the everyday adventures of sabrina

so i got a ping yesterday from my mortgage broker at my local bank — several months ago i approached my bank and, because i was curious what my financial situation would look like if i wanted to buy a condo, i went through the mortgage financing process without having (much, if any) intent to buy a place to live. i did learn some interesting stuff from the process. first, i got access to my credit report as the bank gets it — i authorized a “hard pull” (the kind that gets noted down, and can lower your overall credit rating if you do it too often, because it proves you are a “credit seeker”), but i think it was totally worth it because it showed much more information than the free credit reports (you’d think they’d show us the same thing, but you’d be naive and wrong!). also, i got access to my numeric FICO score, which was interesting because FICO is such a vague cloud of uncertainty. of course with FICO 2008, who knows what it is now, but it was nice to see that number just so i had some sort of idea what my credit rating was. (low 700s; not great, not terribly awful.) plus, they cited on there the things that had brought it down, which was nice because now i know exactly what to work on (i started with the bogus entry that Cingular/ATT had put on there for the phone-that-wasn’t — i disputed that with experian and they finally took it off, about two months ago! yay!). you know that previous post where i referenced late payments to my utilities (the gas company, evidently)? well, they’re hanging on out there on this report. it’s fun. you know. i wave to them when i go by — hi, reminders of my misspent youth! in 3 more years, you’ll be gone forever!

i also discovered that, despite my personal situation (single, single income, no investments, no savings, an existing mortgage on an “investment property,” and $10k of credit card debt), they were more than happy to offer me a loan. a pretty big one, actually, to my perspective — $325k, with 5% down (money which we assumed i would make up through 401(k) loans and personal savings, after my cards were paid off). the monthly payment for this largess would be only around $2500! the very matter-of-factness and encouraging attitude of the broker is part of what sealed the deal on not wanting to have anything to do with a home purchase. i mean, not that she was mean or pushy or anything; she was actually very nice and good to work with. but the idea that they thought it was a good idea for me to extend myself with a monthly housing payment that was more than half my monthly take-home, before my other obligations, freaked me right the hell out. i pretty much said “wow! thanks. i think i’m not going to buy a condo right now.” it helped that this exercise was in july/august, right when the subprimes started to melt down.

so that’s the tinted lenses with which i’m looking at the entire economic situation as regards the mortgage mess. i find it entirely believable that smart people got in over their heads as easily as stupid people. if mortgagors are willing to let you hang yourself, of course people are going to take them up on it. i do blame the consumers to a certain extent — hey, man, i ran screaming, you could have too — but i think most of the blame is on the lenders. the lenders made bad loans, full stop. whether they snookered borrowers in or whether they simply systematically used bad judgment is not my prime concern (although i have my suspicions it was a lot of both columns); that they couldn’t do math is. i mean, for pete’s sake, how frigging difficult is it to realize that someone with a $50k annual income is going to default on a $500k mortgage when her payment shoots up to more than her take-home pay? DUH. the borrower trusts the lender to, at some point, make a decision in his, the lender’s, own best interests; it is in the lender’s best interests that the borrower continue to make her payments. so of course borrowers should have done the math for themselves instead of being blindly trusting, but at the same time, the lenders should have been at least somewhat trustworthy.

so that’s why i’m so cranky about the whole situation. i see the lenders getting bailed out or bought out — okay, not all of them, admittedly — and nobody fusses about it because, hey, that’s just wall street. but the consumers getting bailed out — now that’s unreasonable! they are stupid! they don’t deserve it!

i think it’s fairly unquestionable at this point that all parties adjacent to these bad deals were, maliciously or unknowingly, stupid. but i think it’s unfair to put the entire burden on the consumers and then willfully deny the possibilities of fallout across the spectrum. do i want a tax increase to help pay for some sort of subsidy or concessions allowing these bad decisionmakers to have their bad decisions facilitated, at the cost of a market reset which might make it possible for me to own a place of my own? ridiculous question, of course i don’t. i am cheering for the free market to take over at this point, and lower real estate prices to something less absurd than $350k for a 1br with a dishwasher and a parking space. but the free market isn’t really getting a shot at it, with interventionary action from the fed every other damn day (WTF, you guys couldn’t wait ONE WEEK for the meeting? jesus wept.), and nobody letting the companies which should fail do so. and of course i don’t want the people who got into these bad deals to lose everything — for starters, everyone losing their homes will make rental cost more due to increased demand, and also, empty houses are ugly and permit an increase of criminal activity, which personally and materially affects me. also, i do feel bad for people, and sympathetically speaking, i think something could be done to cushion the blow of losing homes because many people were lied to, sometimes with knowing intent to mislead.

i don’t know what the answer is. i’m just getting really tired of reading articles assigning blame entirely to the consumers, and reading people’s bitchy comments about how the morons should have known better. i think it would be nice if people realized that the lenders weren’t exactly acting like altruistic priests, and quit bitching about how floundering borrowers should just take their foreclosures like men and shut the hell up about it… and it would be nice if people realized that a lot of people getting foreclosed on is going to affect the personal bottom lines they’re so damn protective of. self-centered tunnel vision, not so helpful, people.

and i also wish ben bernanke would, like, take a vacation. ben, sweetie, i’m a tax-and-spend big government democrat; when i’m calling for the federal government to quit intervening in economic matters and keep its muddy hands off the damn market, it’s unusual. okay? so go book yourself a nice flight to someplace with no internet access and no cable TV for a couple weeks, go chill out and leave us alone for a little while.

we now continue our previously scheduled splah.

of course, i wound up quitting that job. entailed with the job switch was a switch from driving to using cta rapid transit to get to work, a $75/month pass (bought eventually, after i got over my hangup about the CIA being able to track my daily movements; at first, i paid for transit cards with cash in order to thwart the man. and also because it took effort to sign up for a Chicago Card) instead of several $30+ fillups/month + $30/mo parking to drive. sadly, my employer doesn’t offer transit checks, so this is not a pre-tax deduction (yes, i ask about it semi-regularly! niqui want transit benefits!). also, there was a not-insubstantial pay change, though that didn’t take effect until 2007. in 2006, my effective pay remained the same from the university to the new gig. in 2007, however, someone decided to give me a Very Large Hat, and apparently that pays pretty well. i took advantage of that to send more money to the credit cards, and it’s true that that’s not a very helpful hint to give anyone who needs to get out of debt: hey, go get a higher-paying job! preferably one that doesn’t give you medical problems related to stress and anxiety, like clinical depression, because the workplace is so completely fucked up! (thanks for that, by the way, NSIT.) that said, if it’s an option, maybe you should look into it.

i also took advantage of my changed personal situation — once i was in better working circumstances, suddenly pretty much everything was better, regardless of whether or not it actually had to do with work — to spend a lot more time focusing on my credit card debt elimination goals. so this is sort of a little rundown of what worked for me.
continue reading…