Economy
Stories of the times from today's Wall Street Journal:
The owners under pressure include Tasha McLaughlin, a 33-year-old mother of two in Sacramento's South Natomas neighborhood. She and her husband, Steve, bought their two-bedroom house in 2004 for $256,000, intending to stay about five years. After 11 months of trying to sell it between 2006 and 2007, the family took it off the market.
"Everyone is saying we should foreclose or claim bankruptcy, but I have a moral issue with that," said Mrs. McLaughlin. "The more we try to pay the mortgage and pinch pennies, the more we get punished."
Now, with a similar home down the block listed for $80,000, the McLaughlins are accepting that they won't recoup their losses anytime soon. Their interest-only loan is set to increase their current $1,600 monthly payment to $2,200 in seven years. If they were to default on their mortgage and walk away, they calculate that in about the same time, seven years, their credit scores would be stable enough to allow them to buy again elsewhere.
"I am just going to swallow my pride and walk out. I have to," said Mrs. McLaughlin. "The market for homes is not going up."
I don't quite understand. Did Tasha and her husband lose their job? Did they buy a house that was so far beyond their means that they could only afford the interest only part and hoped to off-load the house before the real payments kicked in? The article doesn't say.
My house is worth half what I paid for it, but I can afford the payments and I'll just live there longer. Big deal.