This about sums it up from your link:
Quote:
| I was foolish to sign up for the sketchy loan in the first place. Now I was trying to make the best of a bad situation. |
Never get a home loan with no money down. If you can't afford the worst of consequences, then don't do it. And don't expect Uncle Sam to bail you out if you did do it.
My former boss, who never learned a positive thing about personal finance, which is why he is my "former" since he would never listen to me about finance, and he lost his company.........another story..........anyway.........
He and his wife had a credit score of 455 which is about as low as you can go. They started a business during the boom days of housing construction, and they made some good money, but everytime the business was about to get out of debt, he would spend more and put it in the red again. At one time he was grossing 1.1 million, but he still couldn't pay his bills.
So he and wife want to buy a house. They had lots of debt from old charge accts. that they never paid, that he blamed on a prior marriage. But they got some loan officer to loan them the full price on a house - $450K @ 11% interest only. I believe it was split into two loans so it wouldn't fall into the jumbo rate. But that isn't good enough so he borrows another $30K from his business to put in a swimming pool. The business didn't have $30K so it went on his $100K line of credit, which he only got from the bank because I had been paying the bills on time and had made sure there were no late payments. By the way, during this time they had insisted on a salary for the two of them of $24K per month before deductions. I had also got them out of an IRS mess from past years.
So, new construction dries up, business is down. They are still pulling down $24K from a business that isn't making that much because they now have personal bills to cover and a house payment of over $4K per month! Obviously I leave because they don't have money to keep me. But last I knew they were getting a divorce. They had been evicted from their office for non payment of rent. Their new vehicles had been repossessed. They lost the house to foreclosure. (It recently resold for $260K per Zillow). Per court records for lawsuits, they have a $115K judgment to the bank for their $100K credit line that they maxed and includes interest and atty fees. They owe another $10K+ to a portrait studio (those must be some pictures!). They owe a credit bureau about $3300.
Do I feel sorry for them? Heck no!!! Nor do I feel sorry for anyone who got a no money down loan and saw their home value drop while their payments increased. Frankly it ticks me off that Obama stepped in to get banks to restructure the loans that they still can't afford. Let all these homes hit the market in foreclosures, and then we would know the true value of these houses.
The people I feel sorry for are those that bought homes at the high point in the market, and put money down and could afford to make the payments on their loans, but now own a home worth less than what they paid for it. My son is in that situation. They were hoping an increase in value would help them do some remodeling. But nope, they want to start a family, and they aren't getting any loan assistance, and they are making their payments on time, with no help from anyone.
