Bailout effects

DammitJanet

Well-Known Member
I agree with you on the golden parachutes. You mess up and run the company into the ground and get rewarded? I think not! Doesnt happen that way for normal folks.

Ok...I wish these talking heads on tv would stop harping on politics and help us figure out how to fix this whole thing! Maybe we could make them have a "no politics talking rule" on there too...lol.
 

klmno

Active Member
I work for a small business. When things are bad for the comany, the partners, including the president of the company, take cuts in pay or NO pay until things get better. If things get tighter, all employees must take a cut in pay or choose to leave the company.

It's my understanding that the bail out money will be controlled by the government who will give it to desparate financial companies in chunks. Somehow, the government ends up owning something (not sure if it's part of the company or the houses that are foreclosed on or what). The struggling companies who get the money are encouraged to lend it out in order to keep the economy going. But, I haven't heard anything that convinces me that the money won't go to continue paying million dollar salaries and I haven't heard anything about what will happen if this bailout amount doesn't last long enough for the economy to turn around. And, I haven't heard anything about a solution to make sure it doesn't get worse or happen again in the future. At the minimum, they should cap some salaries before handing out "bailout" money paid for by US to people who have already proven they can't handle it.

Someone mentioned earlier that many people were coerced into loans (mortgages) that they couldn't afford- I saw that happen to several people in my area. The man I sold my house to 2 years ago was one. I knew something wasn't right because the realtor kept having to re-write the contract and finaggle the contract amount so he could borrow more than what I knew the house was worth and more than the sale price. I agreed and signed because I had already bought the house I live in now and I knew it wasn't my finances involved, but I felt bad for him. He was talked into it and wasn't savy enough to see it- he was an older man who'd never owned a home. It was foreclosed on in less than 18 mos.

If they freeze my credit card and available credit, I'd be in a real mess right now. That will only make things worse for me- so I might not have to lose my home right now but if they did that, I would.
 
bby, you have company. My husband and I were in the same position as you - almost identical as far as payments, etc. In fact, I'm 41 and have been married for 19 years too! Misery loves company. For us, we were at the beginning of all this mess. We were naive. We never thought house prices would drop as much as they did, and mistakenly thought we would be able to refinance. Wrong!

Well, we tried to sell our house when the payments started to increase. It was on the market for 18 months - we dropped the price numerous times - to much less than what we paid. Needless to say, it didn't work. We lost everything.

I used to have excellent credit. I don't even want to know what it is now. We have no debt, but no assets either. With my difficult child, my dysfunctional family, my financial problems, (not to mention the stupid colonoscopy I had to have - ha) I feel like there is no more humble pie left in the world because it's all been shoved down my throat. Sigh...Ok, I'm done now.
 

Stella Johnson

Active Member
Excuse my ignorance here..

So how much did your payments go up from what they were before? It is supposed to be based on the current interest rate. The interest rate now is lower than it was when some originally bought their homes a few years ago.

I'm sorry to hear you guys had to go through that.:sad-very:
 
For our situation, it was a combination of things. We started building our house right before 9/11. We put our savings into a down payment for the builder, so we were pretty much stuck with moving ahead with the process. I was a business consultant at the time, and by the time we moved in, my business had slowed considerably due to the economy.

Within the first two years, the taxes for our county and city had a HUGE increase. This was a few years back when the interest rates were going up also. I can't remember exactly, but I think our payments went from $2800 to $4100 - and my income had dropped. My husband worked overtime and I worked another job, but once you get behind in payments, it gets really tough. I'm not saying we're not to blame. It's just a tough pill to swallow when executives are walking away with their millions.
 

Nancy

Well-Known Member
I have been closely following this crisis and was very disappointed to see the bill fail. We all bear some responsibility for this crisis, either directly or indirectly. Many of us overspent terribly during the years of rising house values and easy money. We borrowed too much, overextended ourselves, made poor choices when it came to refinancing, bought houses we couldn't afford, got into loans that ballooned and rose out of our league.

