My best friend's brother (I've known him for 35 years) bought a house about 4 years ago for $545k. It's worth maybe $400k now. He got one of those interest only ARMs that can't be re-financed for 5 years without penalty and has a big balloon payment after 10.
He was making about $20 an hour at the time and the only was he could make the $3200 a month payment was to rent out both of the other two bedrooms AND rent out the haphazardly converted garage.
Since then he lost his job (his fault. he had an attitude and threatened to quit over something, they said there's the door). He got another job making less which he also lost because he thinks he's too good to work for that low of an amount. He hasn't found another job yet and isn't looking that hard because he still has $5k left from the $100k inheritance he got from his grandfather's death. He spent a good portion of that on a large fishing boat and a ford diesel truck to pull it. It's helped him stay just ahead of his payments so far but has pissed the rest away so all that will soon end.
At the time he was buying this house his friends all said "DON'T DO IT!" "YOU CAN'T AFFORD IT!"
We said it loud. We said it often. We explained why he shouldn't do it, why he couldn't afford it, why he would lose the house and all the bad stuff that will come from it. I personally told him that he better not come knocking on my door asking to sleep on my couch or asking me to bail him out when he loses the house. his response? "I DON'T CARE, I'M BUYING IT!"
Now there is no doubt he will lose that house. Soon. He even admits it. There is no doubt he will be flat broke without a place to live. did I mention he has a wife and a kid?
What pisses me off is that we (taxpayers) are going to have to cover his a$$ and clean up his mess. We'll have to pay for his stupidity. We'll have to pay for his irresponsibility.
We'll have to pay to clean up his mess because he's too lazy, to dumb, and doesn't care about the difference between right and wrong. He should be the one to be punished, not everyone else.
If I were in charge (and you're glad I'm not) I'd pass a law that said you could not walk away from a mortgage unless you filed BK, and I would make it much harder and much more painful to file BK.
I'd say that if you agreed to pay back a loan (any loan), then by God you were going to pay it back. If you couldn't afford it I'd make it a 40 year loan, or 50, or 100 but one way or the other you would have to pay it back. That would stop this mess and punish the ones who are really responsible for creating it.
No more of this ridiculous liberal BS about blaming the mortgage providers. All they did was giver the borrowers exactly what they were begging for. It's not their responsibility to babysit the consumer. They have parents for that if they are too immature to exist on their own.
Now, on the other hand: if the people running the mortgage companies were irresponsible enough to run them into the ground because of incompetency, then they need to be punished also. If you take a job running a company you darned sure better know what you are doing or don't take the job.
All those executives who work for a failed or failing company should be stripped of all personal assets. Every penny. Make them freaking homeless. There's a difference between giving consumers what they want even if it's a bad idea and running a company into the ground. Punish them with a big stick.
That would send a message, subtle as it may be
