Monday, March 16, 2009

Mortgage Woes


This week my next door neighbor told me that he had lost his house. This surprised me, because he is a plumber and had given me the impression that he was making very good money. He was always talking about how he made $178 for forty minutes of work or how he just got a $9000 contract and stuff like that. The whole time I have lived by him (2 1/2 years) I thought he was doing fine. Upon inquiring more, I found that the reason for his foreclosure was not that he lacked work, but that the companies he did work for refused to pay him. He had $60,000 in uncollected invoices that were out there and the companies that owed it simply were not paying him. This is a common problem for people who work in conrtracting - performing a service and then having to pester to collect - I am told that it is not uncommon to have $100,000 of invoices out and only be able to collect on $30,000 worth of them. I suppose it's part of the business. But now that times are bad, it is even worse.

I would like to point out something about my neighbor's unfortunate situation. Liberals have been blaming the mortgage crisis on "predatory lending" and making it sound like the people who are losing their homes are victims who were swindled into mortgages they couldn't pay down the line. This may be true for some people, but it certainly wasn't the case for my neighbor. Not everybody who gets a hard lot is some kind of victim, especially not the kind of victim where we can easily point a finger at somebody and accuse them of doing it to us. But liberals only tend to see things in terms of one group of people oppressing another, and so it at least makes some kind of internal logical sense that this crisis could be blamed on predatory lending. But my neighbor had a regular mortgage and wasn't prey to anything like that.

On the other hand, conservatives tend to accuse the people who are losing their homes of living beyond their means; thinking that everybody going into foreclosure was trying to live high on the heap and had expensive homes, vacation properties, extra bathrooms they didn't need, needless luxuries and things of that nature. While the liberals try to arouse sympathy in us for all the people losing their homes, the conservative emphasis on the irresponsibility of persons who took out mortgages that were too big for them is a way to try to say that the people who are losing their homes somehow deserve it. Again, this may be true for some, but it is not the case with my neighbor. He did not get into a 5 year ARM in order to squirm into a house that was way out of his class, nor was he trying in anyway to live beyond his means and mortgage a massive luxury house he couldn't afford; his home is modest, like mine. He wasn't greedy, nor was he taken advantage of.

Both sides seem to be trying to find someone to blame for everything, but the fact is, sometimes stuff just happens that is nobody's fault. My neighbor didn't get into an irresponsible mortgage, nor did the mortgage company try to cheat him. Through factors beyond his control (the companies he does jobs for losing their business), his income has dried up and has forced him out. That's just the way it is, and we don't always need to be trying to find out who caused it. It's just a fact of life that sometimes we win and sometimes we lose, only modern man doesn't have the spine to acknowledge this. For us, if things don't go our way, we have to find somebody to blame.

The fact is, nothing is secure in this world. As I was driving home tonight thinking about friends I had lost in the past several years, I reminded myself that God is in control. There is no guarantee on anything. No guarantee that I will live to see tomorrow. No guarantee that God will not strike dead both of my daughters before they reach maturity, leaving me bereaved and alone. No guarantee that I will not fall victim to some disease or accident that could leave me crippled or maimed. These are seriously the kind of things I remind myself of daily. There is certainly no surety that I will keep my house, whether I have a good mortgage or not.

There is, however, one certainty: that whatever comes from God's hand is for the betterment of my soul, even if it means suffering. And this is perhaps where Catholics depart from some of our Protestant brethren - for many external suffering is something from the devil that is to be tolerated but ultimatey rejected. For Catholics, suffering is an opportunity to see the hand of God at work, who wills at times that we should suffer in a variety of ways in order to conform us to the image of His Son, so that in a mystical way, as St. Paul tells us, we may "make up what is lacking in the sufferings of Christ" (Col. 1:24). Following in the footsteps of the Master to become more like Him.

The world and all things in it are transitory, and when things go bad, the best thing is probably not to start wondering about who's fault it is and who you can pin it on, but to seek to glorify God in and through it and recognize that we have no abiding homeland here. At least my neighbor seems to have taken this approach to it: while not a practicing Christian, he seems to have just thrown up his hands and said, "That's the way it goes sometimes." He is not embittered by the experience, but is simply seeking to restart somewhere else without any chip on his shoulder or feeling that anybody "owes" him anything (well, perhaps except the companies who owe him $60,000 in unpaid invoices).

