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September 25, 2008


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Most likely the father lost his job, possibly found a lower paying job, could no longer afford the house payment, so they tried to sell their home.

However, home prices in Michigan have tumbled more than 30% in most areas, that would have wiped out all gains from the past 10 years, and if they had borrowed even once against their equity they would be left "underwater" on the mortgage.

Unable to bring any cash to closing to settle the mortgage, they had to leave the price of the house too high for the market, hence it never selling.

Finally, after falling further and further behind on payments it is easier to enter foreclosure, walk away from the debt, and start over.

I have seen this happen to many of my neighbors.

Funny thing is, the government is bailing out Wall Street, but what about people like this? Where is their help?

That sucks, but it sounds like they have a plan with the wife going back to get a good, in-demand degree so hopefully it will be temporary.

Mark B's question brings up a good point - are we better off bailing out Wall Street or should we concentrate on helping people like this? It's clear where Bush stands from his doom and gloom speech, but I'm sick of these big companies making terrible business decisions and the government stepping in to clean up the mess. It's only a matter of time before the Big 3 automakers get their corporate welfare.

There is such a stigma about being foreclosed on or declaring bankruptcy. I expect there will be a lot of reticence on the part of the foreclosees to keep it quiet. Not long ago, there was a woman so stressed out by her mounting financial troubles here in Massachusetts that she killed herself.

The government is also bailing itself out. Just yesterday I read a report that estimated that Treasury Secretary Henry Paulson (once the CEO of Goldman Sachs) still had up to $500 million invested in the company. Since GS would be one of the prime beneficiaries of the bailout plan that seems like a pretty big potential for conflict of interest. No wonder he's pushing so hard for the bailout.

I agree that the whole bailout plan seems misguided at the moment. I would want to make sure that couples like the people mentioned above get the majority of the benefit and not so the rich Wall Street fat cats can continue to live in the extravagant style they've become accustomed to.

I was shocked when a fairly close friend was getting foreclosed on. I was always impressed by his small business which I always considered quite a success.

But those who have the cushion to get by in a small financial crisis and those that don't usually differ in as little a thing as those who spend 90% of their income versus those who spend 101%. This difference in spending is unnoticable from an outside party, so I don't think anyone could ever know who is on the edge and who is not, but it is the savings that build from that reduced spending that gets you through the slumps that, whether you work for yourseld or not, are inevitable.

Instead of giving Wall Street $700b, they could give that to every American homeowner (about $20k for each adult) to put toward their mortgage on their depreciated houses. That would solve the crisis without giving the fat execs any cut of it.

Mark B: where do you get 20k? 7b/200mil = $3500

Neither deserve bailouts. Life isn't guaranteed to make you a winner. And the market signal being sent here is to get the heck out of Michigan and go somewhere where an actual economy exists. Failing that, vote out the idiots in the state capital who think tax increases and populist posturing will somehow create a viable economy.

Mark B.,

I don't think you really understand how bad things really are. It is just not a matter of a "bailout" to save a few banks. Instead, this is to impact the lack of the liquidity in the market. Banks are currently not lending any money (or very little money) to businesses, to buy cars, new homes, etc. Cash is drying up. In a survey I saw this morning, it shows that 65% of companies are getting hit by the credit crisis. Guess what happens when companies have cash problems? They start getting rid of employees. Think of the snowball effect. You may not like it, but this potential "bailout" IS to help the average guy on the street, as without it, the average guy just might have a job if things really go south.

Mark B. I agree with JimL above. Also, giving that $700B to the homeowners would essentially do nothing, since the money is coming from taxpayers anyway (not that all taxpayers are homeowners but a good portion are).

Guy across the street is getting foreclosed on a house he's lived in for longer than I've been in the neighborhood (and I've been here 14 years) because he borrowed $320,000 against a piece of property that was worth...oh, probably $280,000.

Ditto the lady who bought my old house. The guy across the street is a real estate appraiser whose car rarely leaves the driveway; the woman who bought my house tapped the equity and drew down her 403(b) to finance an endless vacation.

In the case of the guy across the street, we have to add that he divorced, too, an expensive proposition. The wife at first had the house, but somehow he got it back. He claimed she ran up a bunch of debt and he bailed her out in return for the it could be he borrowed against equity as a strategy to get the place back from her. If so, it was an ill-advised strategy.

You never know what happens to people. Sometimes they're victims of circumstance (or rapacious lenders). Sometimes they're victims of their own stupidity.

What a wild September - the largest Chevy dealer here in Memphis closed their doors forever this week.
An omen of things to come? Want to see something eerie?

Go to

What a sad story. I hope that everything works out okay for them.

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