I keep my posts related to fishing material but occasionaly wander to other forums. I have a sincere question that I hope someone will take the time to answer. My understanding of the current economic woes is that banks are failing because people are walking away from their homes because they:

1. Lost their jobs can't find a replacement soon enough, fail to make the mortgage payment and walk away or

2. Their ARM loans finally caught up with them and their payment went from $800 to $1800 and they can't make the payment and walk away.

Losing your job is tough and I have a little more compassion for these folks.

However, pertaining to the other scenario, why didn't home owners when, after realizing their mortage payment was going to double, didn't they refinance to a lower rate?

My guess, with what little economics I understand, is they bought more house than they could afford and so instead of creating some equity, they were slowly but steadily went further and further in the hole.

Assuming I have a handle on this, I would guess if I were to place blame, it would be to those that signed on the bottom line with partial blame going to banks and loan officers for allowing folks to borrow more than they could afford.

I bought two houses (selling one to buy the other) in the last few years. After the loan officer told me what I could afford, I lowered it by several hundred dollars per month so I was not living on the edge all the time. I suspect there are some who should have done the same.

Anyone?

Or should I just tell myself to STFU (which BTW I just found out what it meant a few weeks ago).