Yet another NYT mortgage-victim story

Oh, yes, she's so extravagant. A new roof! Horrors! She wants a loan modification due to a job loss. The article's point is that the program is not reaching the people it is supposed to help. Taxpayers are spending huge bucks to save the banks from themselves, and trying to sell new new loans to generate fees rather than implementing the plan the government is paying them to implement.

Try a reading the article before posting, huh?

OK, so let's deduct $20K for the roof. That leaves $50K she borrowed and spent. On, say, a $50K income. My point is that the paper could've come up with a better example to make its point. There must be some who aren't spendthrifts.

maybe she ate the 50k

She's been eating something. While doing so it might dawn on her that when you retire and can no longer afford your house, you move. Let the bank take it, since she's already spent whatever equity she had in it. You can't keep your house *and* spend its value.

But isn't that the point? We're ALL spendthrifts; that's what this society & economy is based upon & now, horrors, people are getting hurt & how can that be, we're such good little moronic consumers.

True. I pick on Eileen only because she chose to parade her tale of folly through the NYT.

As always, public records (www.maricopa.gov) tell more than the newspaper story does. She put down less than $1K on her $77K house in 1997.

it's interesting how with more than $2k per month income and $600 mortgage with spending "thriftly", she ran up those credit card bills so high to need to refi. i'm also wondering how a $77K condo in 1997 can have a $20K roof in 2007.... was most of the money spend on the roof or some more credit card bills?????

The current mortgage crisis is largely due to financial irresponsibility of the borrowers:
In this case, why is the government or the bank's fault that this person borrowed money that she can not repay (and most likely already spent all the money on things she could not afford to begin with?)

like most of the over-leveraged borrowers in this country, they are as greedy and financial irresponsible as some of the financial institution they are accusing, if not more: they are only financially exposed because 1) they borrowed money they don't have 2) spent it all and 3) now can’t pay it back.

Putting aside macro economic impact, Morally speaking, why should other citizens of this country be responsible for her financial decision and indiscretion? I agree with NWT, it is one thing that people like Eileen looking for help because she lost her job, but it is complete different when the story is passed along by NYT as if she is a victim.

A “victim” of her indiscretions only.

if you haven't watched this yet, i'd recommend it. it's about an hour long, but well-worth the time.

Elizabeth Warren's presentation at Boalt Law School, The Coming Collapse of the Middle Class.

http://economistsview.typepad.com/economistsview/2008/04/the-coming-coll.html

"True. I pick on Eileen only because she chose to parade her tale of folly through the NYT.

As always, public records (www.maricopa.gov) tell more than the newspaper story does. She put down less than $1K on her $77K house in 1997."

Do you guys ever watch "Property Virgins" or "My First Home" on HGTV? I am repeatedly shocked by how little people in this country put down on their homes...I have seen a couple of episodes where people put down 10% or more of the purchase price, but it's mostly 5% or less, and in many cases nothing, with the closing costs being folded into the loan. Most first time homebuyers look like they are one month away from disaster.

My heart and prayers go out to the Eileen Ulery.

No sympathy for people like the one in this story. NONE. I have 3 properties located in NYC, Colorado, and Florida. All from monies I saved up and bought, and have substantial (>35% and in my Colorado condo, 56%) equity in my properties (as a result of appreciation and strong d/p). NEVER ONCE did I ever think of out a home equity loan to finance spending for a car, roof, or anything else. In fact, I accumulate substantial reserves and insurance to finance my homes, if I should become unemployed or worse, and all my extra monies go toward paying down my principal balances. If I didn't have enough liquidity to finance my closing costs, then I DON'T buy the house. For her fiscal irresponsibility, and people like her, now my tax dollars have to be offered up to her bank so that a portion of her out of control spending has to be subsidized?!? And that's the bank's fault for lending her the money?!? Isn't this sort of like drinking or casinos?!? If you can't control your gambling or drinking, then don't buy alcohol or go to Las Vegas. You can't blame the casino or the liquor shop after you've binged on your addiction and hold them responsible for enticing you to buy their product. Does anyone remember a USA where people took responsibility for their actions?!? Yes, it's something called SELF CONTROL and WILL POWER ... practice it, it's liberating, and it will once again make America the greatest and most innovative nation on the Earth.

