The housing mess.
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I just watch a hilarious slideshow (a google doc) about the housing mess depicted in stick figures. You can find it here.
I never thought about it from the viewpoint of people that actually bought their securities thinking they were safe investments. Man they really did get conned.
I’ve always thought the homeowners deserved what was coming to them for getting in over their heads. However I do feel sorry for them in the end and this is partly because of the way the media reports on these things. You’ll see article after article of sob stories of people who can’t make ends meet.
Take for example this story about Patricia Guerrero from Altadena, California. She was making $70k a year and then got laid off and now she can’t make ends meet even after burning through her savings. She’s seperated from her husband so she was the sole provider for her two kids.
Here’s the thing, her savings lasted her less than a month? It was only weeks later than the “bills started to pile up”… and then I read it. “She has had to take extreme measures to pay for her interest-only mortgage of $2,500 a month“. $2,500 a month? DAMN! That’s $30,000/year.
I’m real sorry she got laid off and everything but if you decide to take out a mortgage that’s half your salary and interest-only (which means you’ll probably pay forever until you sell) you’re asking for trouble. The fact is she was a single mother with $70k income, what possessed her to finance this house? Too many people simply got way in over their heads and bought too much house. It doesn’t take much common sense to see that paying $2,500 in just interest payments alone is not better than renting. Which is why most people opt for these interst only mortages in the first place, they want to feel like homeowners.