Mortgage & Loan: A Case Of The Stupids

I mentioned a few months back that it was important to maintain compassion for screwed homeowners and get them help from their toxic mortgages, rather than dismiss them out of hand. I still believe that.

But then I read posts like this one that David found and even my patience is tested. What kind of mentality thinks it's smart to let yourself get foreclosed on just to avoid crime in your neighborhood? Not to mention the awful specter of people "fornicating." (Does anyone even use that word anymore?)

Thankfully, another poster on the foreclosure board has the right of it:

Jay,

I'm pretty sure that CO allows the lender to seek a deficiency judgment if they suffer a loss due to the foreclosure. A lender often wouldn't seek a deficiency if the borrower doesn't have the assets to pay it, but if you have the income and assets, you should be aware that there could be longer term repercussions.

Buying a home is not a lark or something you do on a weekend. It's the most important financial decision most Americans will ever make. That means sussing out every possibility, every eventuality, and planning for any one of a million problems that may never occur. It doesn't mean adding to the looming tsunami of foreclosures because you were dumb and bought in a crappy neighborhood which was being fleeced by a shady developer.

Posted at September 27, 2006 12:54 PM

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I mentioned a few months back that it was important to maintain compassion for screwed homeowners and get them help from their toxic mortgages, rather than dismiss them out of hand. I still believe that. But then I read posts like this one that David found and even my patience is tested. What kind of mentality thinks it's smart to let yourself get foreclosed on just to avoid crime in your neighborhood? Not to mention the awful specter of people "fornicating." (Does anyone even use that word anymore?) Thankfully, another poster on the foreclosure board has the right of it: Jay, Foreclosure has a huge impact on credit. If you stop paying on the note, your credit report will reflect 30, 60, 90 day lates on your home loan which often will result in higher rates for any credit card debt you may carry, and an increased cost for new financing. If you exercised your last resort, you'd pay less in financing for the new property if you did it before any default on your existing loan. I'm pretty sure that CO allows the lender to seek a deficiency judgment if they suffer a loss due to the foreclosure. A lender often wouldn't seek a deficiency if the borrower doesn't have the assets to pay it, but if you have the income and assets, you should be aware that there could be longer term repercussions. Buying a home is not a lark or something you do on a weekend. It's the most important financial decision most Americans will ever make. That means sussing out every possibility, every eventuality, and planning for any one of a million problems that may never occur. It doesn't mean adding to the looming tsunami of foreclosures because you were dumb and bought in a crappy neighborhood which was being fleeced by a shady developer.