Reply to What I don't get: When people complain that they are drowning because their house is underwater

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[quote=Anonymous][quote=Anonymous]Actually, for generations and generations, people bought a house and stayed in it.  MAYBE they upgraded once.  They bought and held real estate for a long time, which allowed it to appreciate slowly, and at the same time they paid off the mortgage, so at some point they owned the house free and clear (regardless of what it was worth).  And that is EXACTLY what would happen today - if people paid down the mortgage and didn't worry so much about what the assessment is worth.  This brings us back to the OP's question, by the way.  Homeowners who can make their payments aren't "drowning" because they're underwater.  Sure, they lack flexibility, but that's not the same thing.  Drowning means your income can't meet your obligations.  But inherent in the question is that the homeowner CAN meet her obligations, but is stressed because her house is worth less than her mortgage.  Which stinks, but isn't a good reason to modify the mortgatge, in my opinion.  
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You know, the housing bubble of the early 2000's when the prices were skyrocketing annually, lead many to jump on the bandwagon late.  By the mid-2000's I saw and heard of many people who thought that they *HAD* to buy then or they would get priced out of the market and then bought more than they could comfortably afford expecting that they could do what people did 5-10 years before which was buy on speculative financing and then refinance, or "take the equity" out of the house, or sell for a quick profit in 5 years and then move on to the house of their dreams.

This is akin to people buying a hot stock...the real investors buy early, and wait for all the speculators to buy into it and when the major investors bail taking their profit, the price plummets and you have the latecomers stuck with a much weakened stock and a cash loss.  It's unfortunate that this has happened to so many, but as pointed out, buying 2-3 houses and getting bigger and bigger each purchase is a very recent phenomenon, say the last 20-30 years.  Before that, people behaved as the PP says.  Unfortunately the latecomers are stuck on the back end of the housing parabola of this relatively new paradigm.

I'm sorry you don't get the profit, sell and move on, but that was never guaranteed.  It does not justify mortgage modification.  I think mortgage modification should be reserved for those people who can no longer afford the mortgage they have, e.g. those who have lost jobs, those who have a family member with a prolonged illness, especially one that was one of the income earners.  These are the ones that need the bailout.  For those just dissatisfied with their location or home size, unfortunately, I don't think the government really can afford to bail you out and you'll have to "wait it out" as the other PP said he has to do.
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