Reply #11: A little research reveals

[notesdev]

... that Ms. Collins is quite good at getting her sob story in the paper; if her financial decisions were half as good, she wouldn't be in this mess.

She bought the place in 2000.

in this story:

http://homefinance.nytimes.com/article/news/2007.10.02.country/5/

she relates how she was still holding an ARM in 2007. At 11 percent - ouch.

What she should have done is refinanced into a fixed rate mortgage sometime in the past 7 years - IF she didn't buy more house than she could really afford. She could have taken advantage of the high valuation and low interest rates of this period, but she didn't.

In the NY Times story, we see she now makes half of what she did in the previous job. It's not really reasonable to expect that you can maintain the same lifestyle on half the pay - and what that having been over a year ago already, she's had plenty of time to make arrangements appropriate to her means. What has she been doing over the past year? Planning to default?

And where is the house equity? She's been paying a mortgage for 7 years, got the full valuation boost of the housing bubble (since she bought in 2000)... she should have a good deal of equity in the house to bargain with. What happened to it? Did she spend it?

I think if we dig down to find the answers to these questions we find a lot of people in bad mortgage situations right now were full participants in the mess.

With regards to this particular case, 2000 mortgages aren't typical of the housing bust to begin with - the years that are trouble are 2003+, in general. So even if her story were completely true and not in omission of crucial facts, it's not at all illustrative of the housing crisis in general.