The 2008 financial crisis that morphed into the Great Recession hit people like Sam Clune with a vengeance. The former mortgage broker ended up being homeless, and his road to recovery is still is winding on 10 years later.
Fresh out of college in 2004 and saddled with student loan debt, Clune went to work in the mortgage brokerage industry in upstate New York. He was preparing for what then looked like a promising career. But within a few years, the business was turned upside down as the subprime mortgage crisis and credit crunch shook Wall Street to its core and the economy was left in shambles.
Subprime loans bundled into securities became toxic assets for banks as delinquencies and foreclosures grew. Lehman Brothers, one of the nation's oldest investment banks and one that bought massive amounts of the risky subprime loans, ended up filing for bankruptcy on Sept. 15, 2008. Another jolt to the financial system around that time was the government bailout of AIG, a seller of insurance on debt securities backed by the subprime mortgages.
Even before Lehman and AIG, there were signs of financial distress in the economy. In fact, the Great Recession officially began December 2007 and lasted until June 2009, according to the National Bureau of Economic Research, a private economic organization.
As the recession hit, the U.S. suffered three years of job losses. New York state, meanwhile, had just one year of falling employment in the same stretch, according to state data.
Yet for some folks, the lingering effects of the recession would last much longer.
"I never really bounced back," said the 44-year-old Clune, who to this day is struggling financially and living in Lima, Peru, with his 9-year-old Labrador dog, Trouble. He has lived in Peruvian capital for about four months and describes it as "somewhere I can afford on the disability check."
It's a long way from the days when Clune worked in Saratoga Springs, New York, for an independent mortgage lender that employed about 1,000 people. He sold residential loan products mostly tied to big banks such as Wells Fargo.
"December of 2007, I had finally hit my stride," Clune said. "I had been working at it a few years and actually made the best in the company that month."
During this time, risky subprime mortgage lending was popular, especially in super-heated housing markets in the Southwest U.S. and East Coast cities as a way for people with low credit scores who didn't qualify for lower rates to achieve home ownership. Loose underwriting standards were common, and that meant some mortgages did not have full borrower documentation attached to them.
"Nobody cared about what the paper was back then since everybody was banking on the house continuing to go up in value," he said. "The continued increase in the value of homes hid a multitude of sins in the lending practices. Then the home values stopped going up."
Clune remembers getting laid off in the summer of 2008 from his mortgage broker job along with hundreds of others in the office and thinking the industry would bounce back. He wasn't alone — others had that view, too.
"There had been lots of regional slumps that people had weathered, and they were generally short-lived," said Aaron Terrazas, Zillow senior economist and a former economist in the Treasury Department's Office of Economic Policy. "People had this experience of regional downturns in their minds."
However, this mortgage slump wasn't like the previous ones. Lending had tightened and didn't recover right away. The effects would spill over into the larger economy. The subprime mortgage meltdown and the ensuing financial crisis from mid-2008 to the first part of 2009 eventually caused stock market paper losses of some $7.4 trillion and wiped out about $3.4 billion in real estate wealth, according to the Federal Reserve.
"I honestly thought I was taking more of a sabbatical than I was getting laid off," Clune said. "I immediately hopped on my boat and just spent the time on Lake George. Then a few months later, the world changed and I thought, 'I guess I won't be going back to my job.' It was a difficult pill to swallow."
About 5.5 million Americans lost jobs in the aftermath of the 2008 economic crisis. In the mortgage sector alone, about 125,000 jobs were lost in 2007 and 2008, according to Mortgage Daily, a trade publication. The mortgage industry, which employed roughly 535,000 in 2005 and saw headcount plummet to around 246,000 by late 2010. As of June 30, 2018, it was just over 707,000.
"We're very stable now and a great reflection of the needs of the housing market," said John G. Stevens, president of the National Association of Mortgage Brokers, a trade group representing mortgage professionals.
Regardless, the full reality of the recession hit home for Clune when he started his next job.
"Two weeks after I got a job selling cars at the local Chevy dealership, it shut down," he said. "Then I picked up a job doing door-to-door home improvements for Sears."
Nonetheless, the door-to-door sales job barely paid bills, so Clune eventually decided enough was enough. It was time to try something completely different and move across the country.
"I thought maybe the problem is being up here in this miserable, cold and dark place called upstate New York," he said. "So let's go to California."
Clune recalls putting "a lot of effort" into finding a job in 2012 when he arrived in California. He didn't pursue mortgage broker work in California since he said it required too many hurdles, including taking new classes to get licensing.
In the end, Clune was only able to find what he calls "irregular work but it never caught on. After some point I became discouraged with it all ... and I lost everything."
Clune is one of millions of workers who never recovered and lost prime years of earning to the recession.
"While total employment has far surpassed its prerecession high, there are still more people who have left the workforce (search) but would like to have a job," according to Lynn Reaser, chief economist at the Fermanian Business and Economic Institute at Point Loma Nazarene University in San Diego.
Before relocating to Peru in May, Clune lived in a homeless camp in the San Francisco Bay area and was helping other residents living in tents get solar energy to power cellphones, laptops, electric wheelchairs or a refrigerator.
Prior to the homeless camp, Clune lived in a truck fitted with solar panels for electricity but said he lost that vehicle after accumulating too many parking tickets.
According to Clune, he was offered homeless vouchers for the Bay Area but turned them down because it would have meant living in neighborhoods "that were the worst place possible."
He struggled with bouts of stress and depression living homeless. Ultimately, after other challenges, Clune ended up on disability.
These days, Clune lives in a studio apartment in Lima and spends most of his time learning Spanish and taking walks along the nearby beach.
Clune said $1,000 a month goes a long way in Peru. For about $400 a month, Clune said, apartments near the beach are available in "nicer neighborhoods." A two-course meal at restaurants costs just $4, he added.
He still has existing bills like student loans and other debt he's paying off. He credits his jobs as a cab driver and chef during college years for keeping student loan debt from becoming too crushing.
He's hopeful of meeting qualifications for residency in Peru.
Besides, Clune adds: "They're much nicer about it than we are in America as far as people moving to Peru. So I think America could learn a thing or two from Peru on this point."