Putting this story to pen is difficult. Yet it is an accurate reflection of our times, the financial disaster that led America to this point and the Kafkan nightmare that awaits anyone who does anything off the beaten path. To preface, this is a story of a mortgage gone bad, of insurance disasters, greedy tenants, government mismanagement, propaganda, and personal irresponsibility. That last part is important to remember for anyone suffering similar circumstances. The individual is as accountable as the other actors. In this case, the individual is me.
When I was 26 years old, I worked a decent job, making about $36k a year. In those days, that was good money for a 26 year old. Real Estate was a good racket then, too. Few considered what would happen a few short years later. Traditional wisdom said to buy a home, stop throwing away your money on rent, get married and start a family. It was the American Dream.
But $36k was not going to put me in the high end of the property market, even if it was good for my age. My family owned a property in a working class (lower-middle) neighborhood since the late 70s and I wound up purchasing a home just down the street from it. There was a bit of redneck vibe to the area, but it was within tolerable limits and, in any event, I thought better the rednecks than the gang-bangers. It was a modest home in an estate sale, priced to move quick, and I picked it up for about $15k under value at $110k.
You cannot imagine the pride I had at that moment. Sure, the house was built in the 70s, and it showed in places, like the weird Formica counter tops they favored in those days, and it was small at a mere 1050 square feet, but it was mine. Most of my friends lived with their parents and I felt responsible and successful in my own meager way. Nobody helped me with the down payment, as was common for the few people I knew back then who did own a home.
For a time, things were good. Sweat equity built up over time as I remodeled the bathroom, painted the interior, rewired much of the home, and exchanged the old carpet for some inexpensive laminate floors.
Then 2008 happened. The home had been worth a comfortable $125k in January of that year. By the end of the year, equivalent homes were selling for less than $60k. Here I was, sitting on nearly a $100,000 of debt, and I had no assets to cover the deficiency. To say it scared me shitless is an understatement. Yet the payments remained as they were before, and there was no immediate danger. Indeed, I soon wound up making $50k/year. Relaxation came with the knowledge that the market would recover.
Danger signs were already lurking, however. Good, working class folks lost their homes in rapid succession as the Great Recession took its toll on construction workers, pensioners, and seniors living off 401ks that had dropped in value. Crime grew rapidly as Section 8 slum lords took over the foreclosed properties. Crack dealers moved into one notable house, full of garbage and broken windows. My future wife had a car vandalized when she came over one night. A few months later, my home was broken into. Fortunately, the things stolen were replaceable.
By 2010, it was clear that I could no longer stay in the neighborhood. My life was in danger. Gone were the rednecks whom I would smoke stogies with. Residents were now considerably darker, both in race and outlook. And they did not like the hangers-on who remained. The neighborhood belonged to them and they knew it. Whitey was neither desired nor permitted to stay in peace. Neither, however, could I rid myself of the troublesome property. The value had dropped to a mere $50k. So I decided to rent the home out.
The rent didn’t even cover the mortgage. Each month I lost $300. Tenants willing to live in such a neighborhood were invariably troublesome. The woman I found to rent the home was the least-terrible of a decidedly short list of malcontents, bad debtors, and bargain hunters. She paid, but was always late by at least a week and would only send the money if I harassed her three or four times for the check. Once or twice a year, the check would bounce and the process would have to be repeated. Demands to pay in cash or money order would typically only be heeded for a month or two before, despite anything I said, I would receive a check in the mail. But I let her stay because I feared the alternatives would be worse.
Poverty is often seen as a sort of noble state in the Bible, but those poor were more like the working class folks that were losing their jobs and their homes. The new poor that followed them into the neighborhood were of the loathsome variety, living on odd jobs, drug dealing, and welfare monies. There was nothing noble about them. Humility was not natural for them, nor was responsibility or even intelligence. My tenant repeatedly did the most idiotic things and, invariably, I wound up having to pay for those mistakes.
