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When the housing bubble bursts close to home

Submitted by on Thursday, 19 February 2009 2 Comments

Mostly, I deal with the economy crumbling around us by ignoring it.

Not ignoring it in a “oh, I’ll just pretend unemployment isn’t approaching 10 percent in my state and Dad’s just on a really long solo vacation instead of working thousands of miles away” way.

But ignoring it in “trying to put it out of my mind on a daily basis” so I don’t walk around all morose and inflict it on the guys. They’re going to have enough to deal with in cleaning up the big people’s messes when they’re adults without having it ruin their innocent years.

Once in a while, that system fails me. Like yesterday morning, when a knock at the door woke me up. Literally – I’d burned too much midnight oil and Boots and I had fallen asleep on the couch.

It was a locksmith, asking if anyone still was living in a neighborhood home. The mortgage company had sent him to lock out the owner, he said. Former owner now, I suppose.

It was the second foreclosure in a week on our street of only a dozen homes or so.

The first  was no surprise. The family had moved in in spring 2005, as housing prices and liar loans neared their peak. It was a modest home Р1,400 square feet Рbut went for an immodest price at the time, in excess of $300,000.

A young family lived there, with kids close to the guys’ age and a stay-at-home mom who always decorated for the holidays. She also had a habit of calling the police every time another neighbor’s camper was parked on the street for one minute longer than the 72-hour limit. She¬† liked to complain to animal control about barking dogs, too.

But obnoxious though she was, no one would wish this on her.

The second was a stunner. It involved the dean of the street, the person who’d lived here longer than anyone. He was one of the early buyers in the entire subdivision, built in the mid 1980s, and might well have been an original owner.

If anyone were situated to ride this out, it would be him, not people who bought at the peak and not us poor renter schmucks who pray the landlord stays current. Or so I thought.

He works as an independent consultant, though, and times are tough in that profession. With companies in this area struggling to keep employees on the payroll, consulting was cut from the most budgets long ago. That’s the downside of working for yourself. Without the safety net of unemployment, when things go south, they go south in a hurry.

In a sign that either hope or denial springs eternal, he’d pruned his trees and roses just weeks ago. We saw the same thing happen back in the summer, as a couple living across from Big Guy’s school worked on their hands and knees for several mornings to plant flowers along their walkway. Weeks later, the “for sale by foreclosure” sign went up.

As we walked Big Guy to school this morning, I wondered who would be gone tomorrow.

The guy who owns the house-painting company? That’s a splurge not many people are making now.

Dad’s high school chum who runs a carpet-cleaning service? Even with the hefty “former soccer teammate” discount we got, I’d figured out about a year ago that buying a steam cleaner would save me in the long run.

The independent heating and air-conditioning contractor? Even though people still have to make those repairs, a bulk of his business came from construction. Not much of that going on right now.

God help us all, I thought.

Copyright 2009 Debra Legg. All rights reserved.

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  • Kevin Duffy said:

    Debra, It’s not going to get any better any time soon, either. It’s the fault of a lot of individual people, most of whom actually believed that they were doing the right thing at the moment — be it exaggerating on the income, fudging the appraisal, brokers shopping the loan — everyone was getting what they wanted and/or needed at the time. Now the question is what do we do about it. Do we take punitive action against the home-buyer (certainly not going to call them a homeowner), the broker, the banker, the appraiser, the guy who securitized the CDOs and sold them on Wall Street? Or do we try to rehabilitate the system, work-out the loan terms so the home-buyer can stay current and continue to live in the home, actually start checking peoples income to debt ratios and running ability to pay calculations and also let the lawyers smack a few mortgage companies in lender liability suits just for the “checks and balance” side of such a suit — costs a lot to defend against and the settlement hurts the bottom line and the ego, too. While one part of me says punish them all, the other side (probably where I really lean) says let’s rehabilitate a broken system and stop this vicious downward spiral before it is truly uncontrollable. What do you think – -you don’t really say — you just try to bring a tear to the readers’ eyes regarding the plight of your neighbors — that does not help — use that big ole brain of yours and tell us what you think would fix the problem and stop it from happening again twenty years from now when your Big Guy and my Big Guy are ready to buy a house.

  • Debra said:

    Actually, I did use the brain the other day on this post. This one was just a follow-up because the neighborhood stuff hit me harder than I expected it to.

    We’re actually pretty much in agreement on this one, Kevin. Part of me leans toward smacking ‘em all for creating this mess — I’m more than a little angry about it because I deliberately didn’t play but now I’m going to pay. But my practical side says we need to try to fix it, pretty much in the way you outlined. And I realize that any attempt at a fix isn’t going to save all the, well, I call them home occupiers because many of them never paid a blessed thing but interest.

    The biggest thing that bothers me about the proposed fixes is too many fixate on the notion that we have to stop prices from falling. Um, no we don’t, because out here at least they still haven’t fallen to pre-bubble levels, though they’re getting close.