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President Obama's advance team might want to do a little more fact checking next time they send...

President Obama's advance team might want to do a little more fact checking next time they send the president out with the housing crisis' latest "victims" to tout home refinance. The president visited a Nevada couple on Friday, describing them as “responsible” homeowners who owe more on their mortgage than it's currently worth. The fact is, the couple did a cash-out refinance in 2007, borrowing $178K off the equity in the home. Had they not taken that money out, and continued paying on the original mortgage, they would not be underwater today.
Comments (42)
  • See? You just can't make this up!
    11 May 2012, 04:44 PM Reply Like
  • Oh my! Stoploss's comment is really resonating with me!
    11 May 2012, 04:49 PM Reply Like
  • Cringe worthy indeed.
    11 May 2012, 04:50 PM Reply Like
  • Well....let's see, when did facts ever get in the President's way?

     

    EG: We'll have to pass this bill first so we can read it later?
    12 May 2012, 12:47 AM Reply Like
  • I'm shocked - shocked I tell you
    11 May 2012, 04:45 PM Reply Like
  • Bingo...no one wants to blame the American consumer and they are one of the biggest culprits.....
    11 May 2012, 04:48 PM Reply Like
  • Sort of. There are indeed plenty of borrowers who didn't take money out; are they still "the biggest culprits"?

     

    This couple sounds like they are classic opportunists -- take money out of your house even as the market is tanking, get on the president's schedule to play the victim, etc.

     

    And yes, shame on the administration's poor vetting.
    11 May 2012, 04:52 PM Reply Like
  • Yes,

     

    I have some trades I lost money on.

     

    I want my money back.

     

    Ironically, the Banksters think the same way.

     

    I win, I win. I lose, you lose.

     

    Just getting some taste of their own medicine I suppose.

     

    Accountability is not very popular,
    while American Idol, I-Phones & I-Pads are.

     

    "The Biggest Loser." How Ironic.
    11 May 2012, 09:18 PM Reply Like
  • > I have some trades I lost money on.
    > I want my money back.

     

    Did the people on the other side of those trades manipulate the market for your trade to fail so that they could profit? Like if you were a Madoff investor?

     

    If you find out that they did engage in such unscrupulous behavior, wouldn't you demand your money back? Yes, you would.

     

    No no, let go of the hypocrisy for a moment. Yes, you would.

     

    > Accountability is not very popular

     

    I agree -- why aren't any bankers or politicians in jail?
    11 May 2012, 10:20 PM Reply Like
  • Want to bet the press will downplay this.
    11 May 2012, 04:49 PM Reply Like
  • I'm so sick and tired of hearing about irresponsible idiots living the dream life, driving the fancy cars, owning the boats, eating out every night, with a house full of fancy furniture, obtaining mortgage modification and special govt hand-outs at the expense of the taxpayer. What a scam. You people doing this nonsense should be embarrassed and ashamed. You know who you are....
    11 May 2012, 05:02 PM Reply Like
  • I am also sick about how Mozillo and Lewis were able to escape unscathed and richer than ever.....
    11 May 2012, 08:53 PM Reply Like
  • Pretty well sums it up doesn't it.

     

    Personal financial decisions are none of the government's business. Nor is it the taxpayer's responsibility when they go wrong.

     

    Pack up, move out, and move on. That is the solution. Its also the only way that people will learn!! Not just this couple, but their children, their neighbors, the people in their church, at work, etc, etc.

     

    The current lesson is to just be stupid and the government will take care of you!
    11 May 2012, 05:08 PM Reply Like
  • > The current lesson is to just be stupid and the government will
    > take care of you!

     

    Perhaps, but this wasn't created by homeowners, it was exemplified by banks and corporations.

     

    Bad "personal" financial decisions barely get any attention from the government compared to bad corporate financial decisions.

     

    Personally, I don't mind a small % of my taxpayer dollars helping out those who were legitimately screwed by those same corporations and banks. The couple in this article clearly do not fall into that category, but many do. Bailing out irresponsible executives (which is really who benefits from corporate bailouts, lets be honest) won't help the economy. Bailing out responsible homeowners (again, not this couple) just might, and maybe then we can all start to get out of this economic pit.
    11 May 2012, 05:11 PM Reply Like
  • Its sometimes difficult to differentiate between the two, that is; the ones who were not savvy enough to understand they were mislead, or the ones who knew the risk but decided to go for it to make some money. I'd say 95% fall into the latter category and few did not know what they were getting into. Today, they play the dumb card and say "I didn't know I actually had to pay back that money I borrowed." But everybody knows the truth of the matter.
    11 May 2012, 05:51 PM Reply Like
  • I take it you also don't agree with bailing out the UAW by giving money to GM and Chrysler.
    11 May 2012, 05:54 PM Reply Like
  • Perhaps, but this wasn't created by homeowners, it was exemplified by banks and corporations.
    ---------------

     

    And I've got zero sympathy for any of them!!

