Foreclosures force ex-homeowners into shelters

great story, I commented else where. The story only mentions half way through that her husband left her and she was borrowing to buy an SUV , take out dinners and who knows what else on at most an $8 an hour salary. This is a sad story, but doesn't look like the bank wsa at fault here.

defensive, much? nobody said it was.

and i believe the excessive borrowing occurred before her husband left her, when they were both employed, not just one person at $8/hour. just a few details, but i like accuracy.

I find it hard to believe that foreclosure would force anyone into a shelter. Aren't there always housing options that cost less than a house payment? Job loss, medical bills, etc can force people into a shelter, but foreclosure is much more likely to lower thier housing costs.

Story left something out. Reminds me of the famous Edmund Andrews story on how he was a sub-prime vicitm and then left out how his wife was a serial over-spender...

She is in her mid-50s and a great-grandmother? Is that possible?

Easy. 1st child at 18, 1st gchild at 36, 1st ggchild at 54. I know plenty of women (today) who are grandmothers in their late 30s. Not a far stretch for their gchildren to be teen or late-teen mothers.

Just talk to NYC nannies. Many of these women become gmothers in their 30s and are supporting their extended families.

"Easy. 1st child at 18, 1st gchild at 36, 1st ggchild at 54. I know plenty of women (today) who are grandmothers in their late 30s. Not a far stretch for their gchildren to be teen or late-teen mothers.

Just talk to NYC nannies. Many of these women become gmothers in their 30s and are supporting their extended families."

easy? you only need to scr*w up twice in a row. 1st with yourself and 2nd as a mother. not that easy imho.

Admin: Are you seriously that naive? That's one of the most COMMON scenarios out there - child of a teenage mother becoming a teenage mom herself. Let us get this straight. We are not talking about a middle-class scenario where a college-bound teen becomes pregnant, keeps the baby, manages with lots of parental support to be in almost the same position she would be otherwise.

And we are also talking about a cultural/socio-economic milieu that does not stigmatize teenage pgs enough.

Why should teenage pregnancies be "stigmatized" at all, nyc10023?

You mean spunky got preggers?

i'm not naive at all. i know that happens, but it's still not that easy to go through that. young pregnancies have to happen a lot in higher social classes, but they just get an abortion with more frequency. there's less religiosity the less poor people are.

actually, if you read about demographics in usa, abortion is used a lot in the south by teenage mothers to limit having further kids. i wish they could have as many options to limit the 1st too as other people with more resources have. to me, the less stigma the less they will hide being pregnant (to their parents even) and the more they will know about birth control. i blame usa's religiosity for the lack of sexual education.

chasingwamus, it depends on the circumstances for foreclosure. if long-term unemployment is involved, coupled with a credit rating that is destroyed, i could see quite easily how someone would not find a home.

and if someone does still have some money, and manages to rent a motel by the week, unless employment is secured i can see that scenario being short-term as well.

this would be much more prevalent but for the fact that banks are not moving with great alacrity to take possession of foreclosed properties.

"and if someone does still have some money, and manages to rent a motel by the week, unless employment is secured i can see that scenario being short-term as well."

Actually, this scenario is a guaranteed spiral into poverty.

Motels by-the-week are considerably more expensive than regular apartments, but like middle class NYC renters who can never save enough for a down payment to BUY a home (because the rent is so high there's no money left over to save), these lower-class people living in residence motels are paying so much of THEIR take-home pay in weekly rent that there's nothing left over to save for the security deposit on a "real" apartment! And so the downward spiral of poverty continues.

(This was documented in "Nickel and Dimed: On (not) Getting by in America" by Barbara Ehrenrich.)

in the case of people that weren't living paycheck by paycheck, the bad FICO issue when looking for a rental could be solved by offering to pay several months of rent in advance.

the problem imho is how common is for a family to live paycheck by paycheck. it would be interesting to see who many do this as a % of all households. as elizabeth showed in her book, even middle income households with 2 earners often end up living paycheck by paycheck.

yes matt, it is. the reason i bring it up is it is discussed in the article in the original post. i don't think they can put numbers on it but many people and families who have lost their homes, rentals or owned, are going this route. without divine intervention in the form of decent employment they are doomed.

i don't know if there has been any analysis of whether during this downturn more formerly middle-class people are resorting to such accommodations. it's hard to do real-time demographics analysis.

Let's not forget that is person(s) was financing a life life style consisting of eating out and owning an SUV costing more than the second home they bought. But that's ok, the Chinese lent us the money.

You think teen pg is a +ve thing, NYCMatt? I think teenage pgs should absolutely be stigmatized. Not the underlying behavior. Teens have always been sexually active, that's not going to stop any time soon. But in my academically-tracked peer group, I can tell you it was NOT cool to be a teenage mom. Lower tracks - not stigmatized as much, either by parents or teens. While it's hard to tease out cause and effect, I think that attitudes towards teen pg can affect teen pg rates.

nyc10023, your elitism is appalling.

