Wednesday, November 9, 2011

Protesting Reality

"Schwetz stood Thursday in front of the Federal Reserve building on San Francisco’s Market Street, holding a plain white piece of cardboard with a handwritten plea: ‘Return our homes.’ A few months after Schwetz purchased a home in Petaluma in 2004, his subprime mortgage payments doubled. For five years, he poured almost all of his earning as a FedEx driver into his house payments, until he couldn’t afford it any longer. He rented rooms to friends, but ‘it didn’t help much,’ he said.”

Schwetz’s lender refused to renegotiate the borrowing terms. Two years ago, he sold his house, which had lost about half its original value of $400,000, for less than he owed on the mortgage - a practice known as a short sale. ‘I’m angry and I’m frustrated, and it’s really unfair what’s been done,’ said Schwetz,”"

Let's examine a few things - he took out a subprime loan to buy a $400k house, and a few *months* later, he's dedicating almost "all his earnings as a FedEx driver."

Assuming he's making $46k a year, and assuming a non-zombie underwriter informed him as a matter of practice no more than 1/3 of one's income should be dedicated to housing, he's deep on the wrong end of that ratio. So, either he lied on his loan apps (probable), or got suckered into a loan that he "qualified" for due to someone else massaging the numbers elsewhere in the process (highly probable.) So a guy with a $46k-ish income is servicing a mortgage payment up in the $30k/yr range ($3k/mo??) - so his principle is up around $500k??

*THIS* is a person who thinks The Fed is responsible for his financial problems??

$46k gross means he's taking home $38-ish, which means his monthly rent/mortgage is going to be in the $900-$1400 range, $1500 tops (per the rent calculator recommendations). There's a name for this in realtor parlance: renter.

I know he's eating it on the equity side - upside down on a liar-loan and no way out that doesn't involve a decade of damage. Welcome to the downside of gambling.

There's no doubt the system is rigged against him/us - it's like trying to negotiate with an avalanche. I understand the psychic pain created when the absurdity of one's expectations comes into sharp relief, and I especially empathize with the need to identify a source - a singularity - who's destruction needs to serve both a re-stabilized future and a sense of justice/vengeance.

This is something bigger than a colorful social anachronism and convenient news fodder. There are deeper assumptions being challenged by physical reality. At best, this is a lurch towards establishing a new language in which to discuss a transition to new expectations. And that's giving this OWS movement waaay more credit than I usually do.