     

    No bailouts for anyone!

     

    What average family takes out 178K in cash from their home? For what purpose?

     

    You see - I think its none of my business what they did with the money - just as its none of my business if they took it to Vegas and won 10 million - good for them. And its none of my business if they invested it into something stupid or bought junk. Government doesn't belong in personal financial decisions beyond regulating the financial industry to ensure fair play.

     

    One of the basic rules of life - if it sounds too good to be true.

     

    Personal responsibility.
    11 May 2012, 06:00 PM Reply Like
  • > I'd say 95% fall into the latter category [who knew the risk but
    > were greedy]

     

    All but a handful of the best financial minds in the WORLD failed to predict the timing and severity of the housing crash and ensuing financial crisis.

     

    Today, of course, there are lots of monday-morning quarterbacks, but almost none of them seem to have evidence of their prognostications from the time in question.

     

    People like John Paulson get to say they saw it coming, because they made the trades to back it up. But everybody and their brother who today claims how obvious it was? Not so much.

     

    I give your 95% estimate a "pants on fire" rating on the truth-o-meter: not accurate and makes a ridiculous claim. :)
    11 May 2012, 06:25 PM Reply Like
  • I can tell you with firsthand personal knowledge that most all the people I meet that are in a bad housing situation are there because they decided to live beyond their means. Quite simply they bought more than they could afford, installed improvements they couldn't afford, or sifted off equity thru HELOC to pay for boats, Cadillacs, and other goodies.

     

    We're not talking about best financial minds, we're talking about the homeowners that borrowed against their homes to live a lifestyle they couldn't afford, and are now wanting a personal bail-out for their poor decisions. Your head is full of marbles if you have any sympathy for these people.

     

    Not sure of your age, demographics, or where you live. But the 95% figure I use is not an exaggeration.
    11 May 2012, 07:06 PM Reply Like
  • Yes, personal responsibility. That was thrown out with the moral compass years ago. I'm with you, no sympathy for those that knew all too well what they were doing and decided to go for it anyway. That's fine, but don't expect me to share in their losses any more than they would expect to give me some of their gains.
    11 May 2012, 07:09 PM Reply Like
  • Chrysler Paid the money back.

     

    GM, yet to be determined how that will work out.

     

    If the Gov't did not give money to a creditor (UAW) in bankruptcy, they may have been a bit less underwater.

     

    But that's vote buying with "Other people's money."

     

    Corzine & Obama, two peas in a pod.

     

    http://bit.ly/HAHsk8
    11 May 2012, 09:20 PM Reply Like
  • Do you have any supporting links to show Chrysler paid the money back?
    11 May 2012, 09:44 PM Reply Like
  • And I can tell you with firsthand knowledge that most all the people I meet that are in a bad housing situation are there because they simply bought at the wrong time.

     

    Quite simply, they had a life change that made it perfectly reasonable to buy a house: relocation for a job, family growth (marriage, kids, sick parents, etc), or just following the advice of the ENTIRE financial industry at the time.

     

    We're talking about reasonably intelligent people: engineers, accountants, successful writers, programmers, financial analysts, etc. They put 20% down and never borrowed against equity, but still they're 20% or more underwater. Your head is full of marbles if you don't have any sympathy for these people.

     

    Not sure of your age, demographics, or where you live. But the 95% figure you use is indeed a random made-up statistic that fits your preconceived assumptions. :)
    11 May 2012, 09:52 PM Reply Like
  • We could do this anecdotal stuff all day, but let's look at FACTS instead.

     

    Total mortgage debt in ~2007: ~$14 trillion (http://1.usa.gov/M5hi9z)

     

    Amount of HELOC debt in ~2007: ~$1.4 trillion (http://bit.ly/KRDxdX)
    Note: not all of this is cash-out debt, but you might still argue that if the HELOC was used as a second mortgage, that's still living beyond your means, and that's not unreasonable to argue, so sure.

     

    Number of mortgages: ~50 million (http://1.usa.gov/KRDpvg)

     

    Average home value: ~$300K (http://bit.ly/M5hi9E)

     

    Average HELOC per mortgage holder: Hard to find data on this at a glance, but let's assume people did something similar to what the Kellers did in this article, and took out about a third of the value of their homes: $100K.

