Incredible must-watch clip.
This is a clip of a borrower calling the show questioning why he should continue to pay for a home for which he owes so much more than it is worth. The guy bought the home for $600k and put a 50% down payment on it. Now he owes $350k due to neg-am but the value has dropped from $600k to $270k. This guy has been destroyed losing $300k cash. He wants to stop the pain. The loan adjusts soon and his payments will double.
The hosts gang up on this guy relentlessly essentially blaming him saying a) you made a contract that you must repay b) even if you have to give up your kids education you made a commitment c) you will drag down all your neighbors value d) you will not be able to ever buy or rent d) you are getting ‘value’ by staying in the home because its a place to live e) you have to take responsibility for your action f) you likely lived beyond your means and now you have to sacrifice g) pay extra to principal to make it up. etc
The homeowners do not stand a chance against thinking like this. As we exit the ‘Subprime Implosion’ and into enter the Alt-A, Pay Option, Jumbo Prime and Prime implosions presently happening simultaneously in various degrees, this will be the primary reason people default. I am afraid this is just a little taste of the type of attacks we should be prepared for.
The fact is — with $300k down this is one of the good guys. He was duped into buying a $250k home for $600k because of the high-leverage, risk taking of the financial insti’s that allowed people with zero money down, terrible credit and no jobs to bid up this neighborhood making it appear the home he bought was really worth $600k. He likely is not saving much money because the lion’s share is going out to this massively depreciating asset. In all likelihood it is a good financial decision for him to walk and rent the home down the street without all of the other ‘joy’ of homeownership expenses that come along with owning. If we walked now the pain goes away. His credit is hurt for a while but if he keeps everything else current if won’t hurt him for long. His credit will recover quicker than the house will recover in value. His loan is a purchase money loan so there is no recourse if he exercises his right to foreclosure. Suggesting that the he dips into his kids college education to make up the difference is a crime. This man has already paid with his life’s savings.