By the by, her photo in the Times shows that she is about as responsible with food as she is with money. Do I have something against fat people too?!? All I can say is that I have a simple tip for all those people trying to lose weight - STOP EATING! And I didn't even charge you like Jenny Craig or whatever other scam diet plans are out there.

maybe when the banks engage in some self control and will power? underwriting standards changed drastically. people in the banking world couldn't figure out that it was truly stupid to give people loans at 5 times income? and having those mortgage calculators pop up on places like MSNmoney which purported to tell people how much loan they could "afford."

it looks like we'll have some "responsible" people in a world of hurt soon. i wonder if this will change the public perception of foreclosure.

http://articles.moneycentral.msn.com/Investing/CompanyFocus/coming-a-3rd-wave-of-foreclosures.aspx

I am with ManhattanKing.....when is it that an individual is not responsible for their actions? When did it become OK to not be held accountable?......When, when, when.......I eat McDonalds, I become fat, it's not my fault it is McDonalds, I get a credit card application I charge.....it's not my fault.....please it's pathetic......

aboutready - just because the product is available doesn't mean that one should engage in it to his/her detriment. I also knew about negative amortizing mortgages, or zero interest loans, but I also knew about cocaine and prostitution and cigarettes. If one is smart enough to stay away from the later, then why does one not do similarly with the former?!? Because the former is more complicated?!? Here's a thought, if you're not smart enough to understand what you're signing up for, then perhaps it's a good idea not to sign up.

Once again agree with what is stated above.......

My point is this ... and I'm definitely not stepping up for the bankers or mortgage brokers, it is about accountability, true accountability. The banks were thinking of the one group they were beholden to, their shareholders. They were accountable to their shareholders, in the short term, obviously not the long term. But that being said, people need to stand up and be accountable for their own mistakes, before asking for blanket bailouts from those of us that were responsible.

ManhattanKing: I agree with you, but while we're apportioning blame, why don't we start from the top down? From the previous administration (who lectured us that spending is our patriotic duty) to the current one, whose spendthrift ways match those of Eileen:

From http://www.nydailynews.com/opinions/2009/05/04/2009-05-04_president_obamas_mantra_in_debt_we_trust.html re the Obamas:

In April 1999, they purchased a Chicago condo and obtained a mortgage for $159,250. In May 1999, they took out a line of credit for $20,750. Then, in 2002, they refinanced the condo with a $210,000 mortgage, which means they took out about $50,000 in equity. Finally, in 2004, they took out another line of credit for $100,000 on top of the mortgage.

Tax returns for 2004 reveal $14,395 in mortgage deductions. If we assume an effective interest rate of 6%, then they owed about $240,000 on a home they purchased for about $159,250.

This means they spent perhaps $80,000 beyond their income from 1999 to 2004.

In 2003, they reported almost $24,000 in child care expenses and, in 2004, about $23,000. They also paid about $3,400 in household employment taxes each year. And as Michelle stated, they spent $10,000 a year on "extracurriculars" for the children.

From http://news.yahoo.com/s/politico/20090515/pl_politico/22580_1 re Biden:
Vice President Joe Biden may be able to use his $220,000 annual salary to start paying down as much as $465,000 in debt.

According to a disclosure statement released Friday afternoon by the White House, Biden last year carried between $165,000 and $465,000 in debt, including a line of credit he took out last year worth as much as $50,000.

In addition to the 2008 line of credit, which came from Wilmington Savings Fund and carried a 7.5 percent interest rate, Biden reported taking out a “signature note with monthly payments” and a 9.99 percent interest rate in 2007 from the U.S. Senate Federal Credit Union.

That’s on top of a 10-year home equity loan he took out in 2005 at prime that’s worth between $100,000 and $250,000 and a prime-plus-one loan he co-signed for his son in 1989 worth between $50,000 and $100,000.

do you honestly think that 80% of americans are sophisticated home buyers? really? i, for one, was always taught that banks were rather conservative, and wouldn't give me excessive loans because that was risky. people go to banks to be told what they can do. when that no longer the same as what they should do, we got situations like these. homeowners should know better, but i'm far more likely to believe that they were ignorant than the banks.

and then the banks that have engaged in such behavior are bailed out, despite their complete and utter stupidity and culpability, and we can have fun casting stones (and worse with that fat comment) at people who are losing their homes? nice.

and if banks are only accountable to their shareholders, not their clients, i'd say we've got a problem.

onTheMove: The Obama's don't count, they were doing that for YOU! He needed that money to further his political career. Now look at him, ain't we proud!

