Two income household, one is a professor of English and Cognitive Reason, other sells dolls online (which can actually be quite lucrative, depending upon what kind).
1994 – Original house, 3400sqft bought for less than $200,000.
2004 – refinanced into sub-prime for $292,500 – initial interest 10.375 (peaked at 12.375)
2005 – started having trouble making payments, claimed because of health problems (his – the dollmakers, his wife is the professor)
Why did they refi in 2004 into a higher interest rate? This does not make sense. They were ‘set’ until then. There was a claim that it was for health care and his business. I suspect it wasn’t health care as much as equity out for his business.. His wife is a professor and most college prof’s health care covers both partners.
Effectively the guy ends up doing an equity out, ‘gambles’ around $90,000 in a ‘business’, whines to the judge and gets it all erased.. even the principal he owed on the house. I do think that the $235,000 in interest and penalties over 5 years might be excessive.. though 10.375% applied over 5 years yields $186,658 if they had stopped any mortgage payments and with no increase in interest during those 5 years (amount that would pile up if they decided to try to live ‘rent free’ by not paying the mortgage).
