I feel bad for these people, not sorry, just bad that things are just going to get worse for them, and that they can’t see that yet. I think they should have just let their house foreclose, in the long run they’d just be better off. If they had nonrecourse loans (which I think they had) they wouldn’t be 1099 taxed, all they would have was bad credit -not the end of the world. Now with the changes that Countrywide made, they will be in more trouble because then they will be taxed and possibly sued when the eventually end up in foreclosure sometime down the road. Wow, I wonder how much they paid for that guy to give them awful advice?
I have some good friends in Texas who are the poster children for hyperconsumption, and they just never get it, and I think they never will. One day I suggested the book The Millionaire Next Door, and they just laughed at me. “What, save money? Don’t spend half your income on housing! Ha! That’s crazy!” They were in such a great position when they moved, they could have bought a very nice house for cash, but no…they bought a McMansion, and put in a 100K outdoor kitchen and pool. They have already taken out a second to pay off credit cards (which they ended up not paying them, and spending it on other things). They are hurting, but haven’t learned their lesson.
It seems that people need to hit bottom, and really experience the consequences of their decisions to finally have the courage to make changes. They are in denial, just like an addict, and need help to see through the mess they’ve gotten themselves into. Unfortunately the help they seek out (bad financial planners, loan officers to refi, etc), continues to enable them…It’s like a counselor at a drug treatment center giving a heroin addict cocaine…makes no sense.
