No, NPR. Not Everyone Deserves To Keep Their House!
This morning driving into the office, I found myself literally yelling at my radio at one of the worst spun stories against our housing market I've ever heard.
Let's preface this by saying that I'm a firm believer in taking responsibility for your actions. One of my dad's favorite sayings is, "If you're gonna be dumb, you gotta be tough!" The fact is, if you buy a house and don't make your payments, you don't have any right to stay. The whole story is spun with the aim of convincing the public that legislation is needed to require a lender to go through some sort of mediation or loan modification first with the homeowner before resorting to foreclosure. Sounds warm and fuzzy enough, but does everyone deserve to keep their house?
You can read the details and listen to the story of this sad family here:
What you'll find here is a sob story of how low-income families are taken advantage of and manipulated into buying houses at terms they couldn't afford, then once they get behind on the loan, the bank is unwilling to re-finance the loan with this family. Sure, it's sad, but when you do dumb things, you've got to be the one to take responsibility for your actions.
Here are the facts of the story:
- An immigrant family bought a house in Boston in 2006 for $584,000, made no down payment, and got a monthly payment that was almost $5,000 more than their monthly income.
- The couple got behind over $150,000 on their payments. Wells Fargo actually offered to perform a loan modification, but since this would up their principal balance to over $600,000, they declined.
Eventually, the house was foreclosed and sold to an investor for $115,000. Two weeks later, the investor sold the home to someone else for $270,000. The story claims that the broker made money, the investor made money, but somehow the homeowner misses out. Well, DUH the homeowner misses out! They were $150,000 BEHIND ON THEIR PAYMENTS!!!! They SHOULD miss out! According to the mortgage you sign at closing, when you don't pay, then you don't get to stay! It's not rocket science.
Also, why should we demonize the wise investor who has been smart with his money, saw a good bargain, and took advantage of a money making opportunity? Since when was someone wise making money a terrible thing? Maybe NPR should read the Parable of the Talents. Maybe this family should go read Dave Ramsey.
The big complaint in the story was that Wells Fargo didn't try to work with the couple to refinance, and should have... but THEY DID!!! They were offered a deal, but refused it. What more can the bank do?! Did they expect them to let them have it for free? The fact of the matter is that houses aren't free in the United States.
She claims they worked 20 years in the U.S. to be able to buy this home... but you'd think that since homeownership was such a big dream, then part of those twenty years would have been spent saving up for a down payment on a home.
"I prefer to go back [to] my country," she says. "At least [you can say] your house is yours." Sure you can, lady.
The thing that kills me is that there are a lot of us making wise financial choices, but still have a hard time making ends meet. There are many who could legitimately need some assistance to make it through a rough patch, but PLEASE let's not bail out idiocy. I am all for charity when someone finds themselves in the tough moments of their lives, but rewarding bad decisions can only lead to more bad decisions. Unfortunately, some people who do dumb things need to lose their home. Sad, but it's the reality.
Home Grown Real Estate
600 Ford Road
Muscle Shoals, AL 35661