Tuesday, July 08, 2008

The Sewer of Inequity...


In The Winter of 2004, we moved to Portland... my wife newborn son and I. We had left Seattle where we were finding it increasingly difficult to find a home anywhere near our jobs downtown or in anyplace in the Metropolitan area that we actually wanted to live. We left a place we loved, sacrificing friends and desires, for a place that promised us more opportunity. We were young, smart, professional, upwardly mobile, financially responsible. We had one old wreck of a truck, little cash, lots of (good) credit, and what's more, we understood our limitations.

Knowing the level of house we would be offered by the loan any bank would be willing to provide us, we nevertheless selected a conservative little home in a transitional neighborhood. We did our homework, balanced our budgets, cut corners where we had to, and secured the best loan possible, from a competitive and highly competent lender. We bought our first home... all 960 square feet of the dull little modern ranch-style fabrication.

In the Summer of that year, the local newspaper ran a story of another young couple who had just bought their first home in the Portland Metro Area. By that time real estate here was booming, Portland being consistently listed in the top ten best places to live in the country. The couple was celebrated for being ethnically diverse. They also had a child the same age as our own and were about the same age as my wife and I. The wife did not work. "Wonderful, I thought genuinely, "a stay-at-home Mom. The child was fortunate." The father, it was reported washed dishes at a local restaurant. "Okay," I thought, "aren't we fortunate to live in such prosperous times." I started out myself as a bus boy and this too was the first home I ever lived in in my life; 'home' being defined for me as living in a place you owned.

The story's attached photo was the kick in the stomach for us... the blow that wiped the smile off both my wife and my faces. The house had to be in excess of 2000 square feet. It was nearly brand new in what looked to be a new subdivision. The happy couple stood in front of their driveway which contained a new car and truck. Their little boy played in the drive, behind the wheel of a $400 dollar electric car. For our part, we had just purchased a used car for my wife in order to make her 40 minute commute. Our other recent purchase was a second hand tricycle for my son, via craigslist. Our old wreck of a truck was to be stolen the following winter.

The story went on to fill the gaps in the mystery. The couple had attained their loans with the help of new government program that allowed them to take on far more burden than any responsible lender would ever have allowed. The Oregonian was not only celebrating the tenuous achievement, it was promoting the practice.

Five years later, as we prepared to sell our little home, I read another story in the same newspaper lamenting the poor judgement and so-called cannibalistic tactics of mortgage lenders, who had violated the tenents of better financial judgement and extended credit and loans far in excess of what applicants could reasonably afford. I thought about that couple from years before, wondering now what was their fate... and who was really to blame.

By thi8s time, we were doing reasonably better than before. Now, we had two children, both in daycare. We had the same used car and had replaced the stolen wreck of a truck with a lesser wreck of an old truck. You see, knowing we wanted to buy a bigger home in the next few years, I passed up the chance to buy a new truck for myself and payed 2,200 for a used SUV and bought a new bicycle instead. We had refinanced our home years before, locking into a very low rate 5 year ARM. We used the equity from our home to help pay for city mandated neighborhood sewer improvements. You see, the city of Portland will fund risky loans to 'underprivileged' couples and build apartments for the homeless all with taxpayer dollars, but then refuse to pay for necessary infrastructure.

Neverthless, we were able to squeeze out some money for a few home improvements.W e payed off some outstanding debt and payed every bill on time for the next several years. Working very hard, we had transformed our modest home into one of the jewels of the block. So by the time the ARM came due, our home had sold for a good price and we were moving on up.

Selling faster than we expected, our new home search became a bit more frantic. We had seen many that we liked, but few that we could reasonably afford. We still understood our own limits. Finally finding the house that we both liked and wanted, our agent prepared the offer. It was more than we wanted to spend, but a good house in a great neighborhood was worth the sacrifice, right?! After a restless night's sleep, however, running numbers in our dreams and having them come up dangerously close to red, we phoned our agent first thing and stopped him from making that offer. Instead, we purchased a smaller home, in need of moderate care in a similar neighborhood. And despite our dissappointment, 2 months later, with gas prices doubled, the grocery bills edging higher, and our 401K's getting crushed once again, we breath a comfortable sign of relief.

Until we read things like this,

Mortgage rescue plan draws Senate support:
...The Senate voted 76-10 Monday to advance the bill, a broad array of housing measures including overhauls of the Federal Housing Administration, the Depression-era mortgage insurer, and government-sponsored home loan giants Fannie Mae and Freddie Mac.

Its centerpiece is a new $300 billion FHA program to allow debt-ridden homeowners who are currently too financially risky to qualify for government-backed loans to refinance into safer, more affordable mortgages.

The measure is on track for passage by an overwhelming margin, possibly by week's end. It has survived several test votes in the Senate, repeatedly demonstrating that there's enough support for it to override President Bush's promised veto.

We work hard. We make smart, responsible choices. We earn trust and extend it wisely. We expect a system to award us accordingly. What we get is higher taxes as reward for our efforts with the money getting flushed down a sewer of inequity, to pay for the perks and the political pull of Salem and Washington peddlers...

... and more blindness and misery for those too ignorant to know better and to pampered by mother government to learn from their mistakes.

Here we go again!