<p>Barrons, the woman has leukemia. </p>
<p>Do you know what the biggest factor is for people going bankrupt in the US?</p>
<p>It’s not being stupid, uneducated, lazy, drinking too much, gambling.</p>
<p>It’s not being able to pay for their health care when they get sick.</p>
<p>LakeWashington, I saw Barney Frank on Bill Maher’s show and I agree with you. He was terrible. Pompous, rude, etc. Time for him to go.</p>
<p>A quick check of Mass law shows they have a homestead exemption in bankruptcy. They could declare on the basis of medical bills and keep the house. </p>
<p><a href=“http://www.ftwlaw.com/articles/homestead.html[/url]”>http://www.ftwlaw.com/articles/homestead.html</a></p>
<p>The homestead exemption doesn’t do anything to protect them if there is no equity in the house. Also, the Massachusetts homestead protection only applies to debts incurred after the filing of a homestead declaration. That would NEVER include a mortgagee (who require that any declarations be removed before making a loan), and would not likely include any creditors if they didn’t know to record a declaration. The homestead bankruptcy strategy is to pay down the mortgage in advance of bankruptcy, so that the lender can’t force a sale, and the other creditors can’t get their hands on the newly-created equity value.</p>
<p>I know through long representation of a company that was in the subprime mortgage business for a while that the lender’s average loss on foreclosure is about 50%. Most of the homes of defaulting subprime debtors are worth less than the debt.</p>
<p>On the FBI’s website, today, at least this will help a little bit, and in any case is 100 x a better answer than Frank’s response. </p>
<p><a href=“http://www.fbi.gov/pressrel/pressrel07/mortgagefraud030807.htm[/url]”>http://www.fbi.gov/pressrel/pressrel07/mortgagefraud030807.htm</a></p>
<p>Many homes sold through foreclosure lose value because of several reasons. They are vacant and not maintained. They are sold at auctions under terms that are not typical in the market (cash out in 30 days or less). They are not staged or given minor repairs so that they show well. They are often sold without an inspection and with absolute as is conditions. Buyers often cannot even see the interior. No wonder they lose their shirts.
About 1%-2% of homes go into foreclosure in a year. I am sure there are many sad stories connected to them all.</p>
<p>Sounds like most of you have never had the bad luck to experience devastating health problems and the far-reaching costs of same. Otherwise you might have a better understanding of the foreclosure family.</p>
<p>Just to throw this out here: the Lower Ninth Ward had one of the highest home ownership rates in New Orleans (and some of the poorest people.)</p>
<p>wecandothis: Actually, as a child, I experienced the loss of our home when my parents were forced to sell it to pay nursing home bills for my grandmother. We did not, however, have three able bodied men living in the home at the time. We did not go into foreclosure either. My parents realized they needed to sell. It was a painful decision that had to be made and they took action before their credit rating was damaged or my grandmother’s healthcare was interrupted.</p>
<p>^^Exactly. Everyone is going to have a financial challenge at some point or another, maybe it’s a health issue, or an unexpected expensive home or car repair, etc. The thing that poorer people may not know is that by calling creditors immediately, getting creditors involved early in laying out potential solutions, a lot of problems including damage to credit can be avoided or at least minimized. Creditors can be terrific allies in problem resolution if the debtor acts quickly, is honest, keeps commitments and keeps communication flowing. When my daughter was very young I had to call a creditor more than once to negotiate a late payment - she seemed to get a lot of ear infections and my health insurance was the sort where I had to pay first, then file the claims, and, every visit to the pediatrician plus the medicine was a zillion dollars or at least that’s how it seemed at the time, AND the jobs I held early in my career were the sort where I didn’t get paid for sick days, plus I still had to pay the day care in order to not lose the space. It’s amazing how a tight budget can just collapse under the weight of a $200 surprise, but, calling a creditor right away helps enormously in solving problems, and in my experience creditors will do everything in their power to help when they realize the debtor is taking responsibility and committed to paying what is owed. </p>
<p>Educating poorer people on these matters and a few other things relevant to managing money is where I would like to see lawmakers focus energy, vs. just writing off that they’re too stupid or hopeless or whatever to be considered candidates for home ownership.</p>
<p>Re the woman and her house, I am sort of wondering why she didn’t rent it. Assuming it’s in decent condition, what I might have done is immediately rent it, and used the deposit + first + last to move my family into a less expensive rental, plus continue to make timely mortgage payments off the rental revenue, and thereby at least temporarily saved my property and credit rating, then, later, perhaps made the decision to sell it. I might also tell the two adult sons to find their own housing at their own expense.</p>
<p><a href=“Undercover Economist: On the move”>Undercover Economist: On the move;
<p>Very interesting article about the correlation between home ownership and unemployment.</p>
<p>not everyone is as resourceful as many of you seem to be, and if the homeowner is older and/or seriously ill, they may not be physically able to just pick up and relocate. until it happens to you, it’s hard to comprehend being incapacitated by illness.
just selling the house is fine if there is any equity and it is in good repair, but if someone has faced a lengthy illness, that is probably not the case. as to the rental idea, again, it must be in good repair and the person must be physically able to search for alternate housing and relocate.
I don’t know from the article if the 3 men were able-bodied or not. But we can’t just assume that everyone who faces a catastrophic health event has family support available to pitch in and help them.
Not everyone is young, healthy, energetic and resourceful enough to overcome a debilitating illness. That doesn’t mean they are bad, stupid or lazy, or deserve to live in sub-standard housing.</p>
<p>The community I live in is a combination of 1/3rd Habitat for Humanity homes sold to low income people (i believe with 0 percent interest) and 2/3rds were made by a large builder who sold them at market value.</p>
<p>You can’t tell me, or any of the other people in the 310 homes here that it would have been better to leave the dilapidated housing projects here, as they once stood on this land. </p>
<p>Previously, both my dad and my stockbroker had told me not to even drive through this zipcode on the way to my other home. Now, I live here and it’s great. I hope more communities like this are built because the housing projects create exclusion while this community brings people of various backgrounds together and we all have a lot to learn from one another.</p>
<p>Regardless, home ownership is great. The poor can own homes. Poor is not the issue. Being stupid is. Living above your means is never smart. This is a problem facing both the rich and the poor.</p>
<p>Interesting article in the NYT Crisis Looms in Mortgages</p>
<p><a href=“http://www.nytimes.com/2007/03/11/business/11mortgage.html?ei=5065&en=8ada7b183ae9e61e&ex=1174194000&partner=MYWAY&pagewanted=print[/url]”>http://www.nytimes.com/2007/03/11/business/11mortgage.html?ei=5065&en=8ada7b183ae9e61e&ex=1174194000&partner=MYWAY&pagewanted=print</a></p>
<p>Marite, thanks for the link.</p>