     

    $1.4T / $100K = 14 million people who probably took out HELOCs.

     

    14M HELOCs out of 50M mortgages = ~28% of mortgage holders that took out HELOCs.

     

    Personally, my anecdotal experience says that it's about an 80/20 spread, with ~80% of people who are underwater and still paying their mortgage never having done anything "irresponsible", and about 20% having lived beyond their means.

     

    I'll even be generous and give you 70/30 if you like. That fits with the ~28% estimate above.

     

    But still. Pants. On. Fire. Sorry! :)
    11 May 2012, 09:54 PM Reply Like
  • Excellent recap D_Virginia. Your math skills are great. Still, I could disagree with the 80% assessment. To buy a house that is more expensive than you can afford could be irresponsible. To buy a house as prices were peaking could be considered irresponsible. To buy a house with a 5% down, or a 10% down, or an ARM could in many cases be considered irresponsible. To buy a house under such conditions when there is the potential of being laid off or re-located could be irresponsible.

     

    There are lots of people who get caught in tough situations that are not of their making, but that could have or should have been avoided. I truly have sympathy for the unwitting who have been caught. But I suspect there are many who just made dumb mistakes they will pay for over the next 10 years.
    12 May 2012, 12:56 AM Reply Like
  • Remember, this refinance program requires that you be current on your mortgage.

     

    Personally, I think it's tough to call anyone who's never missed a payment irresponsible. Risky maybe, but if they're accepting and addressing the risk, there's no irresponsibility here.

     

    Responsibility inherently relates to meeting one's obligations to others.

     

    If we were not in the current mess that is primarily the banks' making, those banks would let these people refinance at a lower rate in a heartbeat.

     

    > To buy a house as prices were peaking could be considered
    > irresponsible.

     

    This assumes you know when prices are peaking. Again, I think it's unfair to insist that the average homeowner have more omnipotent market prediction skills than the entire financial industry.
    12 May 2012, 07:45 AM Reply Like
  • This assumes you know when prices are peaking. Again, I think it's unfair to insist that the average homeowner have more omnipotent market prediction skills than the entire financial industry.
    ----------------------...

     

    Well lets extend this to investing then. In 1999 the entire financial industry was telling investors that the internet was going to revamp everything - and you better get in now. Things like P/E, and even having revenue were said to be outdated.........

     

    Should the government give me my money back because I invested in a company that went belly up???? (actually I invested in two)

     

    Wasn't everyone being told this was the thing to do?

     

    How was I supposed to know when prices were peaking in the stock market?

     

    How was I supposed to know the technology those companies were developing were actually uneconomical?

     

    Blah, Blah, Blah, whine, whine, whine, cry, cry, cry........

     

    Where the hell is personal responsibility? Bought a house and took out a mortgage and can't pay - PACK UP AND MOVE OUT!!!!!

     

    This is pure and utter nonsense what is going on in this country. Where is my program? Where is my handout? Where is the government to put a band-aid on every bad thing that might happen in this world??

     

    Guess what, in a large part of the world people buy real estate with cash. People recognize that taking out a mortgage entails risk - and so they save and buy WHAT THEY CAN AFFORD.

     

    Zero pity for these folks - and a pox on your house for continuing with this nonsense that expanding government and running everyone's lives is the solution.

     

    Freedom doesn't come with guarantees of certain lifestyles!!!
    12 May 2012, 01:05 PM Reply Like
  • Welcome to creeping Socialization. Where everyone is equal and nobody can get ahead.
    12 May 2012, 10:32 PM Reply Like
  • > Should the government give me my money back because I invested
    > in a company that went belly up?

     

    Depends on why it went belly up. If it was a lousy business to begin with, then of course not, that's a bad investment. But if it was a fraud, then the government should at a minimum prosecute the perpetrators and assist with suing them for losses.

     

    In the case of housing, the perpetrators (banks) have not been prosecuted, and no lawsuits for losses have been seriously attempted. It was a fraud on many levels -- borrowers who make their payments not being among them.

     

    If you finance a car, and then the bank you financed it with sets it on fire, don't you think that bank should be prosecuted, and some of that loan forgiven to match the reduce value of the burned car? Yes. Yes, you do. Stop lying. Yes, you do.
    12 May 2012, 11:36 PM Reply Like
  • IF they stop makiing that model and suddenly the resale value of the car is 1/3 of what I expected should I get my money back?????

     

    NO!!!!!!!!!!!!!!!!!!!!

     

    I bought a method of transportation and its my tough luck. If I spent too much and can't afford it - I can't say - geeze I expected to sell the car in two years but now no one wants it. Tough luck.

