As many of your know, I primarily sell bank owned homes.  Part of my job is working with the previous owners to vacate the homes, and I hear my share of stories.  However, I have noticed these stories changing.

For the first homes, I can honestly say that I had absolutely no sympathy.  These were the type of people someone could say that it was not all bad that they lost their homes.

Along with an increasing number of foreclosures here, I have noticed a sharp change here.  Most of the people I now meet are ordinary people.  They are nice and friendly but have made poor financial decisions in their lives.  They are often clueless that they have now lost their homes and it is difficult to explain to them that they have no recourse.  They have lost their homes and must now vacate the premises.

There are numerous causes.  Several of them are results of a divorce.  The husband leaves and the wife can no longer make the payments.  Other cases are people just spent more than what they could afford and when the ARM period ended and the interest rate increased, they could no longer afford to make payments.  Others were making more money before but are now making far less.

 It is difficult to lose a house, but it is also a financial decision that must be weighed very heavily.  When making these decisions one must be absolutely sure he/she can afford the payments.  They also needed to fully understand what an ARM loan truly is.

There is a tendency here to spend and spend and spend and the feeling that a lot of debt is good.  What is happening with the foreclosure market right now is an adjustment.  While it has never been advisable to spend beyond your means, the penalties for doing so now are far more severe.