Who’s to blame when a house goes into foreclosure? We’ve been debating this one on Doom for quite awhile. Recently we heard from Karen Pettit, who places the blame for her foreclosure on GMAC. Here’s her story. See what you think.
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Karen Pettit’s and her husband’s long struggle with GMAC over the foreclosure of their home is documented in this extensive comment under a post about an earlier GMAC foreclosure controversy.
I have been documenting my experience as a 52 year old Slidell, Louisiana woman who is disabled and trying to acquire assistance with housing programs from our Federal Government with an eviction looming from GMAC Mortgage.
…My husband is a seminary graduate. If GMAC will lie to a minister and his terminal wife, I guess no one is safe.
There’s a TV story and video on this …
WWLTM Louisiana (6/17 ’10): “Disabled woman faces foreclosure”
SLIDELL, La. — Karen Pettit of Slidell has has been an auto dealership manager, professional singer, and artist, but will never forget working for the host of the Tonight Show at age 21. …
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The steps outlined below should have been implemented 2 years ago in conjunction with QE 1.0. Taxpayers received no benefit from Bernanke’s policies. The problem with this story is that we all need help in one way or another due to 10 years of mortgage and credit card abuse and fraud.
We need a policy where each consumer is allowed to clean up their household balance sheets based on fairness for all. Banks instead of paying bonus’s should hire hundreds of employees to implement the following:
1. All homeowners who can PROVE with receipts that the additional refinanced cashed out money after the first “purchase money” loan was for home improvements then this loan should qualify for a principle write down regardless of income. In addition all “purchase money” loans should get an automatic principle write down regardless of financial status. Not helping folks today with a “purchase money” loan is a disgrace, because this is one situation where the bank is equally at fault if not more at fault. These folks were busy working and trusted realtors, mortgage brokers and the whole FIRE industry to provide sound financial advice based on the amount of fees and commissions paid by this homeowner.
2. Second Home Loans and HELOC not backed by home improvement receipts and credit card debt should be treated equally under the same new policy. There is no difference between the debt if a homeowner refinanced to pay off credit card debt or if a renter / homeowner did not.
As it stands today after 6 months of defaulting on your credit cards you have no option but to endure the collection agencies and a 7 year hit on your credit report as opposed to a homeowner defaulting on second loans. Why did congress not add a recourse clause to the recently passed credit card act? What good is the credit card act if there is no recourse to recapture the abusive penalties? All debt today whether collected, charged or still being paid should be recalculated going back 10 to 15 years using the new rules for a new outstanding balance. After crediting back to the consumer the years of bad abuses then set up a program for each individual to pay off the debt based on the monthly payment he/she can afford. This is fair for both the consumer in debt and the consumer who did not use credit cards or did multiple cash-out refi’s. There is no disputing second home loans and HELOC are given huge leniency yet are equal to credit card debt.
3. Bernanke can absorb the losses the banks will take on the above policies after eliminating any profit these banks will make for years in addition to claw-backs on all ill gotten gains.
We know mortgage fraud and credit card abuse was out of control. Where are the programs for folks to sign up for recourse?
I’m sort of sympathetic to her plight, but on the other hand, the fact is, she couldn’t pay for her mortgage, and is angry that GMAC was less than cooperative in bailing her out of her obligations.
I, on the other hand, didn’t buy a home I couldn’t pay for and am therefore still renting, and she is asking for my tax dollars to pay for her to own a home while I can’t afford one. Worse yet, a big part of the reason I can’t afford one is because the government is artificially inflating housing prices by paying the mortgages of other people who bought homes they couldn’t pay for!
I feel badly for her illness, but do I want to pay taxes to inflate housing prices and keep her in a home, ensuring that I can’t buy one myself? Um, no. Move out and rent folks, it’s not the end of the world that you don’t own a home.
Breaks my heart to see people losing their homes to circumstances that are completely out of their control.
Actually Cara, millions and millions of us *didn’t* participate in the fraud and bubble, *didn’t* run up our credit cards, home loans or home equity lines of credit to levels we couldn’t pay, and *don’t* want any “help” from the government, other than to step out of the way and let the market operate and to stop taking our tax money and giving it to either banks or people who took on debts they can’t or don’t want to pay.
Well, here is the problem: you certainly can’t discriminate against any type of people in giving loans, or you will be sued, so why should anyone get preferential treatment for not paying a mortgage?
Would her story change if she was a renter?
Recovery 101 – Have we seen much bang for the bucks spent in expectation of stimulating the US economy? The answer is No!
The only solution to really get the economy going and create jobs is to offer a residential mortgage interest tax credit, governed by the same higher income phase out rules as the current mortgage interest tax deduction. A credit rather than just a deduction will cause money to pour into the US housing market and create jobs for real economic growth. The cost to taxpayers for such a program would be far less than the already spent stimulus money and spur the US economy enough to pay for itself. Without such a solution, we may continue to stagnate as we have for the last year and a half.
Perfect Gregory, let’s just have taxpayers pay their money directly to the banks! (Giving people tax credit for mortgage interest would be just that – you pay your bank and that’s treated as your tax payment.) Privatized profits and socialized losses for friends of the DNC and NAR! Let me guess, you’re a Realtor?
This is a great chance and opportunity in cases where you need to change house and the dream house you have found has an owner who also has a mortgage that he is still paying. However, the downside is that you will be required to make a substantial payment that will cover the difference between the home purchase loan and the actual (current) cost of the home.