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Why have the tables turned? For many decades, Americans made their mortgage payments a “paramount” financial responsibility. Obviously, their homes were their most vital assets. However, three years ago, the carnage of the mortgage lending crisis triggered by greedy Wall Street lunged homeowners with troubled mortgages into then abyss of missed mortgage payments. But, the massive mortgage payment defaults makes perfect sense… Ramifications of the banks’ shoddy mortgage loans finally came to roost as homeowners, many victims of unemployment, where stuck in the predicament of spiked mortgage payments that they could hardly afford. Then, a resulting wave of foreclosures caused the real estate market to bottom out. With no liquidity on their properties, once a most prized asset, one could hardly blame the ensuing derelict behavior of consumers. What is a sane person to do with a piece of property that’s depleted of all of its equity? The bottom line is that if your property (asset) has no liquidity, you can’t refinance or take out a home equity loan on your mortgage to pay down debts, or satisfy other basic living necessities. Sadly, even as the economy gradually improves, TransUnion analysts prognosticate there’s no immediate prospect of changes in the horizon. They report that the proportion of consumers falling behind on monthly credit card payments remains at near-record lows. Banks may have received a government bailout. But, the present tell tale signs are still a reality too grim for many mortgage lenders to bear. In the final pages of the closing chapter, movements from common citizens like Occupy Wall Street, and the developing movement of defiant homeowners squatting on their foreclosed properties, are giving the mortgage banking industry a come-uppance. Plus, reaping what they sowed, banks face yet another stream of foreclosures right around the corner – more sage Americans continue weighing their options in giving preferential treatment to their credit cards over mortgage payments. Odd as it seems, in these still pressing financial times, credit cards are a more liquid, more valuable commodity for many folks to preserve. At least for now, despite the disdain of their usurious interest rates, credit card companies prevail as the lesser of the two evils.
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This sounds so odd but I can understand where people will make payments on their credit cards to have some credit limit availability for emergencies — It sounds like so many people have zero equity or their homes are underwater. You can’t take your home to the store and buy food or clothes or pay for emergency car repairs, but you can use your credit cards.
This is interesting, but not too surprising information for sure. Credit cards have a lot more value then we tend to think. The capacity to essentially borrow money on the go, whenever we need it; and even if we will not be able to pay it off quickly, is very tempting and convenient for making purchases or paying off bills. One thing I think should be pointed out is the criminality of the trillion dollar bank bailout passed by the government. As this did pass, I think it would only be right to cut bills of a multitude of people who are still in credit card debt; considering a majority of the money banks received was from taxpayer dollars. One can only imagine how much better off people would have been without having to put so much money into their taxes. Honestly, for some people it is probably the difference between keeping afloat or sinking financially.
Anyways, it does make sense wanting to keep your line of credit as open as possible. I also don’t think the fear of your home being taken away (or something like that) is very prevalent in the minds of many people. Interesting article!
The one thing I always say about the “lesser of two evils” is that you “still have to choose evil.” Credit card companies have their own proverbial bag of problems that go far beyond them being “decent” when it comes to the fact that credit cards are now worth more then the homes we live in. With this post in mind, I really wish that the government would do more to “bailout” the citizens of the United States, as opposed to the big businesses. It’s a strange and corrupt capitalist society where individuals are out on the street and hardly getting by, yet the government bails out big companies and increases taxes in the process as well. How can people be expected to escape debt that is put on them in part by the government?
Amy, great question! Although it’s true that federal laws may make it easier for banks to enslave consumers into debt and provide debt relief bailouts to banks, consumers are ultimately responsible for taking on a debt. One of the aims of the Debt Free League Blog is to disseminate information pursuant to abusive Credit card companies so that folks can become “informed consumers” and make better choices on getting out of debt. Case, in point this particular TransUnion post illustrates a new trend on consumers giving priority to their credit cards over shoddy mortgages. Ironically, it shows that consumers are in fact waking up to as you say, “the lesser of two evils.”
[...] credit repayments to meet, you will have more scope to do this. It is a more serene way to live.There is an increasingly widely held impression in society today that in order to get by, you have t…as well be the case. However, it is possible to live life debt free if you follow some rules and [...]
2011…
Nice read, I just passed this onto a colleague who was doing a little research on that. And he just bought me lunch because I found it for him smile So let me rephrase that: Thank you for lunch!…
When reading this it felt so natural! anyways,
This is crazy but true for the whole situation. TransUnion have been doing some outstanding things and not in the good way, I find it very interesting to read about topics like these because they catch my attention more than anything. Thank you for writing about this and I still find TransUnion`s analysts prognosticate a little weird.
It must be very frightening to have to make the choice between paying a credit card or a home mortgage. Still, I can’t imagine choosing to pay a credit card over my home. Losing your home would be a much greater devistation. I think part of the problem though is that credit card companies are so aggressive in their collection tactics that they frighten people.