Recession: We're All in This Together

I ventured to the supermarket with my husband, 3 year old, and 1 year old, and we ran into some friends of ours with children the same age. After some small talk, they confided in us that they had put their last two mortgage payments on credit cards. "We both have perfect credit, but I haven't worked since April." They laughed giddily, nervously about it, but I couldn't help but notice they looked a bit more haggered than usual, brave smiles topping their stress like whipped cream on dirty dishes. "No but seriously, we can't go on like this more than two more months. Somethings gotta give." They were happy that their lender was still in business, thanks to a federal bailout. But what about them?

We all bought our homes in Los Angeles at about the same time - 2005 - in less than upscale neighborhoods. Our neighborhoods are known as "in transition", which means there are still some gang shootings and domestic murders, but there are also educated, fashionable people who don't carry firearms, and there are plenty of nearby mommy and me classes. Homes are not easy to come by in Los Angeles, and we bought into a big bubble where we could. Perhaps it's living in neighborhoods that are "in transition" that gives us permission to be brave, honest, and unpretentious with one another.

At a birthday party recently, as our small children played, my circle of friends admitted one by one the extent to which we are each under water, upside down, maxed out, and in some cases unemployed. One friend, mortgaged by Countrywide, laughed at the fact that when they bought their home, they were both unemployed and she was 9 months pregnant. Their broker forged employment documents, lied about income, and told them this was how it's done. They managed to find employment eventually and keep the ball rolling, with the help of home equity credit and loans, but not ever saving a single penny. Countrywide has been unwilling to help modify their ARM unless they default on their loan. ruining their credit rating.

My circle of friends used to be all about playdates, preschool, and family barbecues. Now our conversations inevitably turn to facts of survival: Chapter 13 bankruptcy, employment possibilities, foreclosed friends, how to make your lender listen. We don't have a federal bailout plan for our families, but we do have each other. Sharing information, ideas, what's worked and what hasn't, breaks us out of our personal American nightmares and reveals a light at the end of the tunnel.

Comments

[DevHyfes]

What an odd post.

I'm in the same position as Olivia and her friends- struggling to pay for a way-too-expensive house in a less-than-desirable LA neighborhood. While I empathize with her and her friends, I see none of the regret or self reflection that typifies interaction with my friends. For example, Olivia seems despondent that some of her friends might need to "[ruin] their credit rating" in order to renegotiate a loan that they could not afford, and obtained through falsification of records. Isn't a temporary ding to credit rating a rather low price to pay to fix this? They don't have to lose their house or end up in jail.

My problem is that so many people are concerned about how "we're all in this" predicament, but there is no sense of responsibility for the part we all played in making it. Plenty of people- including friends and family- cheered on this practice of buying way more house than we could afford. And now we seem upset at the brokers and banks that let us do this to ourselves.

As I said, I feel sympathy for these people- nobody really likes the thought of families worrying about how they will keep a roof over their heads. But its at times like these that we can learn important lessons and tailor our behavior accordingly- unless we continue this group-denial that our own actions were a significant contributor to this mess.

[YsiaD]

I am angry at the lax and fraudulent mass media. They refused to write the news that would have revealed this fraud to the general public. Most people buying major items, like homes, rely on "experts" completing the deals. And the industry knew this. All the news we really need is unpublished. How this country really works is kept under cover. Even now, how many people know that the SEC isn't changing the basic rules that got us into the mess. The very wealthy and powerful want the status quo and will get their way ....unless their well-supported congress(who are part of the same) changes their ways,including the Dem leadership.

[Henry]

"they bought their home, they were both unemployed and she was 9 months pregnant. Their broker forged employment documents, lied about income, and told them this was how it's done. "

It happens to be a felony to lie on an application for a home loan. It is a matter of law. It does not matter that the broker told them this is how it is done. The obtuse and casual acknowledgement of these things gives you a take on where we are as a civilization.