     

    No houses were set on fire. The only people that had fraud committed against them were the elderly homeowners that owned their homes outright and had slimeball mortgage brokers con them into taking out loans with adjustable mortgage rates.

     

    And lets be clear - you paint a picture that you either support the bankster or you have to support huge government bailouts.

     

    I support neither. Prosecute all the fraud. Tell folks that can't afford homes to move.

     

    And if you want to call me a liar you should be prepared to meet in person!
    13 May 2012, 12:39 AM Reply Like
  • > IF they stop makiing that model and suddenly the resale value of
    > the car is 1/3 of what I expected should I get my money back?

     

    No, you're lying again, completely misrepresenting what I said.

     

    The lender you borrowed money from knowingly and willfully LITERALLY set fire to your car -- would you still pay them back? There were no simple normal market forces at play, the value of your car was fraudulently manipulated and devalued.

     

    The metaphor you clearly are missing here is the unprecedented fraud behind the housing boom and bust.

     

    Your tech stock comparison is like comparing apples to elephants.

     

    The tech bust was arguably very clearly normal market forces -- a "real" bubble as opposed to fraudulently manufactured one: the businesses simply weren't making money. No banks were bundling and selling off crappy tech loans to global investors, no banks were leveraging those tech companies 30x or more, the amount of tech biz fraud was minuscule compared to the amount of banking fraud, appraisal fraud, and Wall Street fraud.

     

    > If I spent too much and can't afford it

     

    Lying again. That's a bad habit, you know. :)

     

    The people we're talking about CAN afford it. They're not facing foreclosure, they're not even missing payments. We're talking about letting these people refinance at lower rates, which will both help them get out of their pits faster, and possibly be stimulative to the economy as a whole.

     

    > you paint a picture that you either support the bankster or you
    > have to support huge government bailouts

     

    No, I paint a picture of real facts. It is you who paints a picture of all or none: everyone who's underwater on a mortgage is the scum of the earth through their own fault and no other forces are responsible. This is a very uninformed point of few.

     

    I paint my pictures with real facts. Messy, unfortunate, inconvenient facts. The truth is never nice and neat -- that only happens on bumper stickers. There are a lot of gray areas, a lot of specific situations.

     

    Come on over to Northern Virginia sometime, I'll buy you a beer that you can cry into as I explain to you how many flawed assumptions you're making. :)
    13 May 2012, 08:41 AM Reply Like
  • Whats the address - you will regret calliing me a liar.
    13 May 2012, 01:01 PM Reply Like
  • > you will regret calliing me a liar.

     

    Oooo, are you going to beat me up behind the flag pole after recess? That's about the maturity level you're at right now.

     

    I'm happy to have a rational discussion, however, if you think you can manage it.

     

    I like this place for happy hour:
    http://bit.ly/KC0Yed

     

    Anytime. Bring your facts and not your erroneous assumptions. :)
    13 May 2012, 01:20 PM Reply Like
  • Big surprise - Northern Virginia, home of the stolen wealth from the American taxpayer. And since you persist in insulting me and calling me a liar I'd say its better I not meet you.

     

    Zero houses were set on fire. Zero cars are set on fire. No one forced anyone to buy a house.

     

    And I never called anyone underwater scum of the earth. I say they need to pack up and move out if they can't pay. Its called moving on, starting over, learning from your mistakes. When we purchase anything we make a judgement that what we are paying is worth it. These people decided paying XYZ for their house was worth it to them - for whatever reason. Its their business - who they choose to listen to is their business. If their house is now worth 5 million more than they paid - good for them. If its now worth 10% of what they paid - good for them. Its their business.

     

    The reasoning that because banks committed some sort of fraud by bundling and selling mortgages to global investors - therefore we should give billions of dollars to allow certain people to live in 300K homes more comfortably is assinine. Prosecute the fraud. Throw all the banksters in jail. Break up the biggest banks. That doesn't changet the fact that each homeowner agreed to pay XYZ for their home - that was their choice and its their responsibility.

     

    But obviously personal responsibility doesn't jive with the socialist utopia of big government deciding who will receive what.
    13 May 2012, 03:14 PM Reply Like
  • > I say they need to pack up and move out if they can't pay.

     

    Still shouting at the rain when the sun's out. What's funny, is that we're not talking about anyone who can't pay.

     

    Let me pose a more simple question to you so that you might stay on topic:

     

    If someone kept nearly 30% equity in their house (a "responsible" number by most standards, no?), never missed a payment and is in no danger of doing so, but STILL is now underwater due to the actions of the banks (and other deadbeat borrowers, and govt policies, etc), is it not appropriate for the banks to allow them to refi at today's rates?

