Shenandoah | by John Galt

July 1, 2010

So you bought a home in Fort Myers, Florida at a price of $160,000.

In 2006, Joe Mortgage Broker Finance Company  calls you and says “Wow, you live in some prime turf dude!” He then convinces you after slapping the hood of your home that “this is the deal of a lifetime. You can refinance at 125% loan-to-value and re-invest it in the home to upgrade it, add a pool, and still have money to go to Vegas and a cruise!”

You sit there dumbfounded. You put all of $5,000 down some two years earlier and now this guy is selling you “The American Dream” so you can finally enjoy the good times in life and have a lower monthly payment.

Without even thinking you tell him to bring your team to the home and get the process in motion.

“His” appraiser says “WOW! What a gorgeous 27 year old home in a classic neighborhood! It’s worth $300,000 easy!”

You kiss your wife and hug Joe’s rep crying while saying to yourself “I’m getting a suite at the Bellagio and my Beamer SUV!”

As the negotiations crawl forward in all of 72 hours, you get pensive and say “I don’t need the additional 25%. Let’s just take a new mortgage out at $300,000 with the 3/27 ARM and take the points out at closing.”

He smiles and says “Cewtainly,” with that Three Stooges Curly type of smile.

You and your better half  sign off, go to Vegas, take a 10 day cruise on New Year’s of 2007, lease a Mercedes SUV because the Beamer dealer pissed you off because you wore flip flops into his showroom and he berated you, and before you know it, all that equity is gone after adding marble counter tops, a swimming pool built by Shifty’s, and changing your old carport into a new room with bar, 60″ plasma TV, and a pool table.

Your job in the ____________________ (fill in the blank with your choice) industry suddenly turns south in late 2008. Your boss walks into the break room during a staff meeting and announces “everyone is cut back to 32 hours effective on Monday” and your wife gets laid off from the title company she used to be swamped with.

Suddenly that $1250 per month payment looks steep. But so far, so good, you’re making it. Until the reset in 2009 where you suddenly have a $1408 per month bill along with a 5% increase in  your property taxes plus 5% more for property insurance. Now you fall behind on your bills. Mercedes demands their rig back after two missed payments. The cable company cuts you off, leaving your Facebook friends wondering if you’re dead. Your credit card companies think you’ve skipped town and start legal proceedings against you. And your boss threatens you because you look hungover every morning when in reality, you’re working your third job on weekends and two each day to tray to make up the shortfall. I guess when you answered the phone with “tonight’s special is the triple pepperoni with free bread sticks” did not amuse him.

As your personal situation deteriorates you search for answers. You go to your accountant neighbor and ask him to put a pen to paper. He tells you to get your home appraised and refinance it asap.

The appraiser shows up and tags it at $180,000, not too much over for what you paid for it years earlier. You’ve lost all your equity but still owe well over $300,000 with interest and penalties for that last missed payment. You call the bank and ask for help but instead here that unmistakable Kolkata, India accent giggling and telling you that they can get a supervisor to help after identifying themselves as “Mike” and telling you that the temperature there is 59 degrees when in fact it’s 82 because by now its spring in southwest Florida. They laugh at your proposal and tell you that you’ll be referred to their legal department if you are not current within thirty days.

You take the appraisal to your accountant friend, he looks at you and says “you need a drink.”

You chug the Nattie Lite because that’s all you can afford now, and look at him ready to cry. He said based on an average annualized inflation rate of 2%, it will take you 27 years to break even and get even a little bit ahead to recover SOME of your equity.

There’s your reality. You are upside down, living in a neighborhood with dozens of home in foreclosure, empty for sale, or “for sale by owner” and due to the lack of jobs, unable to move, unable to sell, unable to pay. You can not afford a lawyer, you’ve tried the HAMP route but can not settle because you are still ‘relatively’ current and your neighbors who tried is said “DON’T!” because they lost everything dealing with the government while waiting on a new deal with the banksters. Instead they brag about living for free in their home for the last year telling you how great it is because the cruise they just returned from really lowered the stress level of not paying their housing payment and allowed them to live the high life just one more year.

So in 26 years, you’ll be able to break even for a home that isn’t worth anything close to what you financed it for, or face a series of legal actions against you, or bankruptcy because you believed the “American Ownership Dream” bullcrap sold to you by a former used car salesman who became a Realtor/Mortgage Broker operating out of one of the empty homes up the street from you in the garage.

Wash, lather, rinse, repeat this story 5 million times in this nation, hell, maybe 10 million times or even more.

Recovery my tuckus, not in our generation, that’s for sure.