I saw on the Nightly news the other day how people are finding ways to “walk away” from one house while buying a new one. It’s called Buy and Bail, and here’s how it works:
You own a house that you borrowed $365,000 to buy, but in today’s market, the house is worth only $219,000 and your variable rate mortgage has ballooned to payments of $4,000 per month. You can’t afford that, so what do you do?
Apparently you go out and buy a NEW house, and letting the first one simply go into foreclosure, walking away from that responsibility as if it never happened.
How do you get a loan for a new house, when you owe on your first house and can’t afford it? Some are lying to the bank, saying they’re putting that house up for rent as income with no intention of doing so. Most simply quick-claim the house into a spouse’s name, or other family member, who will then take the credit hit when the house goes into foreclosure – ruining their credit and reputation, but keeping the guy who just bailed and bought the new house free and clear.
These are the people we’re bailing out. These are the people bringing down the housing industry, the banks, the country and each and every one of us who pay taxes in this country.
These are the greedy, selfish bastards who are making it nearly impossible for the rest of us (well, you, since I own my house already).
This is disgusting, people. A clearer depiction of greed I have never seen.
Do you watch those shows, House Hunters or Property Virgins, or My First House? Do you see where people have decided it’s time to buy their first home, give the agent a figure of – say – $125,000 as the MOST they can possibly afford to buy? Do you see those agents then show them a parade of homes for $185,000 and UP? Then the couples, who have fallen madly in love with one of those houses, decide that sure, okay, maybe if they forego eating, feeding their children, buying clothes for work, and sell a kidney, they could afford it.
And they BUY it! I watch them on the TV, signing those papers without a single clue what’s IN those papers, as easily as if they’ve just put a cashmere sweater on VISA (don’t’ get me started about that purchase).
Or, conversely, you see the young couple, all excited to be looking for their very first real life HOUSE to call their own – they declare to the viewers that they’re not at all picky. After all, they’re newly weds, no children planned any time soon. They’re just excited to own their first house.
Then you watch as they declare 3 bedrooms are simply not enough. And they’d like a formal dining room, thank you very much, since they’ll be having formal dinner affairs at least once a year. And they’ll be needing an office, by the way, and what’s up with that master bedroom suite not having a Jacuzzi bathtub? And OHMYGOD, do they expect us to SHARE a sink?
I have to admit, in the blackest pits of my soul where my hatred of greed and spending outside your means resides, I watch these dolts signing the papers for a mortgage that’s gonna cost them $2,195.00 per month and part of me hopes, with crossed fingers, that one of them gets laid off.
Apparently, though, what they’re doing is walking away and buying a smaller, cheaper house. Letting their credit rating sink into the abyss as if it’s no big thing, and forfeiting on bank loans they still legally owe.
I’m so disgusted, I feel the urge to open someone’s wallet and cut up their credit cards.
Wanna volunteer yours?
The Velvet Zebra 
Ah, yes. Kristin King at Biz Chicks Rule had a wonderful post about this as well. Why the hell are we bailing these people out? The burden falls equally between those accepting such stupid loans as those who are making them. Let them work it out between themselves.
The damned government is not yo’ momma.
Ay-men. I’m not terribly sympathetic with people who stretch right to the edge of what they can afford in order to a buy house, or some other damn silly thing. Then someone is laid off, or breaks a leg, or a kid comes along, or what-have-you, and bam…you’re seriously in trouble.
I WOULD be sympathetic if they admitted stupidity and then started working to get out of trouble, instead of blaming the whole world for the problem and then whining to the government.
…
I ALSO have no sympathy for big companies like Fannie May and Raggedy Andy, or whatever they’re called, as they slowly collapse. Although it does scare me when the government just takes ’em over.
Sigh.
(Of course, yes, I am flat-broke-and-in-debt too, but I make no bones about how much it’s my fault. It really is. Unwise purchased, combined in rapid succession with a job change or two, and then a baby. There aren’t too many ways that a baby can NOT be my fault, yanno! I mean, ways that don’t wind up in divorce court.)
But that’s the big difference – you’re not going around blaming other people, or trying to shirk your responsibilities. I was young and in debt once, too. It’s not a crime, it’s just a struggle that – once you finally overcome – you learn from and avoid letting happen again.
What you DON’T do is walk away from your responsibilities, create more problems, then expect the government (ie: taxpayers) to bail you out !
