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The American Dream Sometimes Turns Into The American Scheme

The story, all too typical, of how a man was seduced by greed and easy credit into buying a into a home, and a dream, he could not afford.

Editor’s Note: This is the first in what will be a series of stories called Dispatches From The American Dream, where we take a look at the changing face of the American Dream in Martinez. I’m going to begin the series with my own story.

In November of 2007, I cashed in my 760 credit rating and maxed out my credit cards and moved into my new home. I was giddy with the thought that somehow, through some slick magic I barely understood, home ownership was back within my reach.

My realtor assured me that home prices had gone up by five to ten percent for the past ten years, and in all likelihood would continue to do so for the foreseeable future.

“Of course,” he said, “there are no guarantees, but there’s no reason to believe that things won’t continue to go they way they’ve been going.”

For years, I’d been skeptical of the housing prices in Northern California. They were outrageous, like some kind of ridiculous fiction. My own house, for instance, was valued at nearly half a million dollars. It is a modest little place on a quiet street, but hardly worth that much. But I was told that it was a steal, and I should jump on it. So I did.

It happened pretty fast. Papers were signed, and before I knew it, I was a homeowner. Just like that. No down payment. The fees ate up a lot of my savings, and the moving costs, but all in all, it didn’t really cost me a lot to move in.

From the start, the payments were more than I could afford. But I was assured that if I could just hang on for a couple of years, the value of my house would soar, I could refinance and bring the payments down with a 30 year fixed mortgage. So I turned to my trusty credit cards to get me through from month to month, and held on.

A few months later, the bottom dropped out of the housing market, and by the time a year had gone by, despair had replaced any giddiness I might have felt. A new marriage dulled, and for a time, replaced the panic with joy and optimism, but things continued to stay desperate in the housing market, and my American dream turned into a daily nightmare.

I applied for a mortgage modification, figuring that of course the bank would help me, the same way the government helped them. But after nine months of being treated like a lowlife, I was abruptly dismissed by a low-level bank employee who told me over the phone that there would be no modification, in the same matter-of-fact way you would tell someone that you don’t have a particular brand of coffee today.

After another year of more panic and financial meltdown, it’s time to just walk away from this whole affair. There is no choice, really. The value of this home will never equal the amount of the loan. And it needs repairs I can’t possibly afford. I have no equity from which to borrow, and there’s no point in trying for another modification. So I’m walking away. It doesn’t feel good, but it doesn’t feel like failure, either. It feels as though the landscape of our country has shifted, the ground is no longer stable, the assumptions I made about the structure of our system are not tenable.

I can, and do, still have dreams of what it means to be an American. But my American dream is vastly different than the one I held so closely in November of 2007. It’s darker, and less sure of itself, of its future. But maybe there’s hope in there, too – a knowledge that even a dream that looks too good to be true, probably is.

EVENTS:

TODAY IN HISTORY (from Wikipedia):

1914 - The Panama Canal opens to traffic with the transit of the cargo ship Ancon

1935 - ·  Will Rogers and Wiley Post are killed after their aircraft develops engine problems during takeoff in Barrow, Alaska.

1945 -  World War II: Japan surrenders to end the war.

1947 - India gains Independence from the British Indian Empire and joins the Commonwealth of Nations.

1965 - The Beatles play to nearly 60,000 fans at Shea Stadium in New York City, in an event later seen as marking the birth of stadium rock.

1969 - The Woodstock Music and Art Festival opens.

1977 - The Big Ear, a radio telescope operated by Ohio State University as part of the SETI project, receives a radio signal from deep space; the event is named the "Wow! signal" from the notation made by a volunteer on the project.

Chris Kapsalis August 15, 2011 at 12:47 PM
You are not alone. A lot of people lost big time when housing was so high. And what choice do/did you have, not own a home? My credit rating went down. Well, went from the 700's to, ummmm, zero I guess. In 2007 I had no problem financing a new motorcycle. The guy even joked and said I could get 10 after checking my credit. I was just recently turned down for a $1000, after the lady checked her computer and the banks opinions of my trustability. I understand one reason my credit dropped, my debt.But you better check your credit score, because it may have dropped a lot , and not always for any reason or possibly an error. The wind can blow in the wrong direction and your credit rating can drop. There is not always a clear reason why it drops or rises. But I have never missed or even been late on one payment since I was a teenager in the 70's, something my mom always told me to do, to build credit. I guess we can throw out a lot of the old thinking that if you work hard, are honest, never miss a payment etc. you will have credit in the eyes of banks, they will put their trust in you, hardly. This sucks Jim, but you have a great attitude. It seems nothing could keep you down for long anyway.
Brian Walker August 15, 2011 at 02:10 PM
Dear Editor, A heartwrenching story, shared by many throughout the nation. The real tragedy of course is that only the people at the end of the line suffer - no one else. None of the hotshot "ex-Enron" financial geniuses that devised the mortgage-backed derivatives that led to the runaway market suffered, none of the bank executives that turned a blind eye to their cock-eyed investment strategy suffered, none of the mortgage brokers or real estate brokers that threw caution to the wind suffered (ok, well maybe a few, but they should have known better), and none of the investment raters (at Moodys, S&P, et al) suffered. The banks that accepted bailout funds from the US government have been acting in bad faith, either refusing to modify loans, or dragging their heels for so long that the homeowners just give in. A classic case of American Greed.
Linda Meza August 15, 2011 at 02:48 PM
Having sat for and held a real estate license, I have never liked the idea of negative amortized or interest only loans. These products always felt risky to me and I could never, in good conscience, recommend them to anyone as a financing vehicle. My daughter had to walk away last year after finding some shady L.A. attny on the internet who "specialized" in loan mods. There are many who could be painted villain here; chief among them, in my opinion, Fannie Mae, Freddie Mac and Countrywide. From the Huffington Post and the New York Times: "Outwardly, Fannie and Freddie wrapped themselves in the American flag and the dream of homeownership. But internally, they were relentless in their pursuit of profits from partners in the mortgage boom. One of their biggest and most steadfast collaborators was Countrywide, the subprime lending machine run by Angelo R. Mozilo." http://www.huffingtonpost.com/2010/08/07/why-were-fannie-mae-fredd_n_674617.html
maria Billingsley August 15, 2011 at 04:22 PM
I remember the haunting phrase " Don't worry you'll make money in your sleep!".Those were the words of our mortgage broker as he explained this incredible loan package offered by the now defunct World Savings. In 2007 my boyfriend and I were seriously looking for a home. During that time our homes were worth over 500k so it seemed logical that we could jointly purchase a home in the the 800k range however, rather than going through the normal route of qualifying for a loan, we were introduced to what we now refer to as a "crazy loan". We walked out of his office thinking "this guy is nuts"! Today we still have our original homes now worth half the price and look back feeling fortunate that we were not victimized by greed.
Lisa Songster August 15, 2011 at 06:40 PM
The housing market scheme, as tragic as it has been, is only a part of the problem. The rich and/or the corporations have been chipping away at it from so many angles that it almost feels like we average Joes have lost the battle. But there is a movement afoot to rebuild the dream. You can read about it at http://rebuildthedream.com

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