It's certainly true that the US consumer is a moron. The banks years ago said that, yes, their interest rates on credit cards were usurious but if the consumer didn't care, why should they? We're all paying the piper today for the foolish fiscal decisions that we USers have been making for years.

manhattanking,
I use to think like you and get upset over it. But I learned to live (hidden & quiet) in this socialistic society where the poor reigns and the riches get richer. Middle class familes syncs with the poor. This Pathethic gov't keeps providing ways out for the irresponsible individuals, scam corps, welfare/disability sucking familes.

Yes SUE McD for you and your son getting fat. Sue the Credit card for your irresponsible spending behaviour. YES SUE & BITCH at the mortgage companies for your Home equity loan that YOU took out to buy a car and spent the vacation you couldn't afford. Sometimes I think this country should legalize slavery for these individuals so that they can bail themselves out to serve.

She disgusts me.

I agree that there was a shared responsibility between the banks and this plump woman. I would never in a 100 years approve a loan to someone making her income given what her monthly mortgage payments were. But I feel zero sorrow for her as she used leverage to purchase the house originally and effectively took out every dime of the strong appreciation over the years to buy "things". She blames the banks but, without them, she would never have been able to purchase the house. I don't want taxpayer dollars going to her so that she continue living in a place that she cannot afford and continue to stuff her fat face. She needs to move and rent a place that is cheaper. She needs to get a job, even if it is at McDonald's.

That's good, burn her in effigy.

Burn her for the banks' lobbying to remove all the protections that were put in place during the Depression, so that they could become the "conservative" institutions that you could bank on. Burn her for our not learning from the lessons of the S&L collapses, and the attendant fraud. Burn her for getting rid of the 20% down norm, and the 30-year fixed rate norm. Burn her for Arizona State's idiot president, who was so ambitious in expanding the "New American University" in every way possible that he's had to lay off people in a field that trades of salary for stability.

As W67th likes to say "nice nice"

Another thing: the NYT probably had a hard time getting anybody to submit to this sort of public humiliation. But the obvious wig this woman's wearing implies expensive health problems that she probably was not willing to talk about.

exactly, get a job at McDonalds, she saves while she earns. You eat for free while you work right?

breakfast: 2 egg mcmuffins, 2 hash browns, small diet coke. $8
snack: super large coke $2
lunch: 2 #4 combo meals, super size $14
snack: super large coke $2
dinner: 2 #1 combo meals, super size $16

total annual savings $10,500

hey maybe that is where the $50k in debt came from, 5yrs worth of paying for this

hate to say it, but I'm getting a little sick and tired (more like just a runny nose) of the coddling the Financial industry and all the "poor" homeowners" are begging and getting.... and that includes the UAW (they were so great at getting such GREAT benefits that they literally BKed their own company = > go get theirs at 10% on the $1 from the bankrupt US Retirement Insurance Fund)....

Also sick and tired of the elected officials and all members of the fed, state, city. local gov't having pensions (not a one Bernie victim in Congress/Senate)/health benefits and perks that puts my wife's and mine to shame. The day we stop working... we getz none... but these schmozes 20 and out...

I can understand the need for the emergent heart surgery in the fall of 08, but now go out get some fresh air, stop eating at McD, get some exercise.... that means NO MORE of my TAX MONEY for out of work NYTIMES writers, this nimwit, me funding GEITNER's no taxes, this LI blue collar worker's unemployment, or "new" homeowners, the 6 months forbearance for anyone who wants a holiday from mortgage payments, UAW workers compensation, ALL OF IT. You've had 8 months to see it all COMING... get rid of the homes you can't afford, minimize, donate, get rid of the clutter and stop asking for handouts... a new car is NOT an American RIGHT, a BIG McMansion is NOT a RIGHT, living in ManHATTAN is NOT a right...

Oh yeah, you can take the payroll audit and the $13.01 that I owe you and the days and weeks it took to figure it out and shove that up your collective Gov't azzez. F'n a, my acct $600 bill to figure out there was a rounding error on my nannies payroll taxes... i've paid what, $15K this last year, plus the $1200 in accounting fees to do this and your.... this is the BIG discrepancy $13.01.... Good grief C.B.

I for one am on a mission to tell the nimwits in our gov't at 1600 Penn by sending one old rusty key with a note that'll read "I no longer wish to "own" a home in the US, if all of the recklessness (lending to people who can't pay, pensions that bankrupt your own companies, bad business judgments (Hummers) ) and mistakes of other individual citizens (their over-leveraging/over-consuming) is being "socialized" against all of us who did not do these things. Congrats on being elected Obama, you have a hot wife and cute girlz and let's see you govern for the "rest of us.""

let it out my brother: reminds me of the "manifesto", Jerry wrote in Jerry McGuire, then quit and lost everything! Stay strong pony boy!

thxs, I thinks :)

r u the asian/latin american mix guy? or am I getting you confused.. not that it matters... nice ass kicking on Ericho75 again... I KNOWZ you're reading this ERICHO....

right on, muh man, sing it, sing it, sing it

that was a mighty fine rant.

and w67th, the gov'ts spent some time looking at both our state and fed returns. seems OUR stupid ass accountant made the errors in the other direction, and not $13.01 either. the gov'ts took the time to figure out they owed us MORE money.

but do be a dear and have a look at the Elizabeth Warren video.

