Home Economics

I wish I could make money being a wife and mom.  I feel so much sadness that I don't have a career anymore.  I spent most of my adult life being in different parts of real estate building a base knowledge that led me to sales.  I loved it and was good at it.  Just before the market collapsed I did well selling condos and when given the opportunity to open a new home subdivision I could see the potential.  That is when the market collapsed on itself.  I was stuck in a model home, in a community, that to this day is virtually empty.   There are a handful of homes where there is infrastructure for over 500  covered in weeds and overgrown grass.  Empty lots with sidewalks and street lights cover hundreds of acres of land.  During the 4 months of sitting in a model and talking to my sales partner I  learned about the stock market.  He was a former broker from NY that semi retired to Florida and did mortgages for fun for a few years.  As the market was crumbling he told me the average buyer had less than $500.00 liquid cash available and yet he could get them financed into a home most could barely afford.  No safety net.  No life line.  Just 500.00 or less.  That was in the day, pre-2008.   

The collapse of the market was primarily blamed on the sub-prime market.  Folks with credit scores from 600-650 were able to get financing with no money down.   They were on the first line of the collapse.  As soon as their mortgage increased (which was generally after the first year) they would fall behind.  Understand, builders lured these buyers in the door by offering "to good to be true deals".  They were buying down interest rates for the buyers to get them in the home and payed the first year of HOA fees. Lenders lured in buyers with No Doc loans, accepting low credit scores and no money down.  What could go wrong?  

Another tidbit that know one talks about are HOA fees.  Home Owner Association Fees.  When you buy a condo you are only responsible for the space in between the walls.  The HOA covers insurance and property maintenance for the community.  They have a Low HOA fee because they aren't managing a complete complex and aren't even in possession of the full complex so it is less expensive for the new buyers.  Insurance is the driving force behind HOA fees.  In Florida condo owners are literally held hostage by insurance companies.   Politics and Hurricanes are behind every insurance company in Florida.  At the time, Charlie Christ was governor and the insurance companies wanted to raise home insurance 2 to 3 times the average in Florida due to storms.  In defense of the home owner he wouldn't let them.  One of the big companies threatened to pull out.  He told them if they left the state they couldn't sell car insurance either.   What the insurance companies did was raise insurance on condominium and apartment communities.  It was a deal breaker for condo owners.  Many of them are on fixed incomes and went from paying $160.00 a month to 450.00 a month in HOA fees alone.  Tack on the mortgage payment and you have a recipe for disaster.  The same thing happened for the new condo owners.  After the first year their HOA fees went up exponentially.  Most were sub-prime borrowers and when their HOA fees increased so did their mortgage payment.  

So I guess you could say sub-prime mortgages had a hand in the collapse, but only in that the banks bundled the loans and sold them (Mortgage Backed Securities) as good and then they bet (derivatives) against those loans.  The economy seemed to be doing so great that the major world economies jumped in the fray.  Everyone wanted a piece of the pie.  Life was good.  Right?  

The weight of defaults gave way to derivatives and mortgage backed securities and it all crumbled.   The aftermath has decimated our economy.  It isn't enough that people are being forced from their homes, being told they can't modify and the home is sold for pennies on the dollar to investors.   Banks don't know what properties they own and lawyers are mixing up the property addresses and parcel numbers.  

Hungry for government bailouts that give banks more money than a homeowner's payment, the banks are opting to kick out the delinquent owners instead of giving them a chance.   In their rush to judgement many mistakes are being made by lawyers and banks.  Paid off homes are being foreclosed on and folks who are current are coming home to find all of their possessions gone and the locks changed.  Many want to catch up and but the bank wont let them.  

I have always heard "Money is the root of all evil" but I don't think so.  I believe it's Greed!  Money pays the bills but greed is an animal all it's own.  Banks (and car companies?) tripped over themselves flying to DC to get their TARP money when bad investment choices (aka..mortgage backed securities and derivatives) wrecked havoc on the world economy.  You see, they sold so many bad investments to foreign countries that they couldn't back it up.  While they were selling the MBS they (the TBTF banks) decided to bet (Derivatives) on the investments (MBS/mortgage backed securities).   They were hedging their bets and guess what?  Guess what they did with all that TARP money?  They invested it and made a ton.  Most paid back the government (taxpayers) interest free and kept the profits for themselves.  That is what really did us in!  It's called Derivatives or what I like to call "Good old fashioned GREED.   

So why am I writing about all of this?   Maybe because I've been working odd jobs over the past 4 years.  Maybe because I need to make sense of all this in my own head and writing it down helps. I'm 45 and starting over.  I'm going into the medical field  I'm taking a basic CNA class this summer to get my foot in the door to make money and then work toward a better paying degree in the medical field.  The colleges are saturated with nursing students and it's really competitive.  As a CNA or PCT I'll have income and a job that matters.  

Do you know someone that walked away from their mortgage?  Do you know someone that lost their home after desperately trying to keep it?  Do you know someone that lost their job and can't find another one?  I'm betting you do!  Yep, and I'm hedging my bets that everyone that reads this has been personally effected by the market in some way.   My prayers go out to all that struggle to find footing in this economy ravaged by the greed of a few.  

Peace!