     

    Try not to rant about "people who can't pay" or "socialist big government" this time. I know it's hard. Just try. You'd be amazed what you can do when you put your mind to it. I believe in you! :)
    13 May 2012, 06:10 PM Reply Like
  • > Northern Virginia, home of the stolen wealth from the American
    > taxpayer.

     

    Hhmm...lie? It would seem so.

     

    Of the biggest employers in NOVA, only a few are defense contractors:
    http://bit.ly/KYY5XV

     

    Virginia as a whole does get a large share of contractor dollars, but that is mostly due to shipyards down in the Norfolk area. NOVA is more of a software and IT region.

     

    And I, for one, am a huge proponent of reduced defense spending, especially on expensive contractors. Looky there! Common ground??? :)
    13 May 2012, 06:27 PM Reply Like
  • Obama' yes give the couple a few dollars lol - but hey i will give me banker mates millons of dollars as they are hard up ah lolol - you can only laugh nothing changes an never will OMG!
    11 May 2012, 05:56 PM Reply Like
  • This is a great example of the handout mentality that liberals (primarily Democrats) are taking for solving the housing crisis we've just gone through. How can you call someone "responsible" for using their home as an ATM? Why should responsible taxpayers be on the hook for people like this? This administration wants to get re-elected by promising more handouts and not doing the responsible thing for this country!
    12 May 2012, 07:12 AM Reply Like
  • you cannot blame people for doing what they are supposed to do.

     

    for years the US Government has told the population that they really must buy a house.

     

    it was touted as the American Dream...agencies were set up to foster and grow the mortgage market...the tax system encouraged it

     

    in the late 90's and into the 2000's the decision was made - by successive Congress and Administrations to shift this into hyperdrive and move down the credit curve so that people who could not obtain credit to buy a home were given the possibility to do so. the market and the people responded.

     

    people are people. they will do what is best for themselves. you cannot balme them for that.

     

    the real issue is the system and rules that facilitated this mass hysteria much of which remains intact today. change that.

     

    if Government set up StockyMae and gave tax deduction on margin debt used to buy stocks, if stocks could be sold with no capital gains etc. etc. what do you think would happen to equity prices?

     

    E
    12 May 2012, 10:56 AM Reply Like
  • "For what they are supposed to do"???????

     

    Its called freedom.

     

    Live how you want to live your life. If you want to buy a house - buy it. If you want to rent - rent. If you want to live with your parents - do so. If you want to live with your girlfriend/boyfriend - great.

     

    Do what you want to do. AND its your responsibility.

     

    And lets cut the crap that somehow the government forced people to do these things. Its more like more and more politicians run for office "promising" people free stuff. Then they get into office and give them "free" stuff. So I wouldn't disagree that stupid government bureaucrats and politicians helped to enable people to make stupid financial decisions - but so what?? How does that alleviate personal responsibility? Perhaps these people should be voting for people who run for office promising to get rid of these programs??

     

    So I agree - gut the damn government and restore our freedoms.

     

    But if you bought a house you can't afford thats your own personal responsibility. If you can't pay - pack up and move out. Get all the houses on the market and let the market flush them all out at whatever price they bring. You might find this actually unleashes a flood of truly affordable housing options.

     

    I find it hard to believe this is really the United States of America. I can't even fathom my grandfather or father expecting the government to pay for his house - nor anyone of their generations..

     

    What these people are really saying is - "we are too stupid to make any important decision in life and so our neighbors and the next two generations should pay for our stupidity, After all we are entitled to a good lifestyle".
    12 May 2012, 01:15 PM Reply Like
  • Econdoc. I was taught that you are "supposed" to save. It's common sense too, that you are supposed to save. To save means that you have to spend less than you earn. That means you have to avoid purchasing things you may want to do the "right" thing to save. It means you have to make decisions in your life that don't jeopardize your "savings". It means you have to determine what is a good deal and what is a bad deal, or you wind up "wasting" money that you could be saving or that you already saved. Included in that whole process is "risk management". The art of making "wise" decisions.

     

    There were lots of times in my younger life when I did not make wise decisions. And I paid the price. Fortunately, I was able to recover.
    12 May 2012, 06:17 PM Reply Like
  • Well I am not from the US but have read all the comments with great interest, But I do see good coming out of homeowners in trouble, and being given the opportunity of refinancing at lower rates, as the banks and mortgage industry helped with the bubble and have far more insight to possible future events than the normal working class.
    13 May 2012, 04:26 PM Reply Like
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