Tuesday, April 1, 2008

The Unsympathetic Me Part II

Hmmmm, where was I?

Oh, yes, the banks are losing their shorts. They have loaned money, in good faith, to people and are now stuck with houses and no money. They are not paying off the money they borrowed and no one is buying the houses they have foreclosed on.

Lower the prices, you losers.

My parents are not homeowners at this time. They sold the house I grew up in 1991 because my father had lost his job and was working for minimum wage and my mom's hours had been cut to almost nothing and they were afraid they would not be able to make the payments for much longer. They've played gypsy since then, working in a lot of places that provide housing (their current gig is on-site managers of a storage property). This has worked well for them, allowing them to stuff money in the bank like crazy. Now, they are nearing retirment and would like to find a nice house to buy. While, like me, they have no burning desire to own, they are afraid that a catastrophic illness will wipe out their savings. It would be safe if invested in a home.

My father surfs the 'net for leads on houses for sale in his price range. There aren't a lot, because while they have been saving, real estate prices have lost their mind. So, he looks at foreclosures. And, he has put bids in on several. Bids that always get rejected, because he is only willing to pay what he can afford. But here is the kicker. It is easy to see how much a person borrowed against their home and when. Sometimes you can find out how much they owed when the foreclosure took place. So my dad bids what was owing on the house + $5000. He gets a good price, the bank is paid off. Everyone wins.

The banks don't seem to be too concerned about getting paid off. They want a nice, healthy profit. Recently there was a foreclosure that $86,000 was owed on. Dad bid $92,000. The bank wants $135,000. Is the house worth $135,000? A house is only worth what someone is willing to pay and it is still on the market. The bank is losing money every day.

And I feel no sympathy for them.

Maybe I am wrong. Maybe I am just cold and unfeeling. Maybe I would feel differently if it were me. But I do believe that we, as a country, have lost any ability to take care of our responsibilites. It is always someone else's fault. And until we start taking responsibility for our own actions, everyone loses.


Shel said...

Amen, sister! I would like to know when the federal government is going to reward those of us who bought houses we could afford and made the monthly payments?

On a different note, my grandfather and great-grandfathers were bankers. My grandfather predicted this mess a few years ago when he saw signs that offered mortgages with "no money down" and "borrow up to 125%" of the cost of your house. He always said people should have enough invested in their house as a down payment that they'd hate to lose it (the house). If only people were as sensible as he is.

fallenmonk said...

I think you are perfectly reasonable. The situation has gotten out of hand and people were not forced to commit to their home by investing a meaningful down payment. With my income I could afford a much larger home...easily twice the house I have now. I elected to refinance 12 years ago to a 15 year fixed rate so that the house would be paid for when I was approaching retirement.
I just recently nagged my daughter and son in law to refinance to a fixed rate loan. The first loan was a ARM with a balloon and all that fancy stuff. They would have been in trouble now even though both have jobs.

LeftLeaningLady said...

shel, aren't you getting a whopping $600 'gift' from the government this year?

And your grandfather is obviously a smart man. I knew the housing bubble would burst eventually, but, because it never occurred to me to use my house like an ATM, I didn't realize it was going to bring the whole economy to a standstill.

LeftLeaningLady said...

FM, you may be right about the downpayment, although, as a veteran, I didn't have one. I actually rolled my VA fee into the loan, because otherwise it would have been impossible for me. And I have noticed people who DID put downpayments in are now expecting to make double that when they sell the house. 'Well, I paid $220,000 with a $20,000 down payment, so I can't sell for less than $240,000 or I will be losing money.' I don't get it.

And I am really glad that your daughter was not caught in this nightmare. See? I am certain she is not a stupid person, but she got caught up in an ARM with a balloon payment. It is an easy way to lose a house.

Now that I am married, together we could afford a much higher house payment. But we probably couldn't afford that trip to Biloxi in a month, or the new flat panel TV in time for football season. Or, we could if we lived on credit cards, which neither of us are willing to do.