My mother was a teenage mom, as were several of my aunts. All, believe it or not, were married at the time to husbands who provided well for them AND their children.

rs, you're fixated. we're not.

admin, if they have been living paycheck to paycheck how likely are they to have the money to put several months down for rent if they've been hit by unemployment and foreclosure? much less the money to continue to pay going forward?

i read some horrifying statistic recently on how many people self-reported they wouldn't be able to afford basic subsistence within four weeks of losing employment.

boy, the only change would be an increase in the quantity of girls that try to hide it. do you remember that 13 year old girl in nyc that gave birth and got rid of the baby (through the window!). she didn't even know she was pregnant. same thing happened to oprah at the same age but... 40 years ago! no improvement there whatsoever. how come a girl of 13 in usa doesn't know where babies come from? once they can get pregnant it would be great to make sure they know how their bodies work, don't you think?

Actually NYCMatt, doesn't that prove nyc10023's point? teenage pregnancy was accepted- so it happened a lot within the family's peer group.

that's the point AR, how come people are willing to live paycheck by paycheck when unemployment is always a possibility.

sometimes is not an option, but many times it is (middle class double income households for ex). i've seen people saying they live paycheck by paycheck but they go and buy a new car versus a used one. they find themselves with tons of debt due to discretionary consumption... why on earth do they chose that? too much optimism about their future income growth potential? or they didn't even do the basic math? somehow being bad at math puts you at risk of doing stupid stuff like this (like putting a vacation in a CC).

the other possibility is that they confuse discretionary with non-discretionary (vacations, new car instead of a used one) and consumption with investment (seen this a lot with housing and home improvements).

It could be couner-argued that the people who wouldn't surive four weeks or go out and buy the SUV are not that different than the Citibank Derivatives trader who has negative p&l for the year. He either hits a home run or else. There is nothing in it form him to act responsibly.

And the governmetn lends him the money in both cases for all the wrong reasons.

yep, entire companies behave like that too. it's called "gambling for resurrection" in corporate finance.

rs, did you read the story carefully? that $15k second home was a business venture. there is no indication of how much they overspent by, and it was clear that what destroyed this woman was divorce. there is no indication that the couple was doomed to slide into poverty under their prior circumstances.

admin, my point is that you can't lump all people together. increasingly, health care costs have been the unexpected factor that have removed savings and thus any cushion. clearly people should have saved more, but as you and i have discussed, it really hasn't been easy. whenever you have a society bloated with bubbled money things will cost more on average. and incomes haven't been higher on average. it may be very difficult to reconcile the notion that your salary no longer allows you to eat out occasionally due to increased costs, particularly if credit is available and the good times are guaranteed to continue forever. nobody anticipated rampant unemployment three to ten years ago. disaster is always a possibility, but usually it seems quite remote, until it strikes. it doesn't make it right, but it makes it more understandable.

as i see it, plenty of people decided they were middle class. they also decided what implies to be middle class and play it along... regardless of their income.

of course it's understandable that those with low incomes are not as able to save. but come on, mexican immigrants were able to save more than the typical middle class family. when it's a choice to put the whole household at risk like that, it's not so easy to understand why they do it. are they are drinking the kool aid or they don't understand risk or they think the gov will not let "that happen" or catching up with the jones is a compulsory pastime?

"mexican immigrants were able to save more than the typical middle class family."

That's because they're willing to live 9 people in a one-bedroom apartment.

Among white "middle class" people, if you have more than one kid per bedroom they're already reporting you to child protective services.

and of course little jr, needs to second home upstate ny to play in... and mom needs an SUV, because g-d forgive she get stuck and have to change a tire...

leased SUV of course :)

"Among white "middle class" people, if you have more than one kid per bedroom they're already reporting you to child protective services. "

what? i know a family with 3 kids sharing the same room. the oldest one goes to hunter, they are doing fine imho.

Mom also needs a nanny so she can run her "errands" (spa days, pilates classes, lunch with the girls, etc.).

"i know a family with 3 kids sharing the same room. the oldest one goes to hunter, they are doing fine imho."

Are they all the same sex?

I'm not kidding here -- I've had parents tell me that their kids have had to fill out forms (unbeknownst to the parents) describing their "living situations", and if the kid divulges that they share a room with an opposite-sex sibling, calls are made.

NYCMAtt, you left out the therapist.... becuase she's not happy.

"if long-term unemployment is involved, coupled with a credit rating that is destroyed, i could see quite easily how someone would not find a home."

True, but the problem here is the unemployement, not the foreclosure. The job loss would put them in a shelter if they were renting as well.

Absolutely! She's NEVER happy! Then you hear about the separation ... "We've grown apart," she says, which is fem-speak for "I got bored" or "his prick is too small".

