Hard times for owners and renters


Many a man who pays rent all his life owns his own home; and many a family has successfully saved for a home only to find itself at last with nothing but a house.  ~ Bruce Barton

Two of my neighbors have to move because their landlords are being foreclosed on.  The guy across the street is very angry that he has to move, and feels that his landlord cheated him by collecting rent by not paying the mortgage with the rent money.

Of course, this doesn’t make a lick of sense.  First, as a tenant, he got what he paid for – a place to live.  So in a sense, he got what he contracted for.  I’m not sure if a lease includes the guarantee that the house will be available for the duration of the lease – if so, perhaps he *would* have a reason to be angry about breach of contract.

We lost our homes, including a rental home, to foreclosure, and I guess our former tenants could be mad at us for the same reason.  However, it was not an easy or fun decision to lose all that money I had invested.

Interestingly, this morning on NPR I heard Why Some Homeowners Hope For Foreclosure. Seems that more homeowners are no longer looking at foreclosure as an ethical dilemma (which it was for us), but purely as a numbers game.
I mean, if you owe $400K and your home is now worth $200K, it’s probably better for your finances to

  • Buy another home at current, low market rates (for around $200K)
  • Default on your first home, and take the credit hit for a few years
  • Live with half the mortgage at the low rate you secured on your new house before default

Wish I had done that now.  I’m still working through the huge debts that foreclosure foisted on me, and may have to lose all my assets through Chapter 7 Bankruptcy in order to start fresh rather than be saddled with hundreds of thousands to pay off.  Crazy world we live in, and lots of professionals I know are in the same boat.

By the way, I was twice interviewed on NPR’s Marketplace Money on this subject in Ghost Town USA and Who wins in a cash-for-keys deal? about two years ago. Seems like a long time ago now.