No sooner do I get off my soapbox than I get upstaged by a well-crafted rant!

I saw that video when aboutready posted it before, and it's truly excellent. It explains why the Beavers lived so well, and our children won't.

Me too, AR, I overpaid $5 & the Feds sent me a check. Keep it, for Gd sakes.

dwell, i got a couple thou. they could keep the $5 but i'm might glad they found my accountant's errors here. and i can't fire him, he comes with the husband's job. better than last year, though, when due to his errors i owed more.

aboutready.. it goes the other way?

dwell can you send me the $5,,, now I only owe $8.01...

alanhart... call me tomorrow... i swing left and right all the time... :)

p09 is that an "Outsiders" reference... sodapop

AR, he sounds like a nightmare.

AR, I'm a bit freaked w/ the air france thing, how 'bout you?

W67, sure I'll send it to ya, but, you'll have to swing right (or left?) & shake ya groove thang

I meant the Cleavers, not the Beavers. I didn't mean to sound dirty, as William Beaver House does.

Dwell: a lot of ppl are freaked about the AF thing. But it's still a very, VERY low probability event (unlike the collapse of the U.S. economy).

I agree with ManhattanKing, gumby and w67thstreet. First, we should address the woman's weight and sew her mouth shut so she can only drink through a straw. Then, lets kick her out of the house that she only spent $1000 on, and for good measure, I suggest breaking all of her limbs as punishment both for getting into this mess and for appearing in the New York Times.
Down with Responsibility.
Down with Irresponsibility.
Anger Anger Anger.
Streeteasy!

-our new cheer

splaken, i'm pretty sure you need a "go" before streeteasy!

dwell, i hate flying but i know all those statistics and they're on the fliers' side.

I was less focused on the woman than the fact that the bank asked for $18,000 in exchange for lowering her monthly payment by $80. Meaning 225 months to break even on that investment or nearly 19 years.

ManhattanKing, gumby and w67thstreet - good on ya. This is like a weekly story wizard run by the NYT - just a new name, new face, new town - same crock o'shite. Love Elizabeth Warren - but folks listen to her for a nano second if at all and say "nope not me..." as they are in a massive state of denial - same folks that own size 2 mirrors.

aboutready: she's pathetic, but unworthy of our sympathy because she (and all the people she represents) are NOT DISCIPLINED, which leads to financial ruin and obesity ... both are effects from the lack of discipline. Then, in the article, she blames the banks, which means that she also lacks accountability. Thus, I do not feel an ounce of sympathy for her. In order to treat this country, we need to treat the illness, and not simply bandage the symptoms. The major problem with this country is that we lack accountability, i.e., nobody says I f#@ked up and I'm going to correct it, but instead everyone goes around blaming others. By the by, you don't have to be a sophisticated home buyer to understand that if you don't pay all your interest on the principal you borrowed, it has to be paid back later, BY YOU the BORROWER. You also don't have to be sophisticated to understand that if you take money out of your home and buy a car or roof, it has to be paid back later, BY YOU the BORROWER. Are there seriously people in the American population that think that if they take out a home equity loan, it doesn't have to ever be paid back?!? On the point about relying on your banker to advise you, well they are NOT doctors or lawyers, which is why they don't carry professional malpractice insurance. Bankers are a well paid (sometimes) sales force. The bank says I have all this money on deposit from China, so I need to generate higher yields and go out and sell this money to people. So the financial wizards on Wall St. package the money and the regional bankers sell it. This is NO different than if you went into a Ferarri dealership and they took a $500k beautiful Italian sports car and packaged it so that you would only need to pay $5k for the first year and the remaining $495k in years 2-5. The point is common sense would tell you that if you couldn't afford the car to begin with, no matter how you amortized the payments, you still CAN'T afford the car. Am I missing something?!? Does this require financial sophistication?!? I think my parents taught me this when I was 10, back in '89.

