Almost every day, I see another large red unit sitting in the city, a silent threat of encroaching danger and doom. They sneak in overnight, or during the day when many of the neighbors are off at work. No one every sees them come and go; the people that operate them must be invisible. Perhaps they are space aliens?
Now, even my "safe" neighborhood has been invaded, though it is filled with people who I expected to be on guard. Instead, neighbors are disappearing. I find out they are gone only when another red unit sits where my neighbors once were.
Follow me and learn more about the danger. . .
A Red Mobile Unit:
These are not filled with construction waste, but with the leftover objects of a home: Furniture, rugs, pictures, clothing, mementos, toys, books. Whatever could not be crammed into a car - if a car is available.
shanikka, bonddad, and others have written eloquently of the financial crisis that looms in our country, a big part of which is the housing crisis. We have a cascade of sub-prime mortgages that are coming undone, with large numbers of people unable to pay the rising costs of mortgage payments. shanikka’s diary earlier today is a better discussion of the scope of this difficulty than I can provide. However, my aim is not to discuss the technical details, or the "epidemiology" of the problem.
If your housing is secure, if you have few financial concerns, and you live in a place where the red dumpsters aren’t proliferating, the current mortgage crisis may seem less important than other progressive issues. I can identify with this – my central concerns are for education, civil rights, children’s care, and mental health. Nonetheless, progress on those issues is threatened by this crisis. The scale is large, but the effects are family by family, individual by individual.
Here is one person's situation. I hope her story will increase awareness of the broad base of the mortgage crisis.
I’m going to lose my most wonderful neighbor. She’s a lovely person of high culture, who knows art and music better than almost anyone I know. Although she's well past retirement, she’s young-looking and vital in spite of her age. She is still a great beauty, and attracts people easily. She’s generous and trusting of friends – to a fault.
Her husband died a few years ago, leaving her with a big, fully paid for house, a modest pension and a small nest egg. Her house is old, in constant need of work, like most in our historic district. She decided to take out a small mortgage to work on things left undone during her husband’s long illness. Not a bad idea, given the modest amount and her financial circumstances.
She asked me to read the pre-closure copy of the mortgage. The only good thing about it was a constant interest rate. It was an interest-only, subprime mortgage – in spite of her report that the mortgage agent saw she had am excellent credit rating. I made a list of the problems that I saw in the loan agreement. Her attorney also noted some problems with her loan, but she assured us she would see that they were fixed. So... she reported that she got the "bad things changed" at the closing, but I never saw what she had signed. I worried.
Now, four years later, she is in trouble. Her first mortgage apparently required her to refinance within three years, but defying logic, the loan forbade her to pay off the loan early without large penalties. At the end of three years, she was talked into staying with the same mortgage broker. She also gave away money and made personal loans from her first mortgage. Several friends benefited, including one of the mortgage brokers. Her generosity, however, left her with an incomplete remodeling job. So she took out a bigger mortgage to replace the first one, and then earlier this year, a third mortgage replaced the second one. The interest rate rose each time she refinanced, as surely as if she had taken out a rising interest loan. And the amount of the mortgage grew by 300%,not
to speak of taxes and insurance.
I have no understanding why anyone would give my friend a mortgage that requires her to pay 78% of her gross income for her house payments, taxes, and insurance! I suspect that her agents lied about her income when she took out the second and third loans. They were very "helpful" to her in completing the applications.
My neighbor owes a great deal of money, at this point probably more than her house is worth. It’s very hard for her to understand that her lovely home may have dropped $50K in value over the last year. Because of the many foreclosures in our city, housing values have dropped precipitously. The housing market is returning to what it was in Detroit during the periods of rampant white flight. Without a family and resources, with little prospect of getting the money she loaned to others repaid, she’s going under. I see no clear way out of her situation. She’s very worried, but has been told, incorrectly, that she won't lose her house, no matter what. So her property taxes are going unpaid, and virtually all of her other bills are being skipped to an increasing extent. Her good credit rating is gone, as is her nest egg.
The Wall Street Journal featured the home mortgage crisis in Detroit about three months ago. Apparently, more than 1 billion dollars in these mortgages have been made in Detroit. Some neighborhoods in particular are targeted.
It reminds me of nothing so much as the block-busting days of the past, yet I see little action in Lansing or Washington to help.
Another big red mobile unit is coming for my friend, and it’s a damned shame.