There's nothing funny about today's post, other than the funny money that went into mortgages. I am on the ground on Henry Long Blvd. in Stockton, CA. This is truly the epicenter of the foreclosure earthquake. I would say one out of every eight homes in this neighborhood is for sale: and you know which ones are vacant because the lawns are dead.
On one block, there are nine homes, and four are for sale.
I am doing stories from Stockton all day Tuesday on all the players in this drama. There's the guy who's helping banks get people to leave their foreclosed homes by writing checks (and with him I learned what a gallon of milk looks like after sitting in a powerless fridge for a few months--don't ever need to see that again). There's the guy from another town who wants to buy a foreclosed home and "flip" it. There's the veteran realtor who says the problems haven't impacted the high end (he just sold a home here for a record $2.6m).
And then there's the dental assistant, a single mother of three, who doesn't want us to reveal her name, but who has to be out of her repossessed home in 14 days. She has nowhere to go and no creditworthiness to qualify as a renter. What happened? Her $2,000 mortgage payment (which she had to work two jobs to cover) reset after two years, and it shot up to $3,800. I asked her how she thought she could take on the loan, knowing the rate would rise. "I just thought things would work out."
She regrets now that she did not stay within her intended budget but let herself be talked into buying more than she should have. She doesn't blame the realtor or the broker or the bank. Ok, she does a little. Mostly, though, she is stressed about finding a new place to live. Her three kids want to know why notices keep getting posted on the door.
Should we feel sorry for her? I sure did. Should she be bailed out? Not if it keeps her in a house she can't possibly afford over the long run. That's not fair to the people who did stay within their budgets, people who have seen their home values plummet as their neighbors go into foreclosure.
They say it's going to get worse in Stockton before it gets better. The market has to work itself out, and one realtor on the front lines doesn't expect things to get back to "normal" til 2011. That means a lot of families will be losing homes, will have destroyed their credit, and will have a very tough time convincing someone to rent to them.
I did ask the dental assistant if she ever planned to buy a house again. She replied, "It is my hope." Her advice to others? "Stay within your budget."
FYI: Here's a link of interest on the Stockton situation:
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