Did your parents teach you that if you lost your job unexpectedly, you'd still have decades of payments, and still need a modest place to live, even a crappy condo in Mesa (if you've never been there, count your blessings -- it's a 20-year old FIAT, not a Ferrari)?

Yes, a mortgage absolutely requires financial and legal sophistication, and it's not reasonable to expect most people to have that. They trust professionals, who are licensed and can be sued for fraud and misrepresentation (which what'shername isn't doing ... she's trying to come up with a payment plan to tide her and the bank over, not sink her four months later).

Is this a Cato Institute chat room?

yes yes MK, but the HELOCs are tax deductible... that is a policy we as Americans voted for, righ? :)

on your Ferarri example if the gov't allowed the $5K monthly payments to be a "business" expense and therefore encouraged such behaviour, aren't we all to blame... just a little somethin somethin to think about...

Oh for the clueless, OUR F'N tax system seriously encourages HELOCS and over-consumption!

alanhart: you're telling me that the bank committed fraud because it allowed her to borrow a portion of her home's value?!? If that's fraud, then perhaps this country needs to file more lawsuits. And bankers are professionals?!? Are you kidding?!? They don't even need a college degree, maybe not even a high school degree to become a banker. Are you willing to trust a HS kid to tell you what you can and cannot afford?!? There are NO credentials necessary for bankers. For advice, I only trust someone that has a strong professional malpractice insurance policy and is licensed to practice.

As for what my parents taught me, they taught me fiscal prudence. Never buy more than I can afford. If I lose my job or worse, I have 12-months of liquid reserves to facilitate the orderly liquidation of my R/E assets, and something called insurance (general and umbrella policies). I bet I won't be blaming my parents or the economy or my bank. I will blame myself!

It's called keeping up with the Joneses........they have the nice car, I have to have the nice car, they go on vacation, I go on vacation, they have nice house, I have the nice house, furniture, so on, so on, so on,........the only problem is the Joneses were broke and up to eyeballs in credit card debt......but it's not your fault, clearly the Joneses made you spend all your money, take out a line of credit and max out all your credit cards.........not my fault the banks did it too me.......not my fault......not me....has to be someone else......I am not responsible..........

alanhart are you saying that someone doesn't understand that if they lost their job they still have to pay their mortgage? are you kidding? maybe we should just not have anyone responsible for anything.....drunk driving....ok you were drunk......shoot someone......hey having a bad day.......nobody ever told me that i'd have to pay back anything......please.......

I am glad that most of you shared the same view. For the ones still feel that the bank is to be blamed because it gave Eileen a loan (a 30 yr Fixed in this case) based on the underlying value of the property at the time: is this the type of value/ character you would like your children to have?

Don't mean to approach this topic from a racial perspective, but rather a cultural perspective, have you seen many Asian families facing foreclosures, I have not, and it has nothing to do with wealth or the color of skin.

NYT needs to stop printing this type of stories and suggesting moral justifications of any sort.

She was lucky when she bought that her job was as stable as it was for 10yrs+. Where she fell down was using her home equity for big purchases. If you amortize 76k at 9%, the monthly payment is 600ish. Easily affordable on her salary. If it had been me, as a single (cheapskate) woman on a small fixed salary, I would have advertised for a housemate to cut down on costs.

What was her top salary? 30k? I would not have ever bought a new car on that kind of salary in the last 10 years. I made 45k in 1997, and bought a used '91 Honda Civic for 6k. That Honda was problem-free for another 10+ years until '04 when it was sold for scrap.

No, gumby, I'm saying that someone who loses her job unexpectedly should be allowed to defer part of her mortgage payments for a period of time, without taking on any additional burden beyond the interest continuing to ring up at the existing rate, and without ridiculous processing fees. Same as for student loans.

Sooooooooo she takes out money against her house and blows the majority of it and she should be ALLOWED to defer......had she not taken out the extra in her house she would not be in the situation she is in.....had she lived within her means she would not be in the situation she is in......had she thought beyond right now saved for the future she would not be in the situation she is in.......but she didn't and now I'm paying for it.......

But have some sympathy for her......I was broke out of college had credit cards but guess what I didn't have the nice tv, vacations, clothes......I lived within my means.....she (the rest of the country) didn't.....now I pay....and I am to have sympathy........please.

the bank did not offer to alter her mortgage. Rather, the bank tried to sell her a new loan ...... as if banks are just going to offer it..........Ms. Ulery received six months of severance. She arranged a monthly $1,500 Social Security check. But when the severance ran out in October, her mortgage finally exceeded her limited means.With so many people out of work, and with her doctor counseling rest for a stress-related illness, she did not pursue another paycheck, negotiating to have her university pension begin earlier. She has been leaning on credit cards..........once again........she did not pursue another pay check.....so wtf.....everyone is saying give her a break.....she's not even looking for a job.....how the hell is any type of loan modification going to help........