Once, she failed to change or clean the air filter for over six months. In my home state of Florida, this is among the dumbest things a person can do, or fail to do. The air conditioner seized and she was on the phone with me screaming at me to fix it immediately. Naturally, the technician found a filter caked solid with dirt, grime and lint. She would repeat this error twice again during her tenancy.
Another time she decided to store cereal and other foodstuffs in the garage. Rats found their way in and devoured the rotting food (never leave food in the humidity of Florida). Then they made their permanent home in the attic, tearing holes in the duct work. Over $1,500 was needed to repair the ducts, vacuum out the old insulation and blow in new insulation.
Many more stories like these exist, but they are not even the most infuriating factor. For, each time I got her voicemail, it would end with a catchphrase that this woman appended to everything. “God bless!” She would say with false enthusiasm, similar to the same phrase scrawled on the cardboard signs of street beggars everywhere. The analogy was fitting.
Still, my losses were limited to $300 a month, and if I was living in a room I rented from a friend for cheap to make up for the loss, well, that’s what I had to do. Yes, my tenant lived better than I did, driving a fancy new car, watching premium cable on a new big screen in the living room of the house she was slowly destroying. And I counted myself fortunate, for other homes were systematically gutted at a much faster rate. Scrap dealers roamed the streets buying up wiring and metals ripped from abandoned homes by scavengers and crackheads looking to score money for their next fix.
At this point, I knew I was in trouble. Values would never recover and the best I could hope for was continuing in my accidental role as a slumlord long enough to get the balance down on the loan. I figured that losing $60,000 plus $300/month for however long it took me to get there would be terrible for me, but I would suffer it anyway. After all, this was my responsibility.
But Fate was not done with me just yet. In the years after Hurricane Katrina made a mess of New Orleans, FEMA had been searching for more money. Government agencies are wont to do that anyway, but in this case, FEMA was really strapped for cash. By and large, most homes in New Orleans did not have flood insurance, yet FEMA paid for their reconstruction anyway. FEMA trailers were everywhere, FEMA debit cards, used often as not for such essentials as lap dances and new Air Jordans, were handed out like candy.
FEMA came to Florida for money in 2013. Many homes in the state, said FEMA, were being subsidized on their flood policies. The fact that Florida paid quadruple the amount in premiums as it received back in claims since the FEMA flood program began might have been a wrinkle in that argument. But not for our intrepid, cash-hungry FEMA agents.
The home I bought once cost $1500 annually for home owners insurance. About $1100 of that was the normal Hurricane and Homeowners policy. The remaining $400 was the flood policy. To make a long story short, the actuarial numbers were perfectly reflective of about $1100/year for insuring the home. In 2013, $7500/year was demanded just for the flood policy. Furthermore, the hurricane policy went up to over $2000/year. Citizens Insurance was not allowed to do that, according to Florida Law, but they found a loophole anyway. So much for state-run insurance companies being cheap. Then Citizens Insurance demanded I replace the roof, the HVAC unit (limping along under the mistreatment of my tenant) and the breaker box or they would refuse to insure the home at all.
Yes. I was going to have to pay nearly $10,000 a year and over $20,000 in improvements to insure a ghetto property worth $50,000. But soon it wasn’t even worth that anymore. It turns out even slumlords don’t want to buy properties that have insurance costs that high. Soon, foreclosures were going for $35,000. One went for $15,000. Democrats celebrated the “rich” finally paying their “fair share” for flood insurance. Never mind the million dollar waterfront properties with lower premiums than mine. Republicans made some mouth noises about government corruption but did very little. Par for the course with them.
There was no end in sight for me, now. It would take the full 30 year term to be rid of the property and in the meantime the terms of my mortgage would require me to pay $10,000 a year in insurance. I was on the edge of ruin. I called an attorney and attempted to negotiate with the bank.
After a year and a half of attempting to short sale the property it became clear that nobody wanted it. I did a deed-in-lieu of foreclosure with the bank and handed them the keys.
