The New Bailout

[sugarpop]

Originally Posted by classicman

Do the math - If the mortgage amount is more than the current home value, thats is a "toxic mortgage." To compound the problem there were ARM (Adjustable Rate Mortgages) bought by people to get into homes that, IMO, they couldn't really afford. Lets leave the "greedy lenders" out of this for a moment.
The homeowners took a gamble that they would be making more or they could refinance later or or or... before the rate on their ARM increased. Many knowingly did this. It has been done for many years, this is not something new. What changed is the home values.

To further compound the problem many homes did not increase in value, in fact, they decreased and on or around the same time the mortgage payment increased. Now you have a devalued home and an increased monthly payment.

An example of the impact:

I understand all of that. But really, shouldn't they have to eat that? After all, they all went along with the ride. They made the loans to those people. They knew (or should have known) what they were doing. When you take risks, the upside is profit, the downside is the opposite. Still, the houses are worth something, even if the mortgage was a bad one. They are probably worth now what they should've been worth to begin with.