I'm not putting all the blame, or even the large part on us. But it is what it is and all of uur economic futures are at stake. When these politcians finally realize that the failure of this bill will hurt "main street" maybe they will change their mind.

I am so sick of the two party system right now I'm ready to get rid of it. My husband worked 30 years and we were responsible in our spending and saving. Our retirement fund is just about worthless. I'm sick of the fighting and haven't seen one politician all day today that gave me any confidence in the system.

Nancy
 
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flutterbee

Guest
My last neighborhood was primarily built on the no money down and a buy down in the interest rates. I bought my house that way. I knew that I could afford the mortgage and the subsequent increase in interest. However, they tried to get me to buy more house. Yeah, I could have afforded it the first year. Barely. But, after that? Nope.

There were 7 foreclosures on my street out of about 25 houses. A good 1/3, if not more, of my neighborhood foreclosed. Then when I became ill and started missing work and couldn't make my mortgage payments, I couldn't even sell my house for the balance on the mortgage. My house made 8 foreclosures. Another one has recently gone on that street. The couple divorced and the guy couldn't afford it on his own and couldn't sell it. His was a beautiful house with gorgeous landscaping.

They broke ground on my house on 9/14/01 - 3 days after 9/11. I had put the contract on the house in May of that year. Job losses were big in Ohio and wages have been stagnant since. We never really recovered from the downturn following 9/11. People couldn't afford their mortgages. And I live in the fastest growing county in the state and in the top 10 of fastest growing counties (or used to be, anyway) in the country. There was too much competition from builders and resale homes in neighborhoods like mine were hard to move.

A friend of mine, admittedly stupidly, got into $180,000 in mortgages on her house that at most would have appraised for $130,000. There was a lot of that going on. Appraisers appraising homes for way more than they were worth so companies could write mortgages on them. Admittedly, she was one that refinanced often to roll in credit card debt and she would roll in the closing costs and it just builds and builds. But, that much in mortgages should have never been written on that house, especially with their credit rating. They almost got into an ARM one time with an early payoff penalty. The broker told them pretty much the exact opposite of what the paperwork read. They count on people trusting them and not reading. Fortunately on that one she brought it to me and I told her it was a bad loan and they got out of it in that 3 day grace period. Didn't stop them from losing their home, though. Just an example, however, of what was going on.

Mortgage brokers were big business around here - and probably all over the country. The salesman that sold us easy child's car had his own brokerage company and a year ago had 20 people working for him. Now, he's selling cars.

It's just a mess. And if they're going to bail out these banks, there needs to be more help for the homeowner in trouble. Otherwise, things are just going to continue to get worse. House values are still falling. This bail out won't change that.
 

SRL

Active Member
It seems for many years, no one in the industry has been honest to people about what they could afford in terms of mortgage. We bought in 1992, right when the housing market was starting to go nuts and prices in my town started rising rapidly. We had done the math and decided we could afford $400 based on our savings and the fact that we were going to lose one income when we had kids. The real estate agent took our data and announced that we could easily afford payments of $1400 per month.

We stuck to our guns and found a house we could afford on $400/month. We refinanced it down to a 15 year loan so it's $445 now and there's no way we could afford more and still stay afloat on one income.
 

KTMom91

Well-Known Member
I bought in 1996, a single parent, with an all right credit score, using a "low income first time buyer" grant through the county. Hubby and I married in 2000, he was laid off in 2002, and we refinanced then, to pull out some money to keep going until one of us could find a job (I'd been a stay at home mom for about 18 months). The estimate was twice what I'd originally paid for the house, but we didn't take that whole amount and we didn't get an ARM, thank goodness. Our house payment is $735/mo, and you can't even rent around here for that.

bby, so sorry you got stuck in that mess. Several women I've taught with have lost their homes because of the ARM resetting, and several of our friends have as well.
 

