More Americans are now walking away from their legal obligation to payback money they borrowed from financial institutions to buy their homes. Many homedebtors want, and quite frankly are expecting, a full bailout from Uncle Sam or Tio Samuel to get them out of this financial quagmire.
But for thousands who desperate need help, it will never come:
"One-third of people who are delinquent should be in foreclosure. It's the best alternative," he says. "They don't have the money. They shouldn't have (gotten the loan) to begin with."
Millions of American homedebtors completely mismanaged their debts. They simply aren't earning enough money on a monthly basis to afford the homes they now reside in. Thousands have decided to give up on making payments to a home that is now worth less and less money each day they stay. They're handing over the keys, and flipping the bird to their mortgage lender.
And not all of these home losers had shitty credit ratings. Some had great credit ratings and pulled down the average annual earnings in Orange County, California, for example: $75,000 per anum. Unfortunately, families earning such "chickenfeed", still had no business purchasing homes 7 or even 10 times their annual gross earnings.
Many homedebtors remain in complete and utter shock, that a home, the highest value purchase they've ever made in their lives, could actually decline so dramatically in value in such a short time:
"As home prices fall from coast to coast, 8.8 million homeowners will have mortgage balances equal to or greater than the value of their property by the end of the month, Moody's Economy.com. predicts.
That could come as a shock to consumers who thought property values would always rise, and it helps explain the attitudes lenders are seeing among their troubled customers, Goodman says.
"If you buy a car and it depreciates," Goodman says, "you don't expect the automobile dealer to write off your loan. There's a sense of entitlement (among homeowners) that is just unbelievable."
Goodman, whose firm specializes in home equity credit lines, says the
main reasons people took out the loans were for home improvement, debt
consolidation and medical expenses. But he estimates that about 20% used the
cash to go on vacation or buy a new car."
And yet some felt it prudent to buy second and third cars, motorycles and to blow the dough on vacations.