Is it just me, or is something not making sense up in this story I saw on msnbc.com today.
I'm not making a ton of money, but I'd like to think that if I were a project manager, I'd be making enough to afford the $130,000 house, especially after 7 years of equity put into it, commute be damned. 50 miles RT isn't so bad compared to other people.
Even if you put $15,000 plus 'sweat equity', for new appliances, etc. you think they'd still be able to make mortgage payments on one salary. That's not a lot at all.

Foreclosure proceeding costs, rental and deposit costs; how could that possibly be cheaper than maintaining the mortgage in a house that you own after 7 years and sucking up the commute, unless maybe you're driving a military H1 Hummer with the worst mpg known.

What's the long term cost of a foreclosure? Are people really that shortsighted?
Story is as follows...
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When the Mitchells bought their modular home in rural Platteville, Colo., north of Denver, they were among the many Americans trading a long commute for an affordable house.

Seven years later, the Mitchells are making another, more painful trade. Their housing woes compounded by the growing cost of Brian’s 50-mile roundtrip commute, the couple recently decided to let their home to fall into foreclosure. Instead, they are renting a house that is biking distance from Brian’s job.

The Mitchells had bought the house in 2001, for $129,900, with the intention of fixing it up and selling it for a profit. But in 2005, when they put the house on the market, interest was tepid at best.

The couple decided to put more money into improving the house, in the hopes that it would stand out among comparable homes in the area. In the end, they plowed some $15,000 and countless hours of sweat equity into the improvements, using credit cards and a loan against a 401(k) account to fund some upgrades.

Still, the house didn’t sell, even when they dropped the price from $126,000 to $122,000. In the meantime, gas prices skyrocketed, which added to their own expenses and made their rural home even less attractive.

The couple, who have two kids, found themselves using credit cards for everyday expenses, like groceries and bills. Even trips to church were curtailed to save on gas. Finally, they decided that their only option was to let the bank take the house.

“Sometimes, in surgery, amputation is the best solution,” Brian Mitchell said.
As the foreclosure proceeds, the Mitchells have rented a house in Longmont, west of Platteville toward Boulder, Colo., that is nicer than the one they had owned. It's also less than five miles from Brian’s job as a project manager. Although the rent is more than their former mortgage payment, Brian, 43, said that, with gas savings, they are still coming out ahead. The move into town is allowing the couple to downsize to just one car.

“It was a tough decision for us to decide to let the house go into foreclosure, but I’ll tell you what, once we made it … it was very liberating, actually,” he said.

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85' 300D No inspection, No registration fees, Cheap insurance
"If my calculations are correct, when this baby hits 88 miles per hour, you're going to see some serious %$&^."

Their new landlord has to like that kind of dumb decision.

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1977 300d 70k--sold 08
1985 300TD 185k+
1984 307d 126k--sold 8/03
1985 409d 65k--sold 06
1984 300SD 315k--daughter's car
1979 300SD 122k--sold 2/11
1999 Fuso FG Expedition Camper
1993 GMC Sierra 6.5 TD 4x4
1982 Bluebird Wanderlodge CAT 3208--Sold 2/13

I don't think the mortgage payments and commuting costs forced them to make that decision...I think it would be the unsecured debt accumulated via credit cards.

The article doesn't disclose the amount or the number of credit cards owed, but if they are making minimum payments on each and STILL having to borrow because the budget is insufficient to meet living expenses, it's probably significant.

But yeah, before I would dump the house, I would have first looked at credit consolidation or worst case, bankruptcy.

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2009 ML350 (106K) - Family vehicle
2001 CLK430 Cabriolet (80K) - Wife's car
2005 BMW 645CI (138K) - My daily driver
2016 Mustang (32K) - Daughter's car

Credit cards...What do you think is normal?...

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Matt (SD,CA)

1984 300SD.. White/Chrome Bunts..Green

1997 2500 Dodge Ram 5.9 Cummins 12 Valve 36 PSI of Boost = 400+hp & 800+tQ .. ..Greenspeed

2004 Dodge Ram 2500 4x4 Quad Cab Cummins 5.9 H.O "596hp/1225tq" 6 spd. Man. Leather Heated seats/Loaded..Flame Red....GREENSPEED

Global warming...Doing my part, Smokin da hippies..

Fight the good fight!......

Its not just the house, sounds like they were living a life style they couldn't afford.

Every foreclosure has a story. If you pulled these people's credit you would probably see a car note or two, maybe a boat or bike note, and a ton on credit cards.

They also didn't tell you about the house, they could have bought it with no money down and sucked more than it is worth out with a refi.

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2016 Corvette Stingray 2LT
1969 280SE
2023 Ram 1500
2007 Tiara 3200

You're right - it doesn't make sense.

