Mortgage Settlements: If Only...

As I sat in my doctor's waiting room this afternoon and watched President Obama announce a settlement with mortgage companies to reduce mortgages, interest rates, and provide $2000 to those families who were unlawfully forced out of their homes, I was thinking of how helpful this might have been, once upon a time.

Some things in life are, "just the way things are." One of these is that poor people become the prey of those unscrupulous enough to see the potential for a profit in the hungry eyes of those trying to escape poverty. Before your brain becomes defensive, dear reader, this is not a rant against Republicans, or even against banks. This is a simple story, a true story, with a very sad ending. And I hope, a story that will further understanding for the necessity to have regulation of the banking industry.

My momma had very humble beginnings. Born into at least a third generation of poverty, she struggled to raise her six children, supporting them with the hourly wage of a practical nurse. Eventually the children became self sufficient and she was able to take advantage of a "rent to own" sale of a house. She was a proud homeowner.

In due time, she paid off the 30-some-thousand-dollar price tag, living with the mold caused by a basement that flooded annually, leaving her washer and dryer and anything else stored there floating in at least 4 feet of water. The reason for the unconventional sale of the house was apparent. The flooding was caused by an inadequate city storm drain that funneled water straight under her house. Of course the city refused to fix the problem. After all, where would an old woman get the money to sue them?

And so, like all houses do, her house aged along with her. Eventually she needed a new roof and new windows. There was no money for these expenses, the cost of living had risen at a much greater rate than her salary, and she felt fortunate that her children were now raised. Besides, her "disabled" husband took up much of her paycheck with his greens fees and his golf cart expenses.

But the roof wouldn't wait. A solution presented itself right in Mom's mailbox! She could take out an equity loan on the house, at a slightly higher interest rate, and fix the roof and the windows. How else would she ever afford the repairs? And so, she did.

But the payments proved to be a strain on an already tight budget. Add a credit card maxed to the limit from buying groceries at Aldi, with the interest rate at 32% from late payments, and she couldn't quite keep up.

Her husband, who didn't like his tee times reduced, came up with the solution; they would borrow against the house again, taking out a second mortgage. Seeing no other solution, and having no experience with such things, she went along with the plan, taking all the equity in the house, plus some, in cash, and agreeing to a payment equal to someone who financed a $100,000 house. After all, the bank wouldn't loan her the money if she couldn't afford the loan, right?

Not more than five years went by when the payments got to be too much. Bankruptcy was filed. The golfer sold her car and bought an old van for her to drive that was painted in, of all things, camouflage. And then, the bank started proceedings to foreclose on her home. The one that had once been bought and paid for.

About the same time, through a death in the family, she inherited a house in a neighboring city the total of which was valued at about $5000. This house was small. This house was falling in. This house had termites. This house needed new electrical wiring and had an old gas stove for a heater. There was no way her furniture and the things she'd carefully collected over the years could fit inside this house. And so she asked me, "If you were me, would you fight the bank, or would you move?" What would you say?

She was sick. So sick. And getting sicker. She was losing her job, her income, her health, and her home. And yes, I advised her to move. To get out from under the burden of that debt and move on. I wish I'd known then what I know now.

One day, she was so sick in the new house that she couldn't get out of bed. I met her in the emergency room and was there to hear the diagnosis: lung cancer. She died in that little shack, unable to go "home."

Did she make mistakes? Many. I fully admit there were many things that should've never happened and bad decisions. But I also understand that she became the prey of the greedy mortgage companies who profited from their investments that, while they were loaning her the money, bet that she wouldn't be able to repay it, lining their pockets, either way.

My sister now lives in the tiny shack, thankful that she had a place to go when she lost her own home to foreclosure.

Life is tough. No one ever promised we'd all get to live an easy life. You have to be tough, and wily, and have someone walking beside you to spot the snakes in the grass. Experience is a tough teacher. And that $2000 would do her no good now.

So why does the mortgage industry need regulation? What if this was your momma?

Mortgage Settlement Could Bring Billions in Relief