foreclosures

I was surfing around on BlogHer tonight and saw this post by Kim Pearson. I was interested in it, because for about the past year, my mom has owned two houses in Florida. While she doesn’t have a subprime mortgage, she is affected by the disastrous housing market there, and I’m not sure how much longer she will be able to hang on.

My mom and her husband bought into an over-55 community probably 3 or 4 years ago. They were buying a new home, and their plan was to sell their current house, which is quite large. All their children are grown, and they didn’t want to have to keep doing the upkeep on the yard and the pool. The new place has a community center, two golf courses, and a shared pool (or maybe two). It seems horrible to me, but hey, maybe I’ll feel differently when I’m in my 60s.

The hurricane season two years ago seriously delayed the construction of their new place. While they had originally planned to move in early 2006, because of shortages of building materials, their house wasn’t done until about June of that year. And by the time they got around to listing their current house for sale, the housing market in Florida had collapsed.

They have had exactly one offer on their house in the past eighteen months. By a couple who withdrew that offer when the wife had a stroke. They haven’t moved into their new place yet, because they’re afraid to leave the current house vacant. When they built the new place they had already paid off their current house, so they don’t have two mortgages, but they do have to pay two sets of taxes, and they’re paying upkeep on both houses.

My mom, who is the primary wage earner in their relationship, is scheduled to retire this spring. She’s turning 66 in a few weeks, and she has a physically demanding job. She just can’t do it anymore, and frankly, she shouldn’t have to. She should be getting ready to retire, so that she can visit her grandchildren, practice her hobbies, hang out with her sisters. She shouldn’t have to worry about paying for two houses.

You could say that my mom and stepfather deserve what they’re getting, because they borrowed too much. The reality, though, is that they just used faulty assumptions when they made their borrowing decision. They made that decision under the assumption that the housing boom of the late ’90s and early aughts would continue, that they would be able to easily sell their current house, and then move into their new place. They didn’t think they’d be stuck paying for two houses, certainly not for more than a year.

But don’t most of us, when we’re making a decision about a major life change, use optimistic assumptions, rather than pessimistic ones? Do any of us go into a big