October 15, 2008 > The Silent Foreclosure Hurricane
The Silent Foreclosure Hurricane
By Margaret "Brenda Starr" Thornberry
We've all read the headlines, "Home Foreclosures continue to batter the housing market", seen the statistics, and been horrified that the heads of Fannie Mae and Freddie Mac have walked away from the disaster with multi-million dollar settlements. Statistics, big numbers, talking heads trying to explain 'tranches' on TV.... You may have seen a few 'Bank Owned' signs in front of houses for sale, but what does this really mean in human terms to you or your neighbor down the street? If you live in a house you are buying or own, the amount you could sell your house for has dropped, but if you weren't planning on moving or refinancing, does it matter? But-what if you are renting?
This is only one story among many, but it hits close to home. Last month my daughter, a first grade teacher, came home to find a notice nailed to the front door of their home in Fremont, advising them the bank had foreclosed on the house she and her husband had rented for over 5 years. They were given 60 days to vacate.
How did this happen?
Their landlord, following the advice of many financial advisors to invest in real estate after the tech bubble cast a cloud over stocks, had optimistically invested in more than one single family home, renting out those he wasn't living in. Things were going well-until he lost his high-paying job. Refinancing kept things going for a while. Being an optimist, he assured his tenants that he was going to catch up...unfortunately he didn't, and when the bank foreclosed on the property, the landlord was out of money and unable to return their deposit or final month's rent, paid through the end of October.
We all know that teachers, even those with several years of experience, are at the low end of the professional pay scale. My son-in-law is in the process of getting an advanced degree, and brings in a few dollars by tutoring and through education grants. At the end of 60 days, their belongings would be out on the sidewalk, and they and their pets would be homeless, through no fault of their own, and in spite of being good renters and professional people. What would you do?
Happily, they were able to find an apartment with a move-in special that accepted pets. The foreclosing bank was willing to provide them with 'key money' if they could clean up and vacate within 30 days. They were able to use this commitment by the bank as collateral for a loan from the local Bank of Mom, that generous lending operation of last resort, to advance the first and last months rent and cleaning deposit at the new place. Best of all, they have many friends who were willing to provide muscle for moving, loan them a truck and cover some moving expenses. They are now in a sparkling apartment overlooking Quarry Lakes, even closer to her work and his graduate school.
But...if they had not had good friends, if they had not had family who could advance them first and last months rent and deposit, if they had not been energetic people, if it had not been during school break, this story could have had a much different ending.
We may like to feel that we are smarter and more prudent than people who find themselves in a bad situation, but the truth is that not everyone who is in trouble brought it on themselves. Fully employed U.S. citizens are finding themselves evicted. If they are unable to come up with first/last/deposit cash, they will be moving in with relatives and friends, or trying to get into emergency shelters, while keeping themselves working and their kids in school.
Does this sound like someone displaced by Hurricane Ike or Katrina? We read about massive government and civic organization efforts to help the victims of dramatic disasters far away, but in this case, the disaster is nearly invisible, and is happening at the individual and personal level. The government is rescuing the institutions that created the foreclosure mess, but no help is on the horizon for the people being evicted from rentals. It's up to us as a community to make this situation more visible, and to support our local community organizations. Contact the Tri-City Homeless Coalition, the Tri-City Free Breakfast Program, the local animal shelter or the civic or religious organization of your choice to see what you can do to help the victims of Hurricane Forclosure - and know that 'There but for the grace of God go I'.