Warning, this is a post that has very little to do with bankruptcy. It is the rant of a fed-up consumer lawyer. If you are looking for legal information, there is plenty of it in this blog, but this post is not one of them. If you are however looking for common sense for your dollars and cents, you have come to the right place.
Fair warning, let the rant begin!
Recently I was driving and heard an advertisement enticing the consumer to go into debt to go on vacation.
The ad goes something like this.
Wife: “Oh, I can’t believe it.”
Husband: “Yeah”
Wife: “Is this our vacation?”
Husband: “No, it’s the honeymoon we never took.”
So far, so good, but then here is the catch… Wait for it…
Husband: (Thinking) “Finally I get to fulfill the promise I made, thank you Ivy (Name Changed to protect the guilty) Financial.” Then the radio announcer guy says “Take out a loan against your house for new furniture or that vacation you’ve always wanted to go on.”
I thought we learned our lesson in 2008!
At this point I started yelling at the radio. I stopped myself before I drove off the road and because I had woken up my daughter (sorry Mellie) with my rant. I let loose a torrent of frustration usually reserved for my hapless New York Mets.
Did we learn anything in 2008? You finally have SOME equity in your home and you are going to borrow against it to go on vacation? Seriously?
Banks exist to make a profit. They are not sending you on vacation for nothing. Every additional dollar you borrow against your home is an additional dollar you will have to pay back later. SO DON’T DO IT!!!
Lets pull this ad apart. It said “take a loan against your house.” A house is a thing, an object, something that is replaceable. Your home is where your kids live!!! The bank is enticing you to borrow money against the place your kids live.
You can’t live in your vacation.
I can’t tell you how many people I see in my office that have awful second mortgages and can’t tell me where they spent the money. I know where they spent the money, and so do the Ivy Financials of the world.
So what does this have to do with bankruptcy? Very little actually. Most lenders are being very careful about second mortgages these days. They are being careful because with the value of real estate plummeting (it has dropped 35-40% and the biggest shoe hasn’t dropped yet) they have been subject to lien stripping even when they have tried to pull a dirty 80/20. This means that a lot of second mortgage lenders are not getting paid on their loans.
Be assured that this time around, the second mortgages will be paid, every last penny, and if they are not, they are going to start foreclosure proceedings.
There is no free ride on the second mortgage these days. I thought we learned our lesson in 2008.