SRL

Active Member
I have been closely following this crisis and was very disappointed to see the bill fail. We all bear some responsibility for this crisis, either directly or indirectly.

I don't think this is a fair statement. There are many people who do live within their means, only they're not the ones you hear about.

I'll leave it at that.
 

dreamer

New Member
I cannot even imagine the big picture. CUrrent effect on me at our huse? This morning I called to confirm my credit limit and balance etc on a credit card, left the house, a few hours later tried to USE that speciific card and..nope sometimes after I called to confirm balance etc, my credit limit was DRAMATICALLY reduced. My card was no good.
Several weeks ago, this very same thing happened when I had to use a credit card to geet a hotel room.
I pay my cards off in full each month.
I use my cards on occasion, for hotel when we go to doctor becuz they will not accept cash.or in an emergency....I also rotate them and use each once or twice a year to keep them active, if I have not used them.
My credit is awesome. My score was high.
Our house is tiny, when we bought it 20 years ago bank tried to tell us we could but like 5 times as much home. I was far too scared, went with this itty bitty starter home. Good thing I did....when we bought it, it was out of the town we grew up in cuz THAT town was out of reach financially, and this town was blooming. BUT our county had some ugly issues and property taxes exploded enormously right after we moved in, and then our property values began to drop..and drop and drop.....on top of that, my husband became very ill, and while we had bought and paid for expensive private disability income protection insurance, THAT insurance co went bankrupt at the time we went to file a claim. If we had not bought such a tiny little itty bitty house, we never ever would have been able to keep it.
And then I wound up getting so very ill....
and then the kids disabilities began to cost and cost and cost.

We have managed to keep our house all these 20 years, its value is the same now as it was when we bought it 20 years ago. Our property tax is now 10 times what it was 20 years ago.

Becuz husband veterans benefits took 10 years to get rolling, our kids did not have medical insurance after I also became disabled. Our income was right AT the income eligibility cut off and some years they got Medicaide and some years no. We could not purchase private coverage for them becuz they were considered "uninsureable" For years we have paid out of pocket huge amounts on our childrens medical needs.
We have taken exactly ONE vacation ever. I do not have all the hi tech things many people think they NEED. I still use a vcr. I still use my $39 webtv I got in 1995 to go online. We went to a movie -and saw Ladder 59. And the movie we saw in a theatre before that one was Titanic.
My kids have never been bowling as a family outing, it costs too much.
No, we do not exactly live beyond our means. We have no retirement fund, no stocks, and no savings, - we supported all of DHs family for years and then husband got sick. We never had an opportunity to even try to grow saveings.
BUT yes, we are already feeling the trickle down of the effect of this financial mess. And it is scareing me bad.
 

Stella Johnson

Active Member
Dreamer,
This is just the beginning but honestly even if they get the bailout I bet the banks still do the same and take credit lines away from the average citizen.

Corporate greed is disgusting.

Steph
 

dreamer

New Member
Stella, I agree with you, totally.
I think I mostly wanted to point out that the thing with the credit limits getting frozen began a lil while back already.....and it had nothing to do with me going over my limit or haveing a "bad" credit rateing. I know my credit rating was very good, talked to my banker recently - checked it.
SO if MY cards are being frozen and reduced etc already.I am certain others are, too, and I wanted to kind of warn people- in case someone has to travel or something- cuz dang, I checked availability of my credit and then a couple hours later- it was a different story. I fear someone might head out of town and wind up away from home or something and suddenly out of a clear blue sky find out they cannot use their credit card at all.
Yeah, I am very afraid it is gonna gets worse before it gets better....yes, even for those of us with no stocks etc. And the prices of things, too.whew. Yes, I am haveing to seriously reconsider medical care follow up for my son and me..becuz our docs are SO far away.....(sons is 5 hours away) and no, we could not get what we needed local, but thats a LOT of gas. Even our farmers market and my home veg garden did not do well this year due to flooding here, even in places it never floods, it did this year.....

