Why are banks and the government to blame ...

Every home I have bought in my life required at least 20% down or else I had to get expensive PMI, Principle Mortgate Insurance.

As a result, anyone such as me, walking away from a home would have lost their 20 % and I think that was an incentive to tough it out and try to maintain the home.

Since many people bought a home with little or nothing down, they had nothing invested in the home except for their past payments, repairs etc. which I view as similar to rent in a way. It is a cost to live somewhere. I am not saying that this is not a horrible think losing a home that had no down payment it is, but it is different than losing a home with a 20 % down payment IMHO.

So walking away was easy, plus when people realized they were not on the hook for the difference between the mortgage and the auction price realized, it was even more incentive to walk away.

Example: Mortgage of 100 K. House gets foreclosed, goes to auction and nets 60K. One would think the owners would still be on the hook for the 40K lost by the bank, but the banks did not go after the additional 40 in most cases. I view that as a bail out by the banks of the owners, but everyone is still blaming the banks.

I think the banks should go after the difference and then people could say how nasty the banks can be once they see the difference.

Any bank who did not recoup its entire investment in the home loan, effectually bailed someone out, but no one is refering to that.

The banks should push back a bit on this issue perhaps.

I have no sympathy for any of those who made the asinine decision to purchase a home they could not afford. They can look elsewhere for someone else to bail them out - I, and others like me, owe them nothing. They "bought" their home, now they can live and pay for it.

Many people know more about the kardashians and Lindsay lohan than they know about personal finance. Congress, Fannie, Freddie, banks, real estate agents, contractors and consumers all made contributions to the bubble and when the market ran out of buyers it all came down.

I might be the only one in this discussion who has actually lost a home to foreclosure. I didn't "walk away". I got tossed out July 2010. Literally. After the deed was bought at auction, it took me a little time to find a new (much smaller) place to live. I ran out of time and space to move all of my stuff, so the local sheriff emptied the remaining contents (that his crew thought had value) from my home onto the front yard, gave me about 20 minutes to go through the property to find other stuff that had personal value that they left, locked me out, then told me I had 24 hours to take anything else I wanted to keep from the front yard. My neighbors and anyone driving by also could freely take anything they wanted from my front yard when I wasn't there. That was the most traumatic experience I've ever gone through. More than a year later, daily I still remember stuff that was piled in the yard that I'd still like to have, as well as stuff that I was locked out from retrieving after the sheriff's crew went through the building.

From 2009-2010, my personal income dropped by more than 50%, and I could no longer afford the mortgage payments on the home I had lived in for 22 years. I don't blame the bank, even though I had paid them more than the original loan. They aren't in business to break even or make tiny profits over a long period of time. I can only blame the economy, something over which I have absolutely no control.

Ken2V you,my friend,make an excellent point.That point is that Congress has been derelict in the duties to the american people for a long time. There has always been corrupt politicians,and those who would sell there soul for one vote.Only in the last twenty or so years,it has gotten much worse.
To oversimply,I think that most politicians will comprimise their ideals,go against there own better judgement, for one thing. A VOTE.
Your right on in noting that when times get tough, that is finally when people wake up and see that everything is FUBAR.
Have I lost some faith in the system we have...to an extent,yes. But I still wouldn't want to live anywhere else.

This story demonstrates why I had a problem with the original statement.
Very sorry to hear your story Bob. So many people in similar situations - who didn't deserve it.
And of course, some who did.

Tonyrob

You cant legislate personal responsibility. You can legislate corporate responsibility.

If a con man rips off a sucker I dont feel bad for the sucker....but I dont condone the con either. You cant stop suckers being from being naive. You can stop con-men from giving people loans they cant afford....and you can stop them from selling those junk loans as AAA grade investments while simultaneouly shorting them in their own corporate accounts.

And in the wake of this giant disaster it is also fair to demand the executives of those cons pay the same tax rates as the suckers they foreclosed on.

BobOrme,

This is horrible and I understand the trauma of seeing all your stuff on the lawn. I live in Florida and see it often down here.

My story is after letting tenants slide on their rent for 14 months I finally had to evict them.

I gave them 30 days notice well over the amount required by law in NY. They were able to take what they could and then trashed my apartment, left it filthy with roaches and it cost me 45 K to get it repaired plus the 11 K in back rent I will never see. It is on the market now.

Many people asked me why did I wait so long to evict... well they said they would come up with the money and there was an infant involved living there so I let them slide.

So I blame myself as well as them for the problem, but in the end I was accused of being heartless blah blah, blah so I could not get out of this with any feelings of trying to have done the right thing. My conscience is clear, but it was a lose lose situation.

The point here is that some people do or at least try to do the right thing and some do not.

If sounds like you tried to do the right thing and just could not cover the payments and you should not be lumped into the same category as those who never could handle what they bought.

I also think all the banks etc also should not be lumped together as bad guys, each situation is unique and I just worry about people saying all the banks and landlords are bad and protesting against the banks en masse. Like it was noted it takes two to tango even if it is down the wrong path.

I hope all is a bit better for you now.

V

Ken;

As usual you nail it.

Much is about personal responsibility. So many feel they are exempt from the consequences of their own actions or even that their actions do have consequences! The natural inclination is to blame everyone except ourselves. While others might contribute it ultimately is our responsibility.

Time and time again the old saw has been and remains that a home is NOT an investment but a place to live. Yet many were luired by the thoughts of easy money. They thought the ride would never end. Property values continued to go up so they must continue to go up forever. Why worry about an interest only loan or a loan with a big balloon payment in 5 years. Heck, will buy the house now, turn it over in 3 or 4 years and reap the profit!

As to cons it is hard to con an honest or well informed person. If a deal seems to good to be true it usually is. Those who are victims of MOST (not all) cons were greedy looking to make a quick buck even when common sense should have told them there was no free lunch.

People seem to be naive. They tend to look only at best case not worst. Not sure what process many use when deciding to buy a home but among those has to be what happens if property values decrease? What happens if I lose my job? What happens if I can't unload the home in 5 years and need to make that large payment?

You are 100% correct. But does that make it OK to be a con-man? Shouldn't we punish the con-men and make it so they cant legally do those same cons again in the future?