However they got into these mortgages, the vast majority of people struggling to save their homes are probably going through something like what we went through when we lost ours. Losing our home was the worst thing that happened in my childhood, and it surely has colored how I view the world since. It plays hell on your self-esteem and sense of security, I’ll tell you that.
After the foreclosure, we moved a mile away to a shabby duplex, our side of which rented for $600 a month. My dad got sick again and that payment proved too much and they had to move to a $475 a month apartment in a complex once known for its swinging singles scene in the 1970s, but since better known for its drug dealers. His medical bills soon forced my parents into bankruptcy.
They bounced around and eventually moved up to a rental house (fortunately, by this time I was off at college, able to go because of a full-ride scholarship from the state). My mom went to school and got her associate’s degree and now has a good career as a medical transcriptionist. My dad was no longer able to do backbreaking labor, but he became a truck driver. They slowly got back on their feet.
They had an unfortunate brush with the mortgage industry a few years ago, though. They finally purchased another home then with a conventional fixed mortgage in the fall of 2001. But in 2005, they refinanced. I was in New York by then, but I warned them repeatedly: don’t get an adjustable-rate mortgage. Interest rates will only go up. My folks didn’t. Or thought they hadn’t.
But guess what? An unscrupulous broker had added an ARM to the mortgage —against their expressed wishes and unbeknownst to them. My folks didn’t notice it at the closing, or indeed, until they decided to move outside of town a couple of years later. They also learned that the broker had put a big fat pre-payment penalty on the note to boot. Like most people, they didn’t understand the fine print. Their fault was in trusting someone who they thought was on their side (They had to structure a lease-purchase agreement with a buyer to avoid the big pre-payment penalty).
Both terms, it should be noted, increased the broker’s commission and increased the mortgage’s value on the secondary market—the one that is blowing up now all around the world.
Most people aren’t losing their homes today because they’re sick and can’t work, though that’s surely not a tiny number. Others lost their jobs, or their lives got complicated by divorce or some other family trauma. And many others got put into balloon mortgages or option ARMs they didn’t understand, or were refinanced into ones they couldn’t afford, by some crooked broker. Or they just simply bought too much house, egged on by marketers and a culture that says spend, spend, spend.
However they got into foreclosure, my heart goes out to them. I remember what it’s like.
Fifteen years after we lost our home on 56th street in Tulsa, I’m glad to report that my folks are doing okay. Two years ago, they were able to get out of the second house and buy that property outside of town. They’re trying to pay extra on this note so they can pay it off —30 year fixed at 6 percent—in their early 70’s, God willing. They’d be about ready to burn the mortgage on the first house if they hadn’t lost it.
So, we’re all right. Most of these Americans losing their homes may be, too, though only after huge setbacks that will make them far less secure financially than they would have been for the rest of their lives.
My sister and I both went to college. I’m a journalist, newly married, and she’s raising a family. A few months ago she and her husband moved across the street from my parents… into a house bought from someone who could no longer afford the payments.
Me and my wife? We rent.