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Paul Kiesel
Paul Kiesel
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Jose Canseco's Home Foreclosed On

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Jose Canseco is the latest victim of the housing and mortgage crisis, or at least one would have to assume so. It was reported late last night by the AP that Mr. Canseco is walking away from his $2.5 million Encino home.

Mr. Canseco states that it didn’t make sense continuing to make payments on the mortgage. And other than some information regarding his financial state of affairs (he claims that he was, “only left with about $17 or $18 million, not even,” after paying taxes on about $35 million made, implying that he is broke), there is no clear reason as to why he chose to let the bank foreclose on his home.

Statements like the ones Mr. Canseco is making will lead anyone familiar with the subprime mortgage crisis to believe that Mr. Canseco had likely taken out some type of jumbo Option ARM loan or refinanced into a similar loan (maybe a teaser rate payment loan). After the value of his home depreciated and his interest rate either reset to a higher rater or the balance on his mortgage owed was greater than the value of his home, it made sense for him to let the bank take it. However, there is also a strong chance that maybe he was struggling financially, like most people have been when their home is about to be foreclosed. A lot of the people who have been going into foreclosure lately are struggling with finances because a large chunk of their income is going to pay their recently increased mortgage payment.

Mr. Canseco does have sympathy for other people who are in similar housing situations. “Like I said, my situation was a little more [sic] different than most. I decided to just let it (the house) go, but in most cases and most families, they have nowhere else to go.”

What this proves is that the turbulence of the housing market is affecting people from the working middle-class homeowner, all the way to the more affluent homeowner. It is safe to say that anyone who did refinance into a teaser rate payment loan or took out an Option ARM loan over the last three years, is not impervious to the subprime mortgage crisis and all of the other uncertainties surrounding the housing market.