With so many foreclosures going on all over the United States, some very important questions are being raised. Who are these people? What did they do to get in such a desperate situation? Is foreclosure due to their own incompetence and lack of financial education, or is there more at work here? Why do a few of them find some way to stop foreclosure, while many others are losing their homes and renting an apartment after it is all over?There are no simple answers to these questions, of course, but the trend is to label foreclosure victims as either the innocent victims of banks, mortgage brokers, and real estate agents, or as consumers too greedy and lazy to read the mortgage paperwork that set out all of the traps in front of them that they are now walking straight into. In fact, though, both of these perceptions are wrong, and homeowners in foreclosure face financial hardships for numerous reasons. But let's meet some of these people and see if their hardships can teach us anything about the current state of homeowners and consumers in general in America.
They are the people who lied on their mortgage applications in order to afford those $300K and million-dollar homes, when their real incomes would only qualify them for houses one quarter of the size they ended up purchasing.
They are the people who bought a new SUV last year to replace a smaller SUV that was only three years old, in order to keep up with their neighbors next door and across the street who had one year old SUVs.
They are the people who continue to finance their own hardships, by borrowing money on credit cards until no one will give them any more money, effectively tightening the noose around their own necks the longer they rely on debt. They know they are tightening their own noose, but they feel they have no other option at this point.
They are the people who have not taken care of themselves first, and are now facing huge medical bills that cause them to fall behind everywhere else, and they are now realizing their work health insurance, once a selling point of taking the job, has enough technicalities to prevent them from ever receiving real support from the program.
They are the people who bought these huge homes and did not realize simply how much it would cost to keep them warm in winter, and now they are faced with the choice of heat, eat, or pay the mortgage.
They are the people whose jobs were sent to India and China.
They are the people who borrow their conspicuous wealth from the same banks that finance the companies that outsource their jobs, but are not aware this is what their bank is doing to them, with their assistance.
They are the people who were given fraudulent appraisals that increased the values of their homes far beyond what was reasonable, just to increase commissions payouts for real estate agents and mortgage brokers, and create more paper wealth that banks could sell to hedge funds.
They are the people who did not realize that having children is very expensive.
They are the people who tried opening their own business and, for one reason or another, just could not keep up and had to confine themselves to the prison of wage slavery and give up their dreams of owning their own business and controlling their own lives.
They are the people whose parents needed extra care and had no one to take care of them after the government handouts ceased and health insurance would not cover their illness or disability.
They are the people whose children needed extra care and found that they could no longer sacrifice their family for work and their income decreased because of their commitment to their own families and children.
They are the people who are now hoping against hope that the government will swoop down and come to their aid, not realizing that it was ineffective government policies, poor economic oversight, and a revolving door between big banks and big government that created the conditions under which so many foreclosures could take place at once.
They are the people who get up every day, just like you and I, and succeed some days, fail others, and make their own decisions in life and learn from the consequences of those decisions, or are doomed to repeat the same mistakes endlessly.
They are the people who, hopefully, once they face foreclosure, realize that family and community are more important than owning the biggest house or competing with coworkers for the most debt or the least-efficient SUV.
Homeowners face foreclosure for any number of reasons, all the way from unbridled greed to outdo their neighbors, to a sudden financial catastrophe that demands their urgent attention and too large an amount of money, regardless of how much they have saved and how prudent their spending habits have been. In finding solutions that will help these people prevent the foreclosure process from taking away their homes, condemning them will offer no benefits, short-term or long-term.
Although criticizing foreclosure victims may be fun and easy for some, while providing a scapegoat for declining home values nationwide, this does not provide effective solutions or a way out of the current foreclosure crisis. It is only with community support and involvement, with neighbors and families helping each other, that foreclosure can be confronted and homes saved. Foreclosure victims are just like all the rest of us, who can learn from our mistakes, financial and otherwise; they are not an aberration or abomination to be shamed, ignored, or made to feel guilty for hardships out of their control. Fixing the foreclosure problem is more important now than pointing the finger of blame, and will lead to more sustainable results in the future.
