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Comment by TomOfTTB | Hacker News Reader

I’m sorry but this woman makes me angry. A lot of it is my background. I grew up living in Government funded housing and eating thanks only to the welfare system. That, combined with working my way up to the point that I now have money as an adult, makes me see financial matters differently than others around here.

I accept that.

But give me a break. Boo Hoo, her house is only worth $700,000 now. She spent nearly $50,000 upgrading it and now its worth less. Oh the Horror.

I get that it hurts when you have to go down a step in your standard of living. I’m not entirely unsympathetic. But there are millions working to have a place to live at all. So I can’t spare much sympathy for this woman.

Short sell the house, find a place you can afford and shut the hell up. Getting kicked out of your $700,000 house is not the end of the world

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What infuriates me most about this situation is the implicit presumption that she deserves the home because she got there first. She took out the biggest loan, therefore she deserves the property now, and we should forgive her debts so that she can stay.

I'm sure that Half Moon Bay would be a nice place to live. Personally, I'd like a bit of land on the Colorado front range -- maybe something next to a creek, with a view of a beautiful valley. The difference between this woman and myself, is that I know that I can't afford it. So I think of my dream property, and work a little harder, save a little more, and hope that someday I'll be able to buy something that approximates what I desire.

Apparently, this woman missed that memo. She went out, took a series of ridiculous loans, and now she's the "owner" of a bit of property that she never had any reasonable ability to afford. And now that it's all gone pear shaped, she thinks that she should be allowed to stay.

Well, that's nonsense. There are thousands of other people just like me, who have been saving and living responsibly for years to afford the things that these lunatics bid up into the stratosphere by taking out massive debts. Now is the time for irresponsible people to suffer, and for the things that they "purchased" to come down in value to levels that the market of reasonable people can support. We shouldn't rescue this woman simply because she was willing to take out the biggest loan in 2006 -- and right now, that's her only argument.

Indeeed. She says right at the beginning:

> I put 10% down and got a 5-year interest-only mortgage for about $576,000 [...]

That's a huge and leveraged to almost the maximum bet. We are all busted now just because of that crowd. And now we have to bail them out? (because it affects all of us, specially the savers as interest rates are practically zero.)

I'm not exactly sure that's what she's saying. What she's saying is that she is, not to put too fine a point on it, fucked, and that if the banks foreclose they're likely to lose more money than if they try and work with her to render her situations less fucked.

Not so long back, a client of ours ran into major trouble. They were left with two options - pay suppliers a percentage and then sell what was left, or put the company into bankruptcy and let the creditors work out who to pay what.

We decided that a guaranteed percentage now and the continued goodwill of the people we'd worked with was a better deal than an undetermined amount at an undetermined later date - so we dealt (more accurately, our MD did; I don't really get involved in that side of things).

So far as I'm concerned, the interesting question here is not whether or not she's an idiot, it's whether or not she's correct that providing the financing she needs would be a net win for her banks over foreclosing on the mortgage. I don't know enough myself to have any basis to make that call, but what's currently infuriating -me- is the fact most of the comments seem more interested in attacking the OP rather than discussing the financials :)

I think it would be perfectly acceptable for the banks to allow her to continue to rent the house, until a new buyer can be found at a lower price. But yes, that's about all the charity I'm willing to extend to someone who made bad decisions, and now wants to profit from them.

It kind of seems like self-righteous crowing IS the point. I there no mercy anywhere? This woman has woken up in a nightmare. It's a worst case scenario. Maybe she gambled and lost. Don't make it about morality. Give her some credit for chutzpah, say something nice, get down off your soap-box and start talking like christians (even if you're not). There's got to be more to life than stoning those less fortunate. jeesh. I'm embarrassed for y'all.

Not to mention that she should be going out and working like crazy to make another deal instead of complaining about it on her blog. It's like that story of the plumber who went around and introduced himself to his neighbourhood that drummed up a ton of business that was on HN recently. There's always a way out of a mess (of this magnitude, at least), given enough brains, willpower and luck. Don't try to extort your lenders, make enough money that it's not a problem!

I've been at zero financially before (as in no money for food, although without debt or responsibilities), and the thing that kills me in hindsight is all of the things I should have done to pull myself up instead of moping around feeling sorry for myself. When you're an employee making roughly market salary, you can't just go and double your wage, but when you're a business owner with cashflow the possibilities really are endless if you take the time to look for them.

I agree. I don't see how the value of her house has anything to do with the situation.

If she planned to live in it for ten years, then it's a sunk cost. If she could afford to spend a house that cost X and now she can't, that's a problem with her income, not the value of the house.

what does the value of the house and improvements even has to do with this situation anyways? You get a mortgage payment as a fixed cost...it doesn't fluctuate if your house goes up in value or if it falls.

So the whole sob story can be pretty much boiled down to "my income is dwindling", give me free money! Her mortgage company would have given her the 4.2% rate. But it'll be very hard for them to forgive 50K for someone with "excellent" credit.

How about asking her family to help you out? Thats what they are there for. If you are 65 and have a daughter, she must be 40 years old. And if she can afford to live in an area where there are 700K houses, surely she can afford to throw a few bucks to her mother, until she can get through it.

Its not like its a huge amount. Her house only dropped 50K in value, so that means she is looking for about $700/mo. So get a family to scrimp together the $700, or sell your car, or bust out some credit cards, or open an equity line or get a second job(doing consulting or hell working at Walmart).

The situation is far from helpless.

Actually (someone can correct me if I'm wrong here), I believe in her situation her payments probably will change.

Her main loan was a 5 year, interest only loan, probably at an adjustable rate. What that means is that for the first 5 years, she ONLY paid interest...that is to say, she did not pay down the principal. At the end of the first 5 years, you start paying down the principal and interest, only that's now compressed into 25 years instead of 30. In short, your payments increase.

People took these loans out because they assume that in 5 years there house would be worth much more than it was when they bought it (of course, because housing always goes up, right?). So the idea was, in 5 years, when my house is worth a lot more, I can just refinance it.

If it sounds foolish now...well truthfully it sounded just as foolish at the time (as I recall when I learned about this stuff back in 2003). It sickens me that my tax dollars are bailing people like this out (directly or indirectly).

I've read real estate investment books that advocated getting interest only loans and refinancing every few years (to take out the equity), but that assumes the value keeps going up.

In this situation it didn't.

But should the bank take responsibility for the market price of her home going down - by taking a loss on a loan and re-valuing the price of the house? No.

She wouldn't be complaining if her house was now worth a million.

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