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What's that about fools and money? 
14th-Feb-2008 08:14 am (UTC)
I'm sorry, but that story is hilarious. (In that really horrible way.)

In the lead paragraphs, Mr. Doyle is "facing bankruptcy" because he can't make payments on his $740k mortgage after refinancing in 2004. It's not until the penultimate paragraph that we learn that he bought it for $275k 13 years ago and has refinanced nearly every year since. That's some brilliant financial thinking right there.

The other story is nearly as fabulous. Ms. Harris has an option ARM, aka the "feel free to screw yourself, or we'll do it for you" loan. (OK, I just made that up.) The borrower can decide how much to pay within a range; at the low end you're just paying part of the interest, but you can pay off principal if you want by writing a bigger check. She is making the minimum payment and is about to hit the 115% threshold at which she has to start paying down the principal. She, too, is pretty clearly an idiot.

Now at least in her case the lender is an asshole too; writing a three-year prepayment clause at over 10% of the principal is appalling. But god damn, woman, don't sign if the deal is going to screw you.
15th-Feb-2008 07:20 pm (UTC)
As someone who just went through the process of buying a house, I don't understand what these people were thinking. I have very little pity for people who took risky loans on their homes and are now complaining that the best case scenario didn't happen.
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