Their plight is the result of a series of poor decisions that have little to do with gas prices. A doubling in gas price for that 50 mile commute equates to around an hundred thirty a month @ 20mpg.

Fixing up a house on credit card debt is economic Darwinism.

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2002 E320 4-Matic
2008 Subaru Outback
2009 Subaru Forester

I've seen/seeing many foreclosures and that article is one of the worst examples I have ever seen, it's either inaccurate, made up or the reporter and people are the dumbest people in Platteville, CO.

Apparently, a "project manager" (whatever that means) in Platteville CO doesn't make too much money. Assuming 126,000 at say 8%, monthly payment based on 30 yr amort. is $924.
Of course, there is no mention of other debts, car loans, etc.

Sounds to me like he got a no doc loan at below market rates, and added interest to the back end. IOW, he was a marginal borrower at best who rolled the dice and they came up snake eyes) Now, he's screwed because he can't afford the payment. Is there an SUV in his driveway? (Wouldn't want to take that bet)

Fortunately, it's his residence and Congress gave him some relief last year on the forgiveness of debt = taxable income issue.

Live and learn.

The cost of the house seems low for CO. Still, we don't know what he makes, or if his wife works etc. Also, who knows what people call a project manager. Also, a lot of people want need to live in CO. I looked into going back there about 10 years ago. I would of had to take a paycut and the cost of living was more. 50 miles isn't a long comute though. We don't know what type of loan he took out. 15 yr, 20 yr, 30 yr. ARM, Fixed other. If say a 30 year fixed at 7 years he might be just beginning to aquire some equity. The big concern was they were putting housing improvements on credit cards. I've done it. Its not smart and puts you behind the 8-ball quick. Depending on what type of vehicle, loan on it etc. It might not be easy to get ride of a gas hog etc. Also, vehicle needs might be different in CO. I did live there for a few years. Storms can come up quick. Still, it does sound like prayer financing. Then the gas price increase put them over the edge.
Tom

Very low, but Platteville isn't Boulder either.

I repaired my house with credit card $$ after using every $$ I had to buy it for cash outright. Paid it off within the year.

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1977 300d 70k--sold 08
1985 300TD 185k+
1984 307d 126k--sold 8/03
1985 409d 65k--sold 06
1984 300SD 315k--daughter's car
1979 300SD 122k--sold 2/11
1999 Fuso FG Expedition Camper
1993 GMC Sierra 6.5 TD 4x4
1982 Bluebird Wanderlodge CAT 3208--Sold 2/13

...."modular" home....
Condition?"

Sad, but this family is in for worse financial crisis in the future. With his credit effectively shot for the next 7 years and his mortgage company likely garnishing his wages at his job, he'll have even less to bring home to the family.

This is the type of fatal financial decision that can hound you for years and years to come. If he switches employers or loses his job, he'll have 60 days to repay the loan on his 401(k).

Nothing like flushing the financial toilet.....twice.

You can't fix stupid.

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1985 500SL Euro w/ AMG bits 130k
1984 300SD Turbodiesel 192k
1980 240D Stick China 188k
2001 CLK55 AMG 101k
2007 S600 Biturbo 149k Overheated Project, IT'S ALIVE!!!

Exactly. And that's what kept me plugging away all these years once I woke up.

I know of a couple (not friends, former acquaintances of my SIL) who filed for bankruptcy to get themselves out of CC and gambling debt. Man did that pissed me off because the were really living it up after that. Turns out the guy's parents put his house in their name and were making the payments for him. The couple has since divorced and the last the ex-wife heard the guy had buried himself again.

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1980 300TD-China Blue/Blue MBTex-2nd Owner, 107K (Alt Blau) OBK #15
'06 Chevy Tahoe Z71 (for the wife & 4 kids, current mule) '03 Honda Odyssey (son #1's ride, reluctantly) '99 GMC Suburban (255K+ miles, semi-retired mule) 21' SeaRay Seville (summer escape pod)

It does sound low. I was looking at houses in the Denver metro area in the summer of 1997, and I couldn't find anything in decent shape (and within a reasonable distance of central Denver) for that kind of dough.

That 25-mile-each-way commute could be lousy, though. The Platteville-to-Longmont route on Google Maps is 18 miles, and while it's well north of the congestion of Denver and Boulder, the last five miles (the ones he'll be biking now) could very well be bumper-to-bumper. The whole Front Range was growing like cancer when I left in '01; it's probably far worse now.

Of course, the real financial cruncher with this couple, though no one in the media would dare mention it, is that they have two kids. If they'd held off on sprogging, they'd probably have been able to keep their heads above water.

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-- Paul W. (The Benzadmiral)
('03 Buick Park Avenue, charcoal/cream)
Formerly:
'97 C230, smoke silver/parchment; '86 420SEL, anthracite/light grey; '84 280CE (W123), dark blue/palomino