Oh, and the tenant? As soon as she figured out the property was going into foreclosure proceedings, she stopped paying. For six months she held up various attempts to evict her with threats of lawsuits and legal wrangling (in one case, she threatened to sue me for the rat problem she caused). My attorney finally gave up and advised me to bribe her to get out.
She demanded $2,500 for this service and then had the nerve to say “cash only, I don’t want you bouncing checks on me.” Naturally, the house was trashed when she finally left. Garbage bags were everywhere and spray paint was on the walls. The fridge was filled to the brim with rotten food.
She lectured me as she left saying “it’s all your fault that I gotta find some place to live.” I had to physically restrain my wife from beating her face in. It was like being the security guard at a live televising of the Jerry Springer show. As a result of the attorney fees and the bribe, I was flat broke and my wife, son and I had been living on ramen noodles and picking up coupons for cheaper formula from the neighbors. My wife, the hot-blooded Latina that she is, could no longer countenance the blatant disrespect. Nonetheless, if my reflexes had been a whit slower than they were, I probably would have had to bail her out of jail.
Now the IRS thinks I’ve made over $70,000 in untaxed income this year. Because it was rented out for so long, it does not qualify as a primary residence and so the “cancellation of debt” is “ordinary income” as if somebody just handed me a suitcase full of money. Navigating the complex tax codes to exclude this have required the services of a CPA and even he says we’re not going to be able to exclude all of it. Why? Because the IRS insolvency test pretty much guarantees an audit, and the burden of proof for all valuations is on me, so I have to “take the safe route” on every deduction and fair market valuation unless I want a garnished pay check. In simple terms, the IRS will say I have tens of thousands in assets when I have basically nothing.
I’ll have a tax bill next year somewhere in the neighborhood of $10,000, in all likelihood. So the ramen noodles and coupon-cutting will continue for the foreseeable future. But I’ll make it anyway.
And my friends who lived with their parents until their 30s? Many of them still do. Maybe they were wiser than I.
What’s clear to me after all this, is that responsibility is punished and irresponsibility cheered on. I could not evict the tenant because she had “medical problems” and the courts would sympathize with her, especially if she made wild claims about rat infestations she blamed on me. She drives a new car while I’m going to have to sell mine and go pick up some piece of crap with 4 wheels and 200k+ miles on it. God knows my base model F150 isn’t a luxury vehicle, but it is newer and has value. I’ll need the money. Section 8 gang bangers live for free while I’ve had to pay more than the entire purchase price of the home, over the years, just to be rid of it and get exactly nothing.
Am I bitter? Yeah, I’m bitter. And angry. Government, banking, irresponsible people and ghetto trash ruined me. They ruined my old working-class neighbors too, some of whom were the most hard working, decent people I’ve ever met. I wonder about them sometimes, where they are today and how they ultimately fared. One man I knew only as “Chief” had a fondness for cigars and whiskey, and he would come over if he spotted me sitting on the front porch. He was in his 70s, but thought nothing of sipping whiskey with us younger folks. He’d commend me. “You’re doing it right, son.” He’d tell me. “Working hard.” Then he’d hand me a stogie and we’d smoke on the front porch with a few other neighbors talking about America-that-was. American flags used to wave lazily in the breeze in front of houses that are now filled to the brim with drug dealers and their addicts.
That America is just a memory for me now. But one thing is clear and inescapable. This was my fault too.
I should have seen it coming. We all should have. The whole country, our entire civilization is cracking around us and good people do nothing. That’s on me as much as anyone else. If only I could slap some sense into that idealistic 26 year old thinking he had it all figured out. But I can’t. This cynical, curmudgeonly bastard is all that’s left of him.
Tonight I’ll smoke my last cigar, for the humidor has been emptying slowly for months, and face another year of living on the cheap, barely hanging on to the Middle class, watching everyone else enjoy the fruits of my labor. I don’t envy them though, because the bill collectors will come for them too, someday. They will come for all of us.