Thursday, September 25, 2008

My contribution to the current economic crisis

Yeah, you can blame me. Well, at least partly. I was one of "those people" - I was one of those unfortunate idiots who lost their home due to the mortgage crisis, the adjustable-rate-mortgage fiasco, the very situation that seems to have led this country to the current economic failure that it is in! I read an article about this recently, and then I read the comments that folks had made. I gotta tell ya - I was shocked at how easy it is for some people to be truly, outright mean without even knowing people's individual situations. They outright blasted anyone who accepted an adjustable rate mortgage (ARM) as complete morons who deserved what they got.

I beg to differ.

Let me tell you MY story. My husband and I were renters. We were pretty content being renters. We didn't have great credit, we had both gotten ourselves into trouble when we were younger with credit cards and such, and we were just trying to re-build our credit back up. But we rented a home, and we paid our rent, and we were fine. My husband's uncle, who he was very close to, called him one day and excitedly explained that him and his wife were selling their home - which they lived in with 3 other people - and that he wanted to give Jeremy the opportunity to buy the home. We went over and looked at it - it needed a lot of work, but he was offering us a pretty good price, for a 4-bedroom home in a nice neighborhood on a dead-end street, with a swimming pool. We told him we'd never get a mortgage, we had no down-payment and less-than-perfect credit. He "knew a guy" who could help - a lawyer who did mortgages on the side. He was a well-known lawyer in our area, actually. What he would do was "gift" the home to us, and then we would re-finance it through this person. We then would pay Jeremy's uncle the difference between what HE owed on the house, and what we financed. You following me here? All perfectly legal, that's the kicker.

So we meet with this guy and we're signing our lives away and I ask if I should read everything (there are HUNDREDS of pages!), the lawyer kind of laughs and makes a joke about how long THAT would take! Well, I try to read as much as I can, and I instantly get nervous when I see the words "adjustable rate mortgage" - now this was in 2004, so they were not on the news all the time like they are now! The lawyer says "No big deal - by the time the interest rate goes up, you can refinance again into a fixed rate." Welllll.... Okayyyyyyy...... I was a first-time home buyer, I had no idea what that meant, and by now, I was so excited to be buying a house, that I took his word for it. Idiotic mistake #1 that I will NEVER make again.

Jeremy's uncle also convinced us how silly it would be to pay for a home inspection. He's his UNCLE for God's sake, he would tell us if there were anything wrong with the house! We knew the bathroom floor was completely corroded in the master bathroom - you could actually see through the floor into the cellar. That was planned project #1 as soon as we decided to buy it. So we stupidly decided to forgo the home inspection. Idiotic mistake #2 that I will NEVER make again.

We move in. Jeremy's uncle and various roommates know that we are moving in on this certain date. We show up with a moving truck and they are all still in bed, sleeping off their drug-induced stupors. Oh, the things we found out that day. *shudder* THEY HAD NOT PACKED ONE THING. Not one. Their clothes were in their drawers, the cabinets full of food, the pantry full of pots, pans, dishes. MOLDY FOOD IN THE REFRIGERATOR. I burst into tears. Jeremy's grandmother patted me on the back and said "Well now, no use crying about it - we'll just have to get them packed up as we unpack you!" So that's what we did. We'd unpack a box of my stuff, and pack a box with theirs. It was a long-ass weekend, let me tell you that. I won't bore you with the entire horror story, but Jeremy and his uncle ended up getting into a fight. It was awful - and I can't tell you how many people have said to me "Well, there you go, you don't buy a home from a relative!" They were right, it's not a good idea.

After we moved in, we did a LOT of work. I wish I had taken before and after pictures, but I didn't. The master bathroom was disgusting - the floor was rotted out completely and the shower... blech! Jeremy did it all over, he tiled the floor and the shower walls himself, it came out beautifully. We had water damage on our kitchen ceiling after a rain storm, and we ended up doing the entire kitchen over. Jeremy did it all himself. Our cellar flooded BADLY - there were 4 sump pumps down there and every stinkin' time it rained, those suckers would pump for days. They pumped the water out into the yard... where it would flow back into the cellar. We did every bedroom over and we turned the 4th bedroom into a stamping/computer room for me, it was my favorite room in the house!

We had never owned a home before. We had never realized that you don't just have a mortgage, you have other bills that renters don't have - such as home insurance, property taxes, and a water/sewer bill. We began to struggle.

And all of a sudden, our mortgage went up. Jeremy got laid off from work and we fell behind. Once we fell behind, it was hard to catch up. And our mortgage went up. And when you are behind on your mortgage, you cannot re-finance. And our mortgage went up. And before we knew it, we owed thousands of dollars and our mortgage was up to $3500.00 per month. Yes, THREE THOUSAND FIVE HUNDRED DOLLARS PER MONTH. How do you "catch up" when you don't even MAKE enough money to pay the mortgage every month? The furnace was completely shot - by the time we moved out, we couldn't even take showers at home because we had no hot water. We were out of money and couldn't afford to replace the furnace. Winter was coming. We have children - we HAD to get out of there.

So we gave it up. We filed for bankruptcy, what else could we do? It was awful and I was so embarrassed about it for a long time, but then the more I read and the more I talked to people, I realized that I was not alone. A lot of people got sucked in - some were like us and could only get an ARM, others were offered ARM's at a lower rate than a fixed with the promise of refinancing once the ARM went up - but then they got into situations such as mine and couldn't refinance. Everyone has a story and I will tell you this - I don't think ANYONE went into it expecting to have to give up their home and file for bankruptcy. It was the very last thing that I wanted, but I had to swallow my pride and do what was best for my family.

So we are back to renting a home that we love, and we are happy. I honestly don't know if I'll ever want to attempt to own a home again, certainly not any time in the near future. Because although we do the regular maintenance around here such as clearing snow and leaves, I like the security of knowing that if the furnace goes, the landlady has to fix it. I hope that the federal government makes such risky loans illegal, to tell you the truth. We probably never should have even been approved for a mortgage/refinance loan with the poor credit scores that we had. Of course I do take responsibility to some extent, because I am a smart girl and I guess that's what pisses me off so much about the whole situation. I hate that I let my eagerness to call myself a homeowner cloud my better judgement. Anyway, that's my story. I don't think I personally was the cause of the terrible financial state that the country is in - but take what happened to me and multiply it by a few hundred or even thousand and you're looking at a pretty serious default rate on a LOT of money. Those banks and lenders have to own some of that responsibility, too.

Well, that's all for now. Stay tuned for my update on Trevor and school tomorrow. Peace!

1 comment:

  1. Wow Jenn, I'm so glad that you wrote about your home ownership experience/nightmare. I'm one of those people who didn't quite understand how so many people got into their situation but you made sense of it. The lenders took advantage of people with the ARM's and pretty much shot themselves in their own foot. And now everyone is paying for it. I'm glad that you and your family got out of your situation and know that things will work out for you. :)