"True, but the problem here is the unemployement, not the foreclosure."

Thank you, WaMus. I personally know of two foreclosures that had nothing to do with the people buying "beyond their means" and everything to do with losing their incomes for more than a year.

The Employment issue is legit. If you can't find work sooner or later, you can't pay your bills.

"Absolutely! She's NEVER happy! Then you hear about the separation ... "We've grown apart," she says, which is fem-speak for "I got bored" or "his prick is too small"."

lol, then girls wonder "why does he fear commitment?"

"lol, then girls wonder 'why does he fear commitment?'"

Hmm. Let's see -- he's only a 15 pound weight gain away from her screwing her personal trainer at the gym, divorcing him, and taking half of his assets.

riversider, don't own an SUV, leased or otherwise if that was a not-so-clever attempt at a jab.

WaMu, i'd think the process is more complex than that. without the home that the owners are unable to sell, they'd have most likely been able to move to a cheaper place to live earlier, thereby not running through as much money.

Aboutready, then I guess NO ONE should own a home because over the course of the 30-year mortgage someone MIGHT lose their job.

admin, many people were middle class. and then they weren't.

"Hmm. Let's see -- he's only a 15 pound weight gain away from her screwing her personal trainer at the gym, divorcing him, and taking half of his assets."

but Matt, i thought only married men were unfaithful, not married women.

no matt, you actually are making my point. under normal, non-bubble, circumstances you will not have massive defaults. some people, of course, will be the victims of bad luck, divorce, health problems, unemployment, overleverage. but most will be able to sell a home at little to no loss and then rent. and most will be able to find employment after a brief period of time.

i'm NOT once again saying that people shouldn't have saved more. i just don't see how 10 million people should have been aware they were at risk of losing their homes. when they were being told it was an impossibility, generally.

actually, far more than 10 million people. the foreclosure estimates are for numbers of units, not numbers of people.

That's why they call it a Fiancial Mania.....something about excessive and unjustified enthusiasm.

That's why they call it a Fiancial Mania.....something about excessive and unjustified enthusiasm.

AR - I would think that someone who lost thier job and is burning through cash would walk away from an oppressive mortgage rather than ride it out until they are penniless AND homeless. There is not much of a penalty for doing it these days.

The bank would then be forced to liquidate the house for whatever people are willing to pay, which would help affordability for the underemployed and low wage earners.

WaMu, that's probably true now, particularly now that the stigma has been reduced. but i think there are plenty of people who went past that point earlier in the process.

and yes the bank's ability to firesale the house would help certain people. and it would make it impossible for someone else nearby to sell a similar house and receive any kind of cash, even if they had relatively robust equity, if they became unemployed. often the house, by the time it is both empty and the bank is ready to sell it, isn't even inhabitable any longer.

this is not a simple situation, there are many layers here.

Yes, have to agree, the person who wasn't over leveraged, would sell the home way before it got to that point. Only the person who bought with no money down comes out with nothing, but then they put nothing in..

"AR - I would think that someone who lost thier job and is burning through cash would walk away from an oppressive mortgage rather than ride it out until they are penniless AND homeless. There is not much of a penalty for doing it these days."

Most landlords ask for credit reports. Defaulting on a mortgage would most likely disqualify you as a tenant.

So now you can't buy OR rent a home. Where do you live?

rs, in many areas prices are down 40%. someone who had 40% equity may now have none. if they put down 20%, they have -20%. and none of this takes into account transaction costs. by the time someone is unemployed they might not be able to sell the house unless the bank immediately grants a short sale, which isn't likely. is the math too hard for you?

buyer put down 20% home lost 40% and now unemployed. This example is really reaching. You must have been Yale Drama major. You sure like the personal attaacks.

oh well, can't stop you , its a free country..

really reaching? your reading must be highly selective. there are plenty of people who can't make their payments now who have lived in their homes for more than just a few years. unemployment? heard of what it's doing here?

but that wouldn't suit the riversider view that everyone deserves what they are getting for being profligate. go back to the Cato Institute. it's where you belong.

besides, it's not that you don't like the personal attacks yourself. it's just that you're too cowardly or think you're too clever to come right out and say them.

Yawn

Matt - you have totally jumped the shark on the teenage pg thing. Yes, for a very teeny tiny segment of the population (1st generation, closeknit religious or ethnic communities), late teen (18/19 very different from 14/15) pgs, no big deal. But we're hardly talking about married (late) teens procreating. We're talking about kids having kids with diff. fathers, mothers, etc.

is that like Milf squared?

I once had a (male) friend confide in me that he thought all women/girls should have their kids before 20. So that they could bounce back without too much effort.

That was me 10023

"I once had a (male) friend confide in me that he thought all women/girls should have their kids before 20. So that they could bounce back without too much effort."

Personally, I think they should have their kids before age 35. It's what's most natural.