“a life raft”
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nytimes.com…
ST. PETERSBURG, Fla. — For Alex Pemberton and Susan Reboyras, foreclosure is becoming a way of life — something they did not want but are in no hurry to get out of.
Foreclosure has allowed them to stabilize the family business. Go to Outback occasionally for a steak. Take their gas-guzzling airboat out for the weekend. Visit the Hard Rock Casino.
“Instead of the house dragging us down, it’s become a life raft,” said Mr. Pemberton, who stopped paying the mortgage on their house here last summer. “It’s really been a blessing.”
A growing number of the people whose homes are in foreclosure are refusing to slink away in shame. They are fashioning a sort of homemade mortgage modification, one that brings their payments all the way down to zero. They use the money they save to get back on their feet or just get by.
This type of modification does not beg for a lender’s permission but is delivered as an ultimatum: Force me out if you can. Any moral qualms are overshadowed by a conviction that the banks created the crisis by snookering homeowners with loans that got them in over their heads.
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As this sort of thing grows, it’s going to normalize the idea of walking away from one’s debts.
Economists have done a lot of work over the last few years demonstrating that unwritten culture is as important as written laws (drop the US legal code onto a bunch of people who aren’t inclined to play by the rules or uphold their word, and you don’t get US levels of productivity out).
I’ve long been distressed by the fact that the epidemic of bastardy has been moving from the black sub culture to mainstream white culture over the past few decades.
…and now we’re seeing white middle class people declaring that their greedy over extension on house buying is somehow the fault of the banks, and hand waving away any moral responsibility they have for their problems.
“I tried to explain my situation to the lender, but they wouldn’t help,” said Mr. Pemberton’s mother, Wendy Pemberton, herself in foreclosure on a small house a few blocks away from her son’s. She stopped paying her mortgage two years ago … “They’re all crooks.”
Here we see the contagious aspect of the meme – first one member of the family fails to uphold her world, blames the victim, the justifies her behavior, then her son sees how well theft works and decides to try the same approach.
The average borrower in foreclosure has been delinquent for 438 days before actually being evicted, up from 251 days in January 2008, according to LPS Applied Analytics.
Those of us who have worked second jobs in order to pay our debts are obviously not thrilled with this.
In some states, including California and Texas, lenders can pursue foreclosures outside of the courts. With the lender in control, the pace can be brisk. But in Florida, New York and 19 other states, judicial foreclosure is the rule, which slows the process substantially.
In Pinellas and Pasco counties, which include St. Petersburg and the suburbs to the north, there are 34,000 open foreclosure cases, said J. Thomas McGrady, chief judge of the Pinellas-Pasco Circuit. Ten years ago, the average was about 4,000. “The volume is killing us,” Judge McGrady said.
Color me shocked that the biggest impediment to justice is incompetence in various government justice departments!
One reason the house is worth so much less than the debt is because of the real estate crash. But the couple also refinanced at the height of the market, taking out cash to buy a truck they used as a contest prize for their hired animal trappers.
It was a stupid move by their lender, according to Mr. Pemberton. “They went outside their own guidelines on debt to income,” he said. “And when they did, they put themselves in jeopardy.”
Speaking as someone who has made his fair share of business mistakes, and who was once in debt to the tune of a cool million dollars, it never occurred to me that I should blame my bank for my decision to hire the wrong people, or keep an intern on staff even though he wasn’t accomplishing much, or negotiating a lease for office space poorly.
All these things cost more money than they delivered in benefits, all were made possible by credit … and all of them were 100.0% my fault.
“I need another year,” he said, “and I’m going to be pretty comfortable”
That’s pretty much what the current economic crunch is about – some people failing to uphold their word and feeling “pretty comfortable”, and others of us working hard even as a lowering tide lowers all boats, because it is the moral thing to do, and our words are worth something.
(To be clear, I put every bailed out firm, every UAW employee, and every cop with a defined benefit plan retiring at the age of 41 in the corrupt bin).
tjic.com |
