Due Unto Others ...

The county approved $40k to develop an education program for home buyers to explain the dangers of purchasing a home at a price that exceeds their ability to pay and then defaulting on the loan to get out from under it.

There used to be such a “program”: it was called truth in lending and involved ethical sellers and financial institutions that screened buyers carefully, ran the numbers, and refused to finance purchases that were iffy, at best. There were rigid guidelines for financial feasibility, and if a potential buyer did not qualify for a loan, that ended the discussion. Buyers were told to come back when they had the means to afford the property because the real estate market and/or the financial institutions would not risk their fiscal health on an individual’s promise to pay.

What happened to that program? Oh, that’s right! Homeowners no longer can handle the truth because they buy what they want, not what they need, telling egregious lies in the process, if that’s what it takes, to qualify for a loan. The lenders play deaf, dumb, and stupid to provide the financing, creating a house of cards that takes a single breath of air to bring down.

And when it comes tumbling down, someone has to make it all go away without costing the defaulter a dime. All a consumer has to say is that “no one told me” or “I didn’t know,” and it's gone. The consequences evaporate for the individual in a heartfelt second of “sorry,” but those of us paying our way end up paying for these miscreants’ malfeasance, too.

They stick it to the man without realizing that we are the man, those of us who honor our obligations, who make the best of a bad situation we didn’t create, but now are stuck with the consequences of their actions.

Case in point: the couple next door jumped on the let’s make a profit at the consumer’s expense on the home they purchased about 4 years ago. They did little to improve the property and maintained a high-occupancy rate with a constant influx of “family from Mexico” who lived with them. About a year ago, they added $100k to the purchase price of their somewhat pedestrian home and planted a For Sale sign in the front yard. Six months later, the house still waiting for a buyer, they found another home, a larger, more luxurious home, in a gated community, and moved. A continual parade of temporary residents stayed at the vacant home, clearing out last weekend when the bank took possession.

The neighbors did what thousands of other homeowners did at the same time, glutting the market with neighborhoods of over-priced “starter” homes that will not sell while committing themselves to high mortgages on another property. Paying multiple mortgages can only last for as long as there is money to pay them. For the average American, living on the edge of their present and future income, that house of credit cards can’t stand for long.

My neighbors’ home has been taken over by the bank, along with the home across the street. In addition, the rental next door has been empty for going on 6 months as one day the previous tenants moved all the furniture into the front yard, packed what they wanted into a couple of cars, and drove off. The absentee landlord knows by now that no one is paying the rent, but who knows where he is. Perhaps this is another property going into foreclosure. Several other new homes on my block are also for sale, the owners already gone, leaving the properties susceptible to vandalism, theft, and squatters.

Of course, the situation created by my neighbors means that I cannot sell my property. The situation created by my neighbors means that my home is probably no longer worth the mortgage I hold on it, in spite of the major improvements I have made to the property. The situation created by my neighbors means that when I sell, I may have to pay off my mortgage out of pocket. The situation created by my neighbors means that although I have NEVER missed a mortgage payment or walked away in default on a loan, their actions are now my consequence.

They’ve moved on; I haven’t—and now I may not be able to!

It’s a spiral of conspicuous consumption that hasn’t reached bottom yet, but it will. Just as the speculators made huge profits off the dotcom boom, took their financial gains and moved on, speculators have scored big on the inflated real estate market and taken their profits with them to another venue. Judging by the recent trends in the stock market, I’d hazard a guess that’s where all these opportunists have decided to play their games.

The average American wants to own a home, so once the pricing of real estate is reset to match the consumer’s ability to purchase it, people will again buy homes. I’m not sure, however, what we’re going to do to reset the ethics of the unethical consumer, the person who continues to lower the bar for the rest of us, who do the right thing not because we’re told to, but because it’s the right thing to do. We are the ones who have to clean up the mess, who have to pay the price—and the penalties—for the ones who shit on the system and walk away.

Instead of them “sticking it to the man,” let’s stick it to the ones who create the mess and expect the man to clean up after them!