buffet saves the monolines!!! wait, what's this, they have to pay 1.5x of the remaining premiums to reinsure? doesn't it mean? oh no, he doesn't save them!!!!

What does this heretofore under-recognized not-just-subprime group have to say about the pickle it's in?

"let me out of this pickle. it smells like vinegar in here."

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"They invested much of the money in shares of companies that subsequently went bankrupt."

Wow. Dumb in housing and dumb in equities, too. Real geniuses!

-- Judge Smales
"You'll get nothing and like it"

Still, Mr. Doyle does not regret refinancing in 2004. “My goal was clear: I wanted to help my daughter go through college,” he said. “It wasn’t like it was for us.”

Yes, this has the same result as someone who took a spin on the sub-prime roulette wheel, but as someone who is also struggling to pay for my children's college I can empathize with his situation.

Last week I wrote a check for my son's spring tuition and fees. And while he is on 50% scholarship, I still sent more money in that one payment than it cost me for my entire education at a small liberal arts college in MN back in the early 80's.

The "middle class" can no longer afford college for their children without taking on enormous financial risks.

You really have to look at the cost/benefit ratio of college anymore. It's getting more difficult to argue you will be better off with just any college degree.

By the way, seems like the market may be up today thanks to Buffett, who lives in a middle-market city and bought his home as a place to live in.

Yes, Mr Buffett will gladly take money for insuring bonds that do not need insurance, but won't touch any of the paper that is causing talk of monoline downgrades and eventual insolvency ('runoff'). And the market will rise on this news. No doubt.

Aheadofthecurve -

You are not alone. I live in a relatively underheated market, and bought my house in 2000 just to have a roof over my head for the next 10-15 years, not as an investment. At the time, I knew people who were really stretching to build their dream home at 30, or moving to much hotter housing markets nearby, and wondered if I was an idiot. Now, my earlier caution is making me feel like a freakin' genius (an unjustified conclusion, I can assure you, which soon passes when I realize how lucky I was to have the opportunity to buy a house the old-fashioned way in this loony market).

They invested much of the money in shares of companies that subsequently went bankrupt.

This is kind of odd considering that over the past 5-6 years corporate defaults and bankruptcies have been historically low. I mean either he wasn't diversified, or managed to put all his eggs in a basket with a hole in the bottom.

Rowdy-I'd say that the flagship campus of almost any state U is a place where you can get an excellent education. Buffett didn't seem to be hampered by going to U Of Nebraska.

Mr Greyshades: No, I don't feel like a genius. But my wife and I did chose to establish ourselves in a mid-size area so that we could afford to buy a very nice house without stretching.

I am, btw, the proud graduate of the local state U.

You're quite right, Tanta. But never in recent history has money become such a barrier to higher education.

Even the Cali U's are priced out of reach of many now, and the next alternative, the state college system, is so overcrowded now due to lack of funding that my daughter could not get classes in her major.

What is wrong with junior college?

For education? What, a place where you or your parents can afford to pay, the professors actually focus on teaching instead of research and you don't have 500 people in one lecture? Prove yourself there even after a mediocre high school career, and you can probably waltz into a nice scholarship to State U or even somewhere more fancy. What's not to like?

Well, back t the idea of workouts, some are just not going to be able to refinance or continue with payments.

Question is, why try to work it out when the IRS is going to come after your for the difference of the short sale? Just walk away and be done with it.

although I don't at all take pleasure in other's housing misfortune, it does make me feel like a rather smart cookie that I bought into a nice neighborhood in 1995 with a low fixed 30yr, refi'd 7 years ago to an even lower fixed rate, and never participated in that 'cash out your equity' insanity.

Nice to know that I've got a higher financial IQ than those six-figure folks. Even Elton John and Michael Jackson have managed to live beyond their substantial incomes.

@Dissident:

why do you need to have a car while in colloge? Live on campus and concentrate in your studies?

Maybe HoityToity Private University wouldn't understand, but your local public university would.

Nah. My sister went to Harvard and all her JC credits transferred without a problem. She had one semester at a prestigious nursing school and those credits DIDN'T transfer to Harvard. She has a Harvard degreee and no one even cares if not ALL the credits were taken at Harvard. I went to a large private school for my last 2 years with similar results. The fact is the JC will check with your school of choice to see if the credits will transfer before you even register for the JC classes.

"Lenders didn't see that things were going too far, partly because we were too close to it, but mostly because objective evidence of this credit risk did not show up in our delinquencies and financial performance until it was too late to prevent significant losses."

