3 Easy Payments

Posted: March 24, 2008 in Homelessness, Housing, Money

This past weekend, I didn’t do much of anything – which was actually pretty nice.

On Saturday when I woke up I turned on the television with the intention of watching the news. Unfortunately, because I woke up earlier than I had planned to, I found myself switching channels to escape all of the early morning infomercials. They all seemed to be about the same thing: buying houses that have gone into foreclosure or are being auctioned at "tax lien" sales by local governments for "… pennies on the dollar."  


I’m sure you’ve seen them.

The inference is that if you buy the "kit" that you could be making up to x amount of dollars on your very first sale. Then come all the testimonials from folks who have either, bought the kit or, have attended one of their seminars. What I noticed however, is that the testimonials were repeated numerous times by the same 3 or 4 people who have "made it big" – with, of course, the fine print disclaimer that theirs were "Unique Experiences. Individual Results May Vary."

The other thing I noticed were the "sidekicks."

These folks go through the motions of being astonished and impressed with what the "host" is saying. The problem is that they’re so terrible at pretending to be in awe, that it makes the whole thing all that much more absurd.

So after watching 4 or 5 of these things and laughing to myself, I decided I would connect to the Internet and see what the news had to say. First stop: the SLO Tribune. Not much there that was overly interesting – at least not to me.

Second stop: SLO New Times where I found an article called: "The foreclosure tour" – with a subtitle of, "Troll others’ misfortunes from the convenience of a luxury motorcoach." That caught my eye – especially since I had used up the early hours of the morning watching those goofy infomercials.

The article was about a "tour bus" semi-filled with – as the article calls them – "would-be investors."

The one quote that bothered me in the article was a quote of Mr. Dick Keenan, the tour’s host,

"There’s an adage in real estate. Sell when people are dancing on tables and buy when there’s blood in the streets. Folks, today there’s a lot of blood in the streets."

There’s a lot more than just "blood in the streets."

There are folks out in the streets – men, women, children, senior citizens, veterans , persons with mental illnesses – that have no place to call home. And, based on projected forecasts, there are going to be more who will find themselves without a place to live.

The article mentioned Fortune Magazine and the Mortgage Brokers Association (MBA), which according to their website, "… is the national association representing the real estate finance industry…"

A March 17, 2008 Fortune article titled "How bad is the mortgage crisis going to get?" quotes Princeton Economist Paul Krugman,

"Actually, I think home prices will fall enough for us to produce about 20 million people with negative equity. That’s almost a quarter of U.S. homes… if you have negative equity, you can end up being foreclosed on… We’re probably heading for $6 trillion or $7 trillion in capital losses in housing."

That doesn’t sound all that encouraging to me.

Then on the MBA site, I found two reports: "Delinquencies and Foreclosures Increase in Latest MBA National Delinquency Survey" and "Reports Consistent with Negative Economic Growth," neither of which provided any comfort.

According to the first report "delinquency rate for mortgage loans" is 5.82% and the percentage of loans that are already in foreclosure is 2.04%.

The report also stated,

"The total delinquency rate is the highest in the MBA survey since 1985. The rate of foreclosure starts and the percent of loans in the process of foreclosure are at the highest levels ever."

The March 18, 2008 MBA Economic Forecast places the unemployment rate at 4.9% for the first quarter of this year and – based on current trends – is projected to reach as high as 5.8% by the end of the year.

I may not be the brightest bulb in the chandelier, but I do know that when people become unemployed, they find it mighty hard to pay their bills. The longer they remain unemployed the further in debt they find themselves. And, if they remain unemployed for too long a period they can find themselves without housing.

And where do they go?

If they’re lucky, they can stay with family or friends for a while. But, not everyone has that option. That means that they can and do find themselves homeless and out on the streets.

According to the "Housing Finance and Foreclosures Insta-Poll Fact Sheet," used by the National League of Cities for gathering data regarding the impact foreclosures have had on local communities, there has been an,

"Increase in homelessness/need for temporary/emergency housing 22%"

All the while, we stubbornly cling to our misconceptions and stereotypical thinking regarding what a homeless person is.

We seem to have no problem yelling out at a homeless person that they need to get a job; that they need to apply themselves and make something of their lives. Yet, we seem to have difficulties with remembering that many homeless are just folks who have found themselves in a difficult situation that may not be their fault.

With the numbers of foreclosures that are projected for this year, combined with the numbers of persons who will find themselves unemployed, we had better understand that the first step at helping these folks regain their lives is for us to change our overall attitude toward them. After all, since most of us are living paycheck to paycheck – it could very well be one of us who finds themselves homeless next.

One last thought –

One of the infomercials allowed potential customers to buy the kit for only "3 easy payments of $39.95" (plus shipping and handling) and an unconditional money back guarantee.

There are probably a lot of folks who are behind 3 mortgage or rent payments.

The only guarantee that they have is that they will probably find themselves without a place to live.

  1. AnAmerican says:

    Unfortunately, some unscrupulous mortage lenders have done a big “sale” on many rather naive home buyers with the little money down scheme and ballooning mortgage payments resulting in foreclosures and personal financial ruin. It doesn’t take a financial analyst to realize that you simply can’t take on more debt than you can pay for. Sadly, some folks just cannot meet the rising costs of living with the current economic climate and find that the dollar is simply not going as far as it once did. Most folks have little “padding” for catastrophes should they occur due to the rising costs of the economy.

    In my community we have a wonderful organization that provides funding for emergencies to those in need. One of the stipulations of receiving assistance from this organization is a complete disclosure of finances. People receive very valuable financial advise to rearrange finances so they can remain in the their homes & avoid foreclosure (It is amazing how skewed the sense of priorities is among different folks… for example, not having enough money to pay for electricity while making $350/month new car payments!).

    By providing this service many folks can be educated about personal finances and avoid finding themselves on the street. The underlying goal is to keep people off the streets by offering help to prevent homelessness if at all possible. Sadly, from what I have seen, and as you point out, there simply isn’t a fix for many who will endure homelessness due to the current economic climate.

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