Please people......this is a joke......nice article NYT.

Yes, let me take out 110% equity out of my condo and buy a car/vacation/cartier watch and drain my savings to $0. If I lose my job, the gov't has my back. WWwoohoo!

There seems to be a mentality out there that no one should be forced to leave their "home". How dare a "family" be forced from their place of residence. Photo op for the NYT. Blame the greedy bankers. In the last decade, a certain percentage of people (greater than 10% and probably 25% in California) purchased homes that they could not afford unless they received large pay raises. They either put nothing down or a very low %'age. Their only true equity in the home was dependent on housing prices continuing to skyrocket at rates well above income gains. Why, exactly, should they be treated differently than the people who lived according to their means, rented until they had enough for a sizable down payment so that their monthly income covered their mortgage and other expenses. Should the government step in and pay my rent is I lose my job? If I become sick and can't work? If that was the case, I'd upgrade to the most expensive apartment I can rent on a measly $250K/year and not worry about saving anymore. This chubby lard was not some kid who was irresponsible. She should have been saving for her retirement and have that original mortgage paid off. She is paying for her terrible spending habits.

She was hypnotized by the bank! I'm sure there's a lawyer somewhere who'll bring this theory up.

The problem is that stupid people outnumber smart people by a factor of 10 to 1. So the theory goes, if we allow all the people that got in over their heads to drown in their own mess, they stop buying pizzas, burgers, sodas, etc. (highly unlikely in her case), and we all become less prosperous. Thus, the U.S. has to spend to help stabilize people like her, so that the smart people can continue to cook up jazzy things for her to buy and bring prosperity to us all. In the end, we have to spend the money one way or the other, whether it's through supporting her through welfare, social security, or subsidizing her home, car, and roof.

Wow, I'm so glad no one on this board has ever suffered a job loss. Now if they'd just stop being total self-righteous pricks about the fact.

According to the best available knowledge she had, when she refinanced she had over $60k equity remaining. (condo "worth" $200k+, mortgage worth $144k) To anyone who did not have the financial sophistication to realize that they were in the midst of a housing bubble, this would be a reasonable cushion. This woman is an administrative assistant, not a real estate professional. Not an appraiser. Not, for the love of god, a bank, ALL OF WHOM KNEW BETTER. Or should have, anyway. It sounds as though this person made prudent real-time decisions based upon the best information she had available. She buys quilts and china and screw-top wine, not designer shoes and handbags. She has been caught up in the following macroeconomic forces: 1) popping housing bubble, 2) declining real estate values, 3) job loss.

And, she is responsible: she must have some savings, because she is current on her mortgage. Period. As sick as I am of bailing out irresponsible people, this is NOT the poster child for irresponsible behavior. Sending her into foreclosure will INCREASE the chances that us prudent taxpayers will have to bail out the banks again. Comparatively speaking, the loan mod is cheap.

Her weight, by the way, has nothing to do with the discussion, and those comments are really inappropriate. If I thought Streeteasy board posters had shame, I'd say shame on you, but I know better than that.

LOL summary of the conversation is = I refuse to help this woman get fat eating McDonalds and charging her meals to her house.

Pretty much. People on this board are capable of much more. I'm all for excoriating people for stupid decisions when appropriate; this case just does not strike me as appropriate.

Let's get something straight, SHE IS 63 YEARS OLD. Even in the best market, she would have been unemployed within 2-3 years and she would be facing the same situation that she is now.

It does not seem that she was about to sell the condo to pay off her mortgage, so the "taking money from equity" jargon just doesn't work.

Now let's look at her buying the quilts and china, forget about the wine. How much of it is now in her house to get her into this situation?

She doesn't seem to have any savings. She used her severance, social security and now had her job start her retirement pay early. With all that money coming in, she should be able to afford her mortgage (1,048 per month).

"She arranged a monthly $1,500 Social Security check."... ", negotiating to have her university pension begin earlier."

I don't see how she can say that she has no money to pay the mortgage.....

evnyc,
macroeconomic forces + her bad spending habits. Yes, she buys screwtop wines and quilts but she should not have bought a car, along with the credit card debt she had cumulated (probably vacation, goods and dining). If she was a responsible person, she should not have tap into the equity of her home. This kind of person does not have savings in her mind. If she wins 100mil lotto, she would spend it all in the next few months.