We didn't know we would lose money until we lost money, just like putting money on 00 and not realizing that it would land on another number till the ball stopped.

"What is wrong with junior college?" Agwee asks...

Nothing wrong with Jr. college, per se. The problem is the overwhelming portion of the student body that treat it like 13th grade. My fairly recent experience is that the vast majority of students who go to junior or community colleges are simply biding time until 'real life' hits (read as - mommy and daddy cut off their allowance) and to make their parents shut up about "going to college". They wile away the hours playing cards in the student union; go to class as little as necessary, which hardly impacts their grades because the instructors are just passing the trash like they did all through the years of primary education.

It takes an unusually motivated student to overcome those surroundings to be successful; and such a uniquely motivated student could likely have found a scholarship into a school with better prospects of advancement and fewer obstacles.

Much of the benefit to be derived from attenting a marquee university is not the substance of the education, but the people that you come to know. You have a new business idea? The CC grad walks into the local 1st National and asks for an SBA loan and lauches an undercapitalized venture that equates to a low-paying job. The HYS (Harvard-Yale-Stanford) grad calls up his frat buddy who is now with a venture fund or investment bank and gets more money that he probably needs to make a go of it. Where does that show up in the college recruiting statistics?

Aheadofthecurve writes:
I don't want to beat yesterday's dead horse, but just let me say this. I don't discount anyone's experiences or the data, but I think I am in the same boat as many millions who don't read or post on this board. Call us the "Silent Majority" if you want. I own a house that I bought many years ago to live in, not as an investment... I do resent the fact that one way or another I and those like me will end up paying for all the foolishness, through higher taxes, a weakened economy or lower investment profits, or, most likely, a combination of all of the above. But I am resigned to the fact that I will be paying.

If you add to your case of pre-bubble buyers all the renters out there who avoided this mess (like me) then one has to ask to whom are politicians pandering? Really, aren't there more of "us" than bubble-buyers with negative equity?

Why is it so hard for me to drum up sympathy for these people? To be fair, the individuals in both examples clearly made very bad decisions about their finances. On the other hand, the use of refinancing to tap illusory "equity" to pay bills, pay tuition, buy cars, go on vacation, etc, should clearly indicate that something has gone dreadfully wrong with our economy over the past 18 to 25 years. Despite official protestations to the contrary, inflation has not been "quiescent" - costs have risen across a number of product sectors. Coupled with a stagnation in real wage growth that began in the early 1970's and accelerated fro the mid-'80's onwards, this has placed the middle - and working-classes (what's left of them) in a tight spot.

But that's okay - by "outsourcing" manufacturing and associated management jobs to low-wage countries, we can beep inflation at bay while American move into "higher margin" service-sector jobs. Right? Right?

Sure.

On the other hand, the use of refinancing to tap illusory "equity" to pay bills, pay tuition, buy cars, go on vacation, etc, should clearly indicate that something has gone dreadfully wrong with our economy over the past 18 to 25 years.

Indeed. Why have salaries remained stagnant while the cost of living continues to go up and up and up?

Why must people, with both partners working, leverage home equity to maintain a standard of living that used to be available to a family with a single wage earner?

The recent economic expansion has benefited corporations almost exclusively. Little trickle down, to borrow a phrase from a bygone era.

The recklessness of going from a loan of $275K to $740 on the same house is unfathomable to any responsible person. I'm not sure why anybody should have any pity for such idiotic act. Portrayal by NYT of this person as victim is even more intriguing ...downright substandard journalism!

The people who finance an undergrad english degree at Podunk U with $80,000 in loans are the same people who take neg am loans. I have trouble finding sympathy for someone who takes out education loans of 2-3 times what they can expect to earn upon graduation.

My law degree cost me over $150,000 (half with variable interest private loans), but starting salaries at big firms are high enough to make it work. Of course, there's thousands in my cohort at second and third tier schools who expected the big bucks and made the same gamble, only to find themselves making $45k a year with a mortgage's worth of loans and a crappy degree.

I think I'm going to encourage my kids to be plumbers and electricians. Good, honest work, and no credential wars.

js: Isn't what you are saying effectively "why do they play Musical Chairs when they know there isn't a chair for everybody"? (And that after having obtained a chair.) Of course in the game all the chairs are the same, and all the players are placed in the same situation, so the analogy can be made only in metaphorical terms.