“The reality is responsible homeowners are not losing their homes; some may lose their houses because of a job loss, and some may chose to walk away, but very few truly responsible homeowners were endangered. The foreclosure crisis was caused by the irresponsible.”


Responsible homeowners did not lose their homes in foreclosure

Many of the sob stories in the mainstream media were focused on who are characterized as “responsible homeowners” in danger of losing their homes. For several years during the recession, I wrote daily posts exposing mortgage equity withdrawal into the millions of dollars. Many astute observers noted the extravagances and poor decisions that often make these homeowners look less than completely responsible. For the most part, responsible homeowners did NOT lose their homes.

To see the truth in this statement, one needs to have a clear definition of “responsible homeowner.”

A “responsible homeowner” is a buyer who, if they utilized financing, did not stray from the conservative parameters set forth by lenders (prior to the bubble) and financial planners. This includes using a maximum 28%-31% debt-to-income ratio on the mortgage, at least a 20% down payment and fixed-rate conventionally amortizing financing.

Few who fit this definition lost their homes; although, some of them chose to walk away from the debt because they were hopelessly underwater. The only ones who fit the above definition who are in danger of losing their homes are those who lose jobs; they are the truly sad casualties of the housing bubble. Unfortunately, it was common due to the financial crisis caused by all the homeowners who borrowed irresponsibly.

Responsible borrowers are not the ones defaulting on their mortgages; irresponsible homeowners are.

Full post here…

Guess this guy hasn’t read Chain of Title…