She *is* paying her mortgage. She is honoring her obligation. $452 is pretty parsimonious to cover food, health care co-pays or premiums, which will likely increase as she ages, and a modest pleasure in quilts and wine. Based on these figures, she is making substantial sacrifices to remain current. I think this should be applauded and rewarded, not publicly lambasted.

Ba, you are making assumptions about her credit card spending. Credit card debt might have been medical - she does not appear to live an extravagant life. She seems one hell of a lot more responsible than the banks. I think she was making real-time decisions based on available information. If that information was imperfect, that was - I cannot say this emphatically enough - not her fault. She is trying to do the right thing. People have been burning her in effigy here, and it is just ridiculous.

I have sympathy for those who put down a significant downpay, then it turns into neg equity due to the RE swirl, followed by loss of his/her job.

She was not managing her money as well as she should have. But, yes, she has been FAR more responsible than the Edmund Andrews character. If the bank has any smarts, they should let her keep paying what she can because she does have a guaranteed income and the house would be worth far less to them if they foreclosed.

Evnyc,
I am making an assumption? so are you.
Any medical disastrous $ would've been noted in the article.

$60k was substantial equity when she took on her current obligation. What happened with the original mortgage is no longer relevant. It didn't get her into the present difficulty.

Maybe. You do not know that; maybe she would not have wanted it publicized. I said "might have" - I am saying that we cannot draw conclusions. Your conclusions were already drawn.

NYC10023, bingo. Bozo the Economist deserves his public embarrassment.

it's more than 60k.
She made principle payments toward her equity with her mortgage payments. Which equates to close to 90k of equity she had withdrawn.

I have no beef with her low downpayment because traditionally, administrative jobs in large colleges have been fairly stable. A 77k mortgage at 9% is just over $600, which was well within her 30k (?) 1997 salary. Yes, she should have been even more frugal given how close she was to retirement and had a housemate for some of the time. The biggest mistake was tapping her home equity for discretionary purchases (minus the 20k roof - I feel like she got ripped off on the roof price, they don't cost usually 20k in a low COLA). When you are that close to retirement, you shouldn't be tapping into your one asset.

OTOH, she isn't horribly destitute, I imagine one of her kids could put her up in their living-room and use her as a PT/FT sitter.

this villification of individuals who are living on the edge mystifies me. does anyone really think that the individual consumer, intelligence level or no, is more culpable than a banking industry that had decades of underwriting history and information? and does anyone think that these people enjoy where they find themselves, many on the verge of homelessness?

when i go to the dentist and he/she tells me i need a root canal, i don't argue. that is his/her job. when people went to the bank for a loan, until 2003ish, it was the banker's job to say no, that isn't possible. do you really think that the average consumer was any match for the mortgage origination machine? if so, i have some property to sell you in Miami. and where in the hell are the "bailouts" that people are talking about for the homeowners? extremely little money has been allocated, and most of the efforts have been counterproductive, as is the case in this example. but there have been plenty of bailouts for the financial industry, which not only allowed this to happen, but caused it.

and this nastiness toward the less fortunate is just ugly. i know many fat rich people. i guess it's better if they get that way on foie gras and champagne.

$77k house appreciates to $200k+ and you withdraw some equity while leaving what appears to be a prudent cushion; thank you for making my point, ba.

Thanks, AR, I was hoping you were around!

evnyc,
you amaze me. Tapping into equity leaving what appears to be prudent cushion?!?! Enough said.

evnyc.. I may never be able to show my face on SE again.. but here it goes.....

Some people should be renters and some should be owners...... not based on race or anything like that, just based on doing this simple math..... income >= spending (except for short periods of time, like when in school... birth of new children etc etc etc...)

I think our fatal flaw in our homeownership policy is the power that be equate homeownership = fiscal responsibility, not the other way around... this is the lesson we are learning.

We had it right with the stringent mortgage rules..... the 20% downpayment was a show of fiscal prudence/responsibility... when that GATE was broken wide open... we played a game of musical chairs with our "homes."

Okay, she wasn't smart in using her equity while being so close to retirement. But the real sin (I leave it to you to apportion) was the final mortgage # (was it 140k?) that she was supporting on a salary that wouldn't have lasted much longer, regardless of job loss. She was very close to retirement, and her fixed pension + SS would in no way have supported those mortgage payments. The job loss just pushed her there sooner.

ba, you amaze me! I should not (theoretically as I do not own) take any equity from my home ever under any circumstances, because by god, I should have KNOWN this was a housing bubble and my house actually wasn't worth what people told me it was?