It’s akin to being fat. If you’re overweight, it’s because you indulged too much and got a bit lazy. No one held a gun to your head and forced you to eat that greasy hamburger or bag of cookies. You chose to do it, and it’s your right to do it, and I won’t stop you from doing it. But if, by doing it, you gain a few pounds – it’s no one else’s fault. It’s not the fault of the person who sold you the burger, or invented those cookies. And there’s no quick fix or easy solution. You have to eat less, and move around more, and it’ll take as long to lose that weight as it did to put it on.
Debt is the same way. For whatever reason, you found yourself owing a lot of money and barely making ends meet. It happens, to just about everyone at some point. But it’s no one else’s fault. You’ve made bad choices, or been laid off, or had an injury or unexpected pregnancy just to name a few things. But you realize it’s no one else’s fault – so you struggle, you work, you find a way, and eventually, at some point, you’ll be out of that hole and secure, settled and solvent.
But it takes time, and work, and a lot of effort on your part. And then, when you look around one day and realize you owe no one, you’re doing okay and that long, hard road is behind you – maybe then you’ll be a nutter like me 🙂
I’m already a nutter. But I’m my OWN nutter. I can’t join you. If there are two of us, then The Conspiracy will find us. 😀
I don’t think it’s a bad thing to be young and in debt, although I admit, it bothered me much less before I had a child in the house (what? parental instincts developing? Weird). I think you have to get steeped in debt and pull yourself out before you can have the good sense not to do it again. It’s like not going to college right away, working dead end jobs for a few years, and THEN really valuing a chance at college when it comes around. You need the one, to appreciate the other.
so there’s nothing wrong with being in debt, debt-free, overweight, thin, college’d, or working stiff’d. The difference is all responsibility, and taking some. If you foolishly bought a house and then the market collapses and you get into trouble…well, I AM sympathetic. It was just a stupid decision. The bit I’m not sympathetic with is if you bought a house WAY outside what you could afford, and then try to blame it on someone else, or run away from the problem. That’s a life equivalent of a hit-and-run accident. And you’re the one driving away. It’s against the law in car accidents, why not in life? (That would never work).
The only other thing I’m not sympathetic toward are REALLY WHINY SPOILED PEOPLE on those House Hunters shows who go on and on about how emotionally upsetting it is that their bathroom is an odd-number of square feet and also one of the tiles is slightly blacker than the others, and they really wanted a hottub. Well, sure. *I* would really like a library with a hidden door in one bookshelf that leads to my office, or to my Bat-Cave, but I’m not going to have a breakdown if I don’t get it… 🙂
Exactly, yes. *I* was horribly in debt as a young person just starting out in life – and it took me years and years to climb out, but I did it. And it’s only then, when you’ve struggled and finally broken free, that you can become such a nutter about avoiding that pitfall ever again.
It’s good life experience, to struggle and face your responsibilities on your own, and overcome them, regardless of how many years it takes.
Don’t get me started on the Spoiled Brat Contingency! Gawd! The bathroom in my humble abode is so small (and there’s only the one) you have to step out to change your mind. From the toilet, you can reach everything (which comes in handy if you’re out of toilet paper, by the way). My tub is 4′ long, and I’m 5’7″.
But it’s all I need. It’s adorable, comfortable, and affordable. And it’s 80 years old and crammed full of charm!
Well. I’m old and in debt, but I knew how much house I could afford. It’s not that hard to figure out. If a financial idiot like me can figure out all I can afford is $130,000 home, anyone should be able to.
You buy what you can afford. You don’t buy what you can afford, then that’s your business, until I have to bail you out. Then it’s my business and I get to come over and pop you in the mouth.
I honestly didn’t know people could walk away from their responsibility. I’ve never really had much sympathy for people who buy more than they can afford anyway, but to learn they then can just walk away, while getting a better, more expensive home, and suffering no consequences whatsoever.
Well, I’m definately going to pop them in the mouth.
It is just sick. Plain ol’ sick. Some of us suffer through because we have a high sense of personal responsibility and people like this come through and just do whatever they want. Then the government is going to kiss their boo-boos all better at the expense of the rest of us who are struggling and doing without because we do things the right way.
Must be nice to leech off of everyone else.
Oh, and I forgot to mention that I am currently working hard to get myself out of my debt mess. I just paid off one of those credit card beasts and am working toward the others. It’s a good learning experience for sure.
Good, Tori! 😀 That’s got to be an exhilarating feeling.
It’s why I’m fairly open about being astonishingly in debt. Yes, it’s a lot of credit cards. It’s a lot of stuff we bought that we couldn’t afford. Some out of stupidity. Some managable, until a baby came along and made all the money difficult (s’not his fault, though).
