View Mobile Site

Betting America’s wealth, future on irresponsible borrowers

Text Size: Small Large Medium
POSTED February 28, 2009 5:17 a.m.
Last April a Manteca woman in her 40s was able to stop the foreclosure process on her rural Airport Way home. She did it by working odds jobs and relying on the generosity of others who gave her items to have yard sale after yard sale.

Her home was far from being in prime shape. She was getting odd windows here and there to fix it up. It had structural issues she was fixing. One bathroom was completely shut off due to plumbing problems. It was a step or two above tear down stage but she was working on it.

The home was jammed with boxes of items she had collected for future yard sales. Furnishings were sparse. There was no TV. There was no computer.  There were no granite counter tops.

It would be safe to say the McMansion crowd would compare the house to a slum. It wasn’t, though. She was fixing her home. She was fighting to save her home taking on any odd job she could. She had owned much better but she went through a period of bad financial luck that put her and her kids on the street. She saw the value of a house for what it was - shelter that you could go home to.

It was a stark contrast to the “woe-is-me” stories dominating the news.

A few days later I ran into a retired Manteca firefighter at the North Main Street Save Mart.

He told of a neighbor who had shot and butchered a hog in the front yard of their newer northwest Manteca home. The retired firefighter was surprised to find out there was no law against butchering animals for food in your front yard. Although the cultural difference was a bit jarring, the experience that floored him the most was when the neighbor’s church members came knocking on his door asking for donations so they could keep their home.

It’s when he found out prior to buying the home that sold in excess of $400,000, the family of farm workers were living in a barn in Lathrop.

The family obviously had no business buying a $400,000 home. The odds are also likely that they were misled by the lender who only saw fat commission checks.

Then there are the buyers that were foreclosed on in the Woodward Park neighborhood.

They bought their home in February 2005 with a zero percent down loan with two years of reduced payments that were essentially partial interest. In December of that year, a second was taken out on the home. It was done on “equity” that the home gained in 11 months. The loan wasn’t huge but they were able to pull out $20,000. County documents don’t tell you what they spent the money on but it certainly wasn’t on home improvements.

They are the home buyer who symbolizes the foreclosure mess, not the struggling single woman or the misled farm workers. They bought with nothing into the home. They went into not viewing the house as a home but as a source of wealth that they could access when they wanted for fun money.

And now they are walking away without losing anything that they had before going into the deal. They put no money into the house to buy it. They had mortgage payments that were most likely lower than their previous rent payments. They were able to deduct 100 percent of their mortgage payment because it was all interest. Neighbors said the family told them they stopped paying the bank for five months before moving out which means they spent nothing on housing for five months.

They also were able to walk away – thanks to an act of Congress - from having to worry about being taxed on money that the bank was not able to recover on their loan when the home was sold in foreclosure.

Why should we keep risking the economic future of this nation on people who played the system for all it was worth?

Nationally, close to 60 percent of all mortgage loans of such buyers that banks have modified to put mortgage payments into line with household income after the lender took  a hit on principal and interest are going into default.

These are people who the bank took a second risk on because the hard income numbers showed  that with discipline – read that dropping things that have become “needs” but are actually “wants” and paring down – the borrower could manage mortgage payments.

These are the people we’re risking everything on, not that single woman on Airport Way or even the farm worker who was somehow duped into believing he could afford a $400,000 slice of the American Dream.

The Woodward Park buyers represent the bulk of the 10 percent of the population that when all is said and done made opportunistic home purchases with hardly any skin in the game.

We are redefining government not based on the responsible action of 90 percent of the population that includes those who honored their homeowner commitments as well as renters.

These people are not victims. They are playing the rest of us.
Commenting is not available.

Commenting not available.

Please wait ...