The whole entire big picture is very scary.
 
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flutterbee

Guest
I'm worried about the house I rent. The owner bought 3 houses in this town in October of last year. The husband bought them and then I'm assuming quit-claim deeded them to his wife because the auditor's website shows the purchase in his name and then the 'sale' to his wife and the dollar amount was $0. They spent a great part of the year in California. I am hoping that they paid for the houses outright, but I have to think with buying 3 in a month that they got mortgages. 2 of the houses they bought were in foreclosure. This one was going cheap because the family was selling it as the owner went into a nursing home. So, it was absolutely taking advantage of the low prices - an investment - can't blame them for that. But, what if their money is tied up in the stock market and they lose the houses? I'm out of a home in that case and a lot of people in these situations aren't finding out until they're served with eviction papers from the court filed by the banks. Or what if they dramatically raise the rent?

It's scary times.
 

Nancy

Well-Known Member
SRL i was including myself in that statement even though I did live within my means. I didn't overspend and I carry no balances on any credit cards. We did all the right things and yet we are struggling just like everyone else and stand to be completely wiped out soon. We can argue forever about whose fault it was but many of us profitted in the good times when the housing market was going through the roof and the interest rates were low. That is why I believe we all have a responsibility and a stake in the solutions. And I'll leave it at that.

Nancy
 

TerryJ2

Well-Known Member
BBy, my husband and I were given that option and we said no, it's too unpredictable. I want to know the exact amt, even if it's a bit higher than I like to pay. I do not like not knowing.
I think one of our banks may be eaten by another, but that's happened so many times over the yrs, it's no big deal any more.
I am a bit concerned about our college savings/investments for easy child ... but we won't need to touch it until next August. I hope things stabilze by then.
I just take it one day at a time.
It changes that fast, anyway.
 
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flutterbee

Guest
Terry, I wouldn't personally right now, but my parents might. Hard to say in these times. If that's the case, when I get back on my feet I could buy it from them. It's definitely a thought. We have already talked to the management company about trying to buy the house in a year or two anyway.

Thanks for reminding me of that. I'm breathing a bit easier, now. LOL
 

DammitJanet

Well-Known Member
I was having this discussion with Tony tonite. He was kind of blase about the whole situation acting like this didnt effect us too badly because we have nothing and dont invest. I quickly pointed out to him exactly what his job is. If the credit market dries up then then there will be no money for businesses to build commercial buildings and then he has no work! That will hit him very fast. As it stands already his work has been slowing down for the past year. If it gets much worse we are going to really be in a bind.
 

bby31288

Active Member
In my case, we bought our house no problem. Payment 2,300.00 a month. We lived in it for a year. After a year we got a letter from our mortgage lender that our escrow was short about 3,700.00 for taxes, they underestimated when we bought it. It went from 6,000 and change to over 9,000 a year for taxes. So we had some options, pay the 3,700 and the payment went up to about 2,900. or don't pay the 3,700 and the payment went up to 3,200. So we didn't have 3,700 to pay, and couldn't affort 3,200. So we refinanced. That is how we got caught up in the ARM. In order to keep my payment about 2,500. The idea was that the interest rate wouldn't rise to much, and in a few year we would be making more money to afford the rise in payment. So I went from having excellent credit to this mess.

Dreamer, I like you didn't carry a balance on my cards. My bills are paid each and every month. Its just when you start to fall behind on your mortgage payment, no matter the fact that you pay late, your credit score drops. Hence why we couldn't refinance to a fixed rate. We have the ability to pay a decent mortgage, just no one to help us get back to a fixed rate we can afford. We even took a 401K Loan to catch up with payments at one point. The only thing that did was buy us some time.

Because of the foreclosure, doesn't mean we are deadbeats. Just stuck in a bad situation. Poor Choices...
 
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