I’m cheerfully willing to admit my own stupidity, partially because I’m keenly aware that it was MY OWN stupidity, you know? And it’s the same reason that, despite the huge pile of stress that being on the raggedy edge causes you (especially when there’s a kid) I will hardly go for bankruptcy. Or welfare. Or any of that stuff. It’s my mess. Why don’t I just sort it out myself? So I will, eventually.
Even more than the people who overbuy and then shirk responsibility, I have a bigger problem with the companies. I mean, you practically have to actively resist someone giving you huge amounts of money in terms of loans. You wake up one morning and find out that someone refinanced your car and your house in the night and now you’ve got loans to pay off in now! new! low! monthly payments. The banks will give you money. Mortgage your house for nothing very much. And so forth.
So it’s the culture, and the corporations, of Do-As-You-Please that I get excessively grumpy with. Sometimes, the people really just don’t know better. The companies do.
That bit in the middle reminded me of my MIL, Pete. She called up my husband asking him to borrow money so she could pay the filing fee for bankruptcy. She told him that she’d give me the paycheck from one of her jobs every week. Think you might just save up the money yourself then? Or maybe work out payment arrangements for the items in collections? Or perhaps stop buying things you know you can’t afford?
My husband told her no and then got his esop money from his old job and went off and bought a boat.
Companies do make it easy for people to make stupid decisions and they know that people will. But people like my MIL will just keep doing it. Over and over again.
We did get government aid when I was pregnant with Piper. Though not for lack of trying to take care of it ourselves. We both worked our butts off and had the most expensive, most comprehensive health insurance plan available to us at work, and we were still short. Once I stopped working, we qualified for aid, as recommended to us by the hospital. Which turned into a good thing because Piper ended up being the $35,000 baby with her NICU stay. Not that I’m thrilled the government paid for my kid, but I do feel we put forth good effort in our attempts to take care of it ourselves.
On the surface, I’d love to say that companies make it too easy and should shoulder some of the blame – but ultimately, they don’t.
They might make it tempting, and seemingly easy, to purchase something you don’t really need while making it seem like you really really would be foolish to pass up this amazing, low-cost special deal. But, when it’s all said and done, they didn’t force you to buy it. They didn’t hold a gun to your head and say “Sign here, and fork over 25% interest.”
They tempt you (and by “you” I’m being completely general) but it’s YOU who bites the apple.
Every time I walk into a store in the mall, I’m greeted at the door by “Would you like to apply for–” I stop, look that poor minimum wage person in the eyes and say “Do you sell cars or homes here?” to which they blink, and I add “That’s what credit is for. A house, or automobile. Not a sweater.”
They bombard you, constantly. They send you crap in the mail, they try to convince you as you’re pulling out some cash that if only you’d take a moment to sign up for their credit card, they could save you 10% on today’s purchase! OMG! You’re a fool to say no.
Call me a fool, then.
Again – I’m saying this from the position I had to scrape, claw and drag my way to. I was once deeply in debt, by virtue of youth, low paying starter jobs, and foolish purchases. But I climbed out. It took years, and I never once shirked my financial debt – I paid every dime.
If you’re in debt, you know it, you know how and why it happened, and you’re working as hard as you can to get OUT without blaming someone else, or walking away from what is ultimately your responsibility – you’re not the person I’m preaching at. You’re me, not that many years ago. And you WILL make it. One day, you’ll be debt free, and able to turn look at that clerk who thinks you’re an idiot not to spend another $15.00 so that she can save you a whopping 10% on today’s purchase of new shoes, and say: “Credit cards are a corporate conspiracy to enslave the population in debt.”
Then smile as you put your change in your pocket and walk out of the store with those new shoes, knowing that poor clerk is still trying to process what you’ve just said.
Actually, and perhaps ironically in a way I can’t quite articulate…we ARE beginning to pull ourselves out successfully. The bit that helped enormously is going to school. It doesn’t seem to make sense, that going back to university would help get read of financial debt but there you go.
…
I was a bit unclear, in that we also had some form of government aide when my wife was pregnant with our son. I tend to think of that as a different case. While I wouldn’t be comfortable putting ME on welfare, I won’t hesitate when it comes to the kid. Just because *I’m* broke doesn’t mean he should get the short end of the stick, especially at such a young age. It was government programs like the WIC program which meant that for most of the time, he ate rather better than I do.
So when it comes to kids, bring on the government moneys. And why not. If we don’t take it, they’ll just allocate it to something far more dippy, later… 🙂