Friday, July 27, 2012

Getting Our Piece of the Bailout

In 2008 my husband and I, along with the rest of our fellow Americans, watched with frustration as the big banks spiraled out of control, eventually being granted bailouts that kept them from failing, and then continued to be frustrated as those same banks appeared to be wasting taxpayer money to give the very same individuals who made the decisions that caused the banks to spiral out of control millions of dollars to supposedly "keep talent". We read the articles in the newspaper, magazines, and online, and yes, we faithfully stayed up later than we should have to watch Stewart and Colbert (I do not miss the irony in the fact that as a teacher who teaches rhetoric I prefer their take on the media mess). And then we watched as houses in our working middle class neighborhood went up for sale and then didn't sell.

Our neighbors on one side had their house on the market in 2005 when we moved to Indianapolis just as the bubble started to burst. They had just built their dream home on the north side, closer to work and where they wanted to live, and they finally moved, but the house didn't sell. And it didn't sell. Finally renters moved in, and so started a series of questionable renters and we watched the house fall apart. Eventually the house sat empty, and finally it became a bank owned home that went up for auction. We couldn't blame our neighbors for letting their house go to the bank. They already lived in the house they wanted to live in and were watching their house value drop due to a falling market and bad renters that were destroying the home they had lived in. But we didn't want to stay in our house forever, and we knew that a house selling for less than original market value would not help us sell our house for as much as we needed to when we were ready to upsize.

The house on the other side didn't help our situation. That neighbor was nice enough, but she had been a subject of neighborhood gossip for years, and shortly after we moved in her marriage fell apart, her kids moved out with her husband, and eventually we didn't see her for long stretches. She was apparently living somewhere else and coming back to the house on occasion. The yard became overgrown and the house started falling apart. My husband started jumping the fence between our yards to cut down the overgrowth that spilled over the fence and into our yard. Finally, the house appeared to go to the bank, then to a flipper, and then to a homebuyer, selling well below market value. Both of these houses on either side of ours sold well below original market value. Houses that had been worth $20,000 more than ours in 2005 were now selling for less than what we bought our house for. And then my husband got transferred.

We knew that selling our house would be the biggest logistical problem of the move from Indianapolis to Fort Wayne. The houses on either side were not the only problem. There were a lot of For Sale signs in our neighborhood that weren't moving. And we had maxed out our home equity redoing our kitchen in hopes that it would 1) make living in our small house easier than with the 70s kitchen we had before and 2) help us sell the house when the time came. To make matters worse, our furnace quit in January as we were making plans to take the transfer, money we did not have up front that would suddenly have to come out of even more credit. To be blunt, we had a lot of money invested in a house that was realistically not going to sell for enough money to help us cover all those bills. We went with a realtor who said he could probably get us the money we needed to break even, but the house didn't sell. We kept clearing things out into storage to make the house look less cluttered, the pictures of the house looked great online, but we didn't have the traffic necessary to sell the house. Our house is on the smaller side of those in our old neighborhood, and we were trying to sell it for more than the other houses in our neighborhood that were also on the market. Out of frustration, we switched realtors and started looking for a renter or buyer, whichever came first. A renter didn't move in until November, after we had made double house payments on two houses for three months. Our mortgage was finally covered, but not before spending a lot of money that we may never see again.

We are on our second renter. So far our renters have paid their rent and taken care of our house. In fact, the current renters have gone above and beyond the call of home rentership by making the outside of the house look even better than we lived there. That doesn't mean we are out of the woods. Yes, our mortgage is paid, until our current renter decides to not renew their lease. The last time this happened we went two months without paying that mortgage, two months during which we had to decide whether we were going to continue scraping by to make payments on a house we never intended to live in again or live our lives in a new city in our new home. We knew the potential damage to our financial credit, but it was keep a house we were not living in or keep a house that was home to us, our two children, and our dog. We chose the later. Thankfully, the house was once again rented in January, we were able to catch up on our payments, and the angry phone calls stopped. But we got a good dose of the same reality that millions of people across America have faced in this bad economy. And really, we're one of the lucky ones. At least we found a way to keep the house and our credit safe, but my heart goes out to those who have not been so lucky. There was once a time when I could not understand why people would strip a house that has been foreclosed on. Seriously, wasn't it their fault? They're the ones who stopped making payments. They're the ones who were irresponsible. But no one talks about the people who lost their homes because they were upside down on their loans, because they got transferred, because they lost jobs or had a crisis that suddenly took all the extra money that they had. And after our experience, I have a feeling that this is more common than our government is willing to admit. And yeah, I had a desire to go back into that house and strip the kitchen of everything we had put in there. We did the work, we picked everything out, and I HATED the thought of it just going to the bank.

Yes, we shoulder some of the blame. We made decisions (like maxing out a home equity loan to redo a kitchen) that made our situation worse. And it didn't help that life just kept happening to us. Not only did our furnace in Indy go out, but we discovered the following November that our Fort Wayne furnace, after passing inspection the previous spring, got fried when we tried to turn on the air conditioning in July. That meant another HVAC system, two in less than 12 months. Then our well pump went out, and then we spent two months without rent. Did I mention that I was pregnant with our second baby at the time? We may have made poor decisions in the past, but that didn't stop life from happening to us. It left us thinking "where's our bailout?" We bought into the idea of the American Dream. Buy a house, have a family, your investment will always be safe. Only, our investment wasn't safe. And we live in Indiana. What about those people in California, Nevada, and Florida? They were worse off than us.

So what are we doing about it now? We started the switchover to a new bank and now we're working on a house refinance that will roll a lot of this accrued debt into our mortgage, hopefully freeing up a lot of money so that we can stop living in debt and start living. Have lessons been learned? Yep. But we got into bed with one of the big banks, and locally, the big bank is treating us well. Maybe deep down I really do want to see us get our share of the bailout. If my tax dollars are going to pay for them to pay their higher ups huge amounts, then I want to take advantage of what that allows them to offer me. Do I necessarily like it? No. But it's the closest thing to a bailout that this middle class American family is going to get.

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