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Every week I hear hundreds of excuses about why a home was lost to foreclosure. As it turns out, according to the victims, someone else is always to blame. In 12 years of providing this type of help, I’ve only heard a handful of people say it was their own fault, even though nearly all foreclosures could be avoided, if the owners had acted differently. There are obviously exceptions to this rule, but in my experience, most homeowners should take a look at their own faults before trying to blame others. They could have read the mortgage contract at closing, purchased a more affordable home, or spent less money on unnecessary items. Many could have sold their home, refinanced before their rate adjusted, or found help sooner, but they were irresponsible and waited until it was too late. This might seem harsh, but it’s true; acting quickly to correct the problem and finding help from a qualified source can stop foreclosure nearly 100% of the time. Don’t get me wrong, I do understand there are uncontrollable events, such as divorce or medical problems, when a home may no longer be affordable, but there are many ways to solve these problems without the lender foreclosing on the home.
Today, the big excuse is the adjustable rate mortgage. Homeowners claim they didn’t know it was going to adjust, or they blame the lender who gave them the adjustable rate mortgage. The truth is, we’ve been using adjustable rate mortgages to get lower monthly payments since 1982. Every single person who accepted an adjustable rate mortgage was given documentation clearly explaining the mortgage, so if they didn’t read, or at least review the terms of their loan, it’s their own fault. Our legal system clearly states that ignorance of a law is not an excuse for breaking it. Just because you choose not to read a contract before you signed it, doesn’t mean you don’t have to abide by it. Countless people have told me how they originally went with a no/low interest, adjustable rate loan, because it was the only way they could afford their home at the time. Obviously the loan payment wasn’t going to get any lower and they clearly knew this, but they still blame their lender for raising the rates and causing the loss of the home. When someone buys a home that they can barely afford at the lowest possible interest rate, they shouldn’t be blaming their lender when they lose it a year or two later!
I’ve heard excuses like, “my best friend died” and I couldn’t find the courage to get out of bed; only to later find out their “best friend” was a pet gerbil. Another example is a client who said they couldn’t afford their $1,100 mortgage payment any longer, but for the previous three months, they had spent over $1,200 on iTunes and $1,000 at The Gap. This woman blamed her husband for not getting a better job and blamed the lender for raising the mortgage payment from $1,000 to $1,100. People with mental problems, who let their life fall apart because of the loss of a pet, are another story, but when you continually spend above your means, foreclosure and/or bankruptcy are inevitable. How can you possibly blame someone else for this?
I wouldn’t be writing this article if stories like these were few and far between, but nearly every single person we hear from has a similar story, each leading up to how someone else is to blame. Just when we think we’ve heard the most absurd excuse ever, we get a caller with something even more ridiculous. The scary part about all this, is that these people really believe someone else is to blame. They don’t take responsibility for their own actions that led down this path; which means they probably wont learn from their mistakes. This theory seems to be proven, based on the number of people who go into foreclosure multiple times, or spend 2 or 3 years in and out of foreclosure, until they finally lose the home.
Of course, everyone is quick to blame the lenders, or the government for not imposing stricter rules. But with stricter rules, many people wouldn’t have had a home to lose in the first place. Think about how many people were able to buy their home, under the old rules, who didn’t go into foreclosure. When new mortgage rules were imposed, home sales immediately dropped, which affected our home values and the overall financial market. Now we have tax supported bailout plans, so homeowners are blaming the government when they lose their home. Many are upset and were expecting the bailout plan to be a handout, rather than a plan to prevent this from happening in the future. Handouts today can almost certainly mean higher taxes and more government control over our spending in the future. Do you want the government to control when and where you spend your money? Maybe, when your credit score drops below 650, we should have a system where the government steps in and takes control of your entire life?
We live in America, where each person has the right to spend their (net) income almost any way they please, which also gives us the right to end up broke and living on the streets. We are each responsible for our own actions, both good and bad and it’s time we accept that responsibility. If we don’t accept this responsibility, we will risk losing it. If you are facing foreclosure, regardless of the reason, you need accept responsibility and determine what actions led you down the path to foreclosure. Whether it was not reading or understanding a legal contract at closing, or buying a home that was realistically more than you could afford. You need to determine what you could have done differently to change the outcome of events that led to foreclosure and make changes immediately. Stopping foreclosure is as simple as fixing the problem that caused the problem in the fist place, so until you can truthfully identify this problem, it will be impossible to stop.