Tuesday, January 3, 2012

Clueless: Oct. 12, 2008

This column is from a time when the economic crisis was brand new and terrifying instead of old news and still terrifying. More than three years later, I still do not understand what people were thinking.

I guess they just weren't.

The economy is calling, but it will have to talk to the answering machine
    Debt collectors call my house several times a week. They’re not looking for me. They’re looking for someone who owned my house a few years ago, someone who declared bankruptcy, lost her home in foreclosure and tore everything, including the towel racks and a built-in entertainment center, out of the walls on her way out the door.

    “I’m looking for a relative of yours,” the collection agents chirp when I answer the phone. “Do you know where we can find her?”

    “No relation,” I say. “Never met her. Please quit calling.”

    For my family, the people looking for our home’s former owner have become just one sign of these unsteady, scary times.

    Right before the beginning of the Wall Street crisis that has shaken our country’s economic foundation to its core, my husband and I decided that since he is effectively retired, we should move away from our riskier investments and into something safer. When we did that, we found that his retirement fund had shrunk $37,000 in the last 10 years.

    I’m not complaining, exactly. We’ll recover somehow. But I am feeling pretty freaked out.

    My husband and I are financially cautious; we are a little cheap, and we work hard to avoid debt. So when health problems cost my husband his job, we were able to sell our dream house in town and use the equity to buy a cheaper house in the suburbs.

    So he had no job, and we have two kids, but we also had very little debt. We lived lean on my income, and we survived, with some help from my folks, until I found a job that pays enough to support our family.

    When we were considering making an offer on our house, I did some research. During the giddy height of the real estate boom, the former owner (the one who fled with the towel racks) financed 100 percent of the home’s purchase price, taking out one of those 80/20 loans, with the 20 percent down payment financed at a high interest rate. She moved in with two mortgages and no equity.

    Last week, I accidentally opened a letter addressed to her and was greeted by the news that she has been referred to a collection agency for unpaid credit card debt, but she can conveniently pay off that debt BY PUTTING IT ON A CREDIT CARD.

    I want to ask the collection people who keep calling me why anyone would lend even more money to someone who financed her house at 100 percent — why they sent her credit cards and how deluded they must be to think they’ll ever see any of that money again.

    Folks, I’m no math whiz, but even I would have known not to make that deal.

    Which leaves me to wonder: Where are the people who are supposed to know about these things? Where are the financial masters of the universe I keep reading about who are supposed to be so smart and who make the economic gears turn and cause money to appear from nowhere and investors to dance?

    Where are the people who are supposed to know what they’re doing?

    They’re waiting for their bailout check to clear, I guess — a check written on borrowed paper with mortgaged ink.

    And I’m left standing here holding the phone.

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