Please pray for him and for all persons who are in danger of losing their homes, for whatever reason.

6 comments:

Mr S said...

I believe that God gives extra crosses to those whom He loves.

That is the way He treats His true friends.

It is no wonder He does not have many, because most of us work so hard to have material comforts dictate our lifestyle.

Your neighbor is in our prayers

Anonymous said...

I just heard about contractors who weren't paid for their work going back into houses and taking everything they installed. ex. granite countertops etc.

BONIFACE said...

Anonymous-

That's interesting...wouldn't work in my neighbor's case because he does work for big companies and management companies...the hotels or restaurants he is installing the plumbing for aren't run by the people who are paying for it, so it wouldn't really be fair for him to pull the stuff out of a hotel in Detroit when the person in charge of paying the bills is in some office in Memphis.

CO said...

Boniface,

Your neighbor's story is unpleasant to hear. I am sorry for his troubles. Your point is dead on: The fact is, nothing is secure in this world. I understand your point that God is in control, but I wish to emphasize that active moral actions glorify God as well. Find the problem, fix the problem, suffer the consequences, and move on!

In your neighbor's case, there seem to be two distinct problems: broken contracts and the lack of sound money. The first is easily visible, the second is not. Both are inconsistent with Catholic teachings and both create a nasty slippery-slope condition.

Contracts are based on free will; both parties willingly consent to an exchange of goods. Breaking the contract is theft. That Boniface's neighbor is apparently unable to enforce the contracts (or receive assets recovered after liquidation) reflects poorly on all citizens. Allowing broken contracts gives power to the violent and dishonest. Perhaps this is a moral hazard of broken contracts named "bailout", "stimulus", "loan-modification", and that ilk?

Sound money refers to a medium of exchange with stable value. Instead, we have a system where money is controlled and printed (inflation) at the whim of a cartel (legal-tender) endorsed by Congress. In short, "business cycles" (ie. booms and busts) result when the interest rate is set to a "target rate" rather than set through market demand. Why should Catholics support a cartel that destroys wealth and promotes debt while creating unsustainable growth?

I agree with Boniface that both liberals and conservatives blame their favorite scapegoats. Calls of "Predatory lending" are merely a silly distraction (see free-will and contracts above). Conservative calls of "irresponsible greed" never mention sound money. (eg. Bush said "Wall Street got drunk". Nobody asked: "Who provided the alcohol?")

...sometimes stuff just happens that is nobody's fault, but this is not one of those times. Fundamentally, Boniface's neighbor lost his house in part because we (US citizens) chose poorly. The penance is bitter and will likely be refused for as long as possible.

BONIFACE said...

CO-

Thanks for your balanced and informative comment.

One clarification: when I said no one is to blame, I meant with regard to the state of my neighbor's mortgage, which is why I said, "My neighbor didn't get into an irresponsible mortgage, nor did the mortgage company try to cheat him."

I certainly didn't mean to imply that the businesses weren't responsible for not paying their bills to him (which, though connected with whether or not he pays his mortgage, is a separate issue from the terms upon which he got his mortgage).

Thanks for your input!

Anonymous said...

I have the same problem. Not 60,000 of them, but about 700. It is apparent that the guy just will not pay.

Many companies do this to small business men. As you might recall, in the 2008 crisis, companies were going under 'cause they could not get loans to make payroll! In my book, if you cannot make payroll out of operations, you are not a going concern. It is disgusting that companies force small businesses to involuntarily provide credit.

Essentially, you have to mark up everyone to cover the loss.

Did you know that Walmart does not pay for its inventory until each item is sold individually? That means that all of the stuff in a Walmart is loaned there, and so any damage or theft is the supplier's cost, not Walmart's. Even though these are things out of the supplier's control.

The customer that I'm having trouble with is called a 'good businessman' by some. I guess nowadays, being a good business man includes fraud, contract violation, theft, and one of the four sins that cry out to heaven for vengeance.