Her Monthly mortgage was $600/month with $2000 monthly income
She borrowed against her equity, swelling her payments to $1000+ while her income remains the same.
Any person with at least a pea sized brain would not borrow against their equity unless they can manage those monthly mortg+hel payments.
Evnyc, you just proved yourself to be the dumbest crop of all.

In addition to mandatory counselling before taking on mtge (okay I know some of you aren't big brother types), I think people should also get counselling at age 45 about retirements. We're heading into another demographic storm. I look around and I see all these folks procreating at 40+. Good for them, but how on earth are they going to save for retirement at the same time as raising their very young children? I forget which article it was but there was a 50+ dad (sole breadwinner, making 70k+) with 4 young children. He was a state employee, with good job stability, but the days are coming when the senior staff are going to be the first to go because they cost too much. There are young whippersnappers who'd take 30k for his job.

NYC10023, you have a very good point, although it sounds like she could have supported the payments fine if she had remained employed through retirement. She wasn't smart; however, given the circumstances in which decision making had to take place, I'd argue she wasn't stupid either.

W67th, I am in total agreement. Home prices were totally disconnected from wages for a very, very long time, and we are not going to unwind this in a few months. Our homeownership policy has turned into a nightmare.

Also, I'd like to point out that her wages weren't going up - where was she supposed to get the money for her new roof? From her paycheck? Fat chance.

Ba, I'd rather be dumb than a vicious twit.

ba294, that's just stupid. the amount down has meant squat if equalized against up and down markets. i'd have no problem with the bank's losses if they had done a reasonable calculation of income vs. housing costs and required more down and given less lenient terms, often horribly detrimental to the borrower but with smiles and good on yous for getting a home.

but that wouldn't have given the wealthy this lovely bubble to exploit, right?

evnyc, your post was great. i'm not talking about this person generally (other than that creepy preoccupation with her weight). but your comments regarding her financials are well put. i think we will be stunned, in the end, to see how many people, including relatives, neighbors, and co-workers, can't maintain their mortgage. people feel better about themselves, if they have been prudent, in knocking others down. but oddly, not the institutions that truly allowed this. there's a tremendous amount of pain out there, and stress, and people are focusing on McDonalds dining habits.

That's the thing, evnyc. That close to retirement, you don't take chances like that. Senior staff cost more, I'm not sure what the policies are at U of A but rarely can you stay past the age of retirement.

although at higher level loans the down payment is critical. just not here.

evnyc,
As nyc10023 said, if you tap into your equity, it increases your mortgage payment. If your monthly income stays the same, how can you afford those new payments? This is simple stuff and I hope you get it.

Oh, no, nyc10023 - in academia there is no such thing as mandatory retirement. You can stay indefinitely. I work with 90-year-olds. Several of them.

In this rare case, she could have made zero dp given the numbers and her job. She erred in not thinking about retirement.

I learned the lesson about retirement and ratcheting up your expenses when I was very young and impressionable. And of course, it's cheaper to finance retirement when you stay married :)

oh and if oil prices increase due to a commodity bubble that is caused by another bubble and if medical insurance co-pays and employee contributions amounts go up hugely maybe you may only be able to survive by tapping into your equity. i'm not saying that's the case here, because i am not focusing on this one poor woman. i'm talking about americans in general. and if they had all been so prudent and put their homes on the market earlier, well think what that might have done to the oh so important part of our consumer-oriented economy.

She was admin. They aren't guaranteed indefinite employment, are they? I know of only a few cases (academia being one) where there is no mandatory retirement.

AR: Americans are kinda screwed that way. I'm keeping my backup passport possibilities nice and warm.

Ba, because your equity rose. It masked all kinds of problems with the disconnect between home prices and wages. This is also simple. People make decisions within specific contexts, not in a vacuum. That is simple, can you not comprehend this?

AR, thank you. I think there will be quite a humbling few years ahead for us as a country. I don't understand the obsession with MacDonald's.

also forget medical expenses as Ariz state univ offers full health coverage with $500 max dedutible

nyc10023, with those standards everyone should have sold and gone to live in a cave. but you are right, and you are prudent, and oddly enough i think that those who are younger (and prudent) may do better in retirement because they expect so little from the system. those who are older may have expected more, which they'll not receive.

10023, if you haven't worked in academia, you might not realize that it doesn't have to be guaranteed: no one will ever force you out.

AR has an excellent point, placing this woman's experience in a broader context.