Just As I Thought

Who is at fault? The lender or the borrower?

I don’t understand.
ABC News just ran a story about a couple who are tearfully struggling to pay their mortgage and have had to take steps like canceling their phone service and borrowing money from their kids.
Their mortgage has gone from 9% to 14%. Their current monthly mortgage payment is $2,015. Their combined income is $80,000 a year.
What?

The phone’s been turned off; Mike’s truck has been repossessed. They fill up $10 at a time.

“I can’t even afford to get gas so I can go to work, make money, pay the bills,” he said.

The Walkers are so afraid of losing their home and uprooting their three sons that they pay the mortgage first even when it cuts into grocery money.

“We had the electric company come in here to shut off our electricity,” Susan cried. “It’s so embarrassing.”

By my calculation, they’re probably taking home $5000 a month, leaving $3000 a month after they pay their “high” mortgage. What the hell is going on here? Couldn’t ABC find a family who are in real trouble? This is not the example I’d use if I wanted to point out that things are bad for ordinary people. They sometimes borrow money from their sons, who live with them. I can only assume that they aren’t asked to pay rent despite at least one of them being 19. What in the hell are they spending all that money on?
If I made $80,000, not only would I be able to pay my $3900 a month mortgage on a tiny bungalow, but I’d also likely never have my electricity turned off for non-payment.
Without going into specifics about my financial situation, let’s just say that I make less than half what they make. My mortgage is nearly twice what theirs is. I’ve never missed a mortgage payment in more than 2 years, I’ve never had my electricity turned off, borrowed money from a relative, nor had to turn off my phone.
So, I have to wonder: is the problem with the mortgage, or with the financial responsibility of the borrower?

3 comments

  • Hey, Gene,

    I’ll bet you dimes to donuts that the remaining $3,000 goes into utilities, gas for their big fuel-sucking SUV’s, and credit card payments. How do I know this? Because we too have credit card debt and are paying it off like gangbusters so we don’t have this onus over our heads any more. We have a low mortgage with a fixed rate. As a first time home buyer in 2003, I had enough foresight to NOT fall for any ARM offers. And it’s a good thing, as now I’m unemployed and on unemployment. My husband is paying most of the bills. I’m covering our mortgage and credit card bills. And we don’t go out to eat. We don’t go to the movies. We don’t do much of anything. But that’s the price we pay at this point because of previous crappy spending habits. We corrected our mistakes by not using credit any more. Our credit cards are no more. Dave’s car will be paid off in July. And by that time I’ll have 50% equity in my house. Due to Dave Ramsey and sacrifice, we’ve retired $24,000 in debt in the last 1-1/2 years.

    The people you wrote about made some bad decisions and are paying for them now. They’d better suck it up and stop whining, in my opinion.

  • Oh, I just read the article from the link you provided. These people made a huge mistake and allowed their lender to con them into what everyone wants: to own a home. This couple put NO MONEY DOWN on their mortgage. Sorry- I think that’s pretty stupid. If they had just explored their options a bit more, they might have been able to borrow money from a bank, credit union or other source, just to put at least 10% down on a home. They also could have withstood the lender’s spiel and insisted on a fixed interest rate. I pretty much think the people who bought the house are the ones in error.

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