I'm probably going to hell for this post...

...but the fact that the subject of this story is a cancer patient doesn't excuse the mindless "banks are evil and prey on innocent homeowners" meme spouting sloppy journalism. I suggest you read the article before reading the rest of my post but here are the salient facts:

• The Kempffs are facing foreclosure after deliberately missing payments on their mortgage


• They bought their house in 2002 for $430,000


• They now owe $786,802

This means in 7 years they have extracted over $350,000 through cash out refinances. That's about $50,000 per year tax free, roughly equivalent to the spending power of $80,000 per year of taxable income. Nice work if you can get it.

So what crisis (other than the tragic disease) has triggered this? Per the article the "Kempffs' option adjustable-rate mortgage payment skyrocketed to $4,300 a month from $2,500". Yikes! Is their heartless bank jacking their interest rate to 20% or something? Um, no. They are simply requiring (as all Option loans eventually do) that the payments begin amortizing. Ever wonder what an amortizing payment on a $786,802 loan looks like? Well at a perfectly reasonable 5.16% rate it's, wait for it, $4,300. (That's slightly better than the current average for 30 year fixed conforming loans). So all the evil bank was asking for was that they actually pay principal and interest at what is historically speaking a pretty low interest rate. This cannot in any scenario be considered unreasonable, can it?

Did anything else contribute? Perhaps loss of income?

Lois is struggling to keep up her business as a piano instructor in the dwindling economy. "I went from having 40 students a week to 13 students a week, so my income just crashed," Lois Kempff said. "From October to May, I lost all those students."

What is unreasonable is that you can borrow the equivalent of an $80,000 salary every year for 7 years and expect that you'll never have to repay it. It's even more unreasonable to believe that you can repay it teaching piano lessons. Let's assume the statement is accurate and she really did have 40 students per week. At $20 per student for 50 weeks per year that's $40,000 per year. Her house was "earning" twice as much as she was. This debt was never going to be repaid by any means other than selling the house, and the house was probably never really worth that much (they now estimate it to be worth about $550K).