailing out. Some stories out there are just that - stories. People who used the boom in the housing market to create cash flow - and now don't have enough cash to support those actions. I don't want to bail them out....I want them to start over, as they should.

I told J. I was writing about the bail out plan and he said 'well, supposedly there is criteria - you should read about the plan before you post'. And my response to that is: it's my blog...and I can rant if I want to. (and the song 'It's My Party' keeps running through my head.....).