HEINDRICK SO

It’s no surprise that the subprime borrowers are suffering and it makes sense that almost everyone around is suffering – but here is an article which may still come as a surprise. New York Times writes of the spreading mortgage crisis and includes a story of a engineer making six figures now facing bankruptcy.

“An example of the spreading credit crisis is seen in Don Doyle, a computer engineer at Lockheed Martin who makes a six-figure income and had a stellar credit score in 2004, when he refinanced his home in Northern California to take cash out to pay for his daughter’s college tuition.

Mr. Doyle, 52, is now worried that he will have to file for bankruptcy, because he cannot afford to make the higher variable payments on his mortgage, and he cannot sell his home for more than his $740,000 mortgage.”

“The whole plan was to get out” before his rate reset, he said. “Now I am caught. I can’t sell my house. I’m having a hard time refinancing. I’ve avoided bankruptcy for months trying to pull this out of my savings.”

Don is a prime example of what many California homeowners are facing – paying for the mistakes of unqualified buyers and literally taking thousands of dollars in equity from their homes.

“But borrowers like Mr. Doyle, the engineer in Northern California, say they are victims of their circumstances — housing prices collapsed and lending standards tightened just as they needed to sell or refinance.

In refinancing their home in 2004, Mr. Doyle and his wife were doing what millions of other homeowners did in the last decade — tapping into the rising value of their homes for home improvements, paying off credit card debt, college tuition and for other spending.”

Mortgage Crisis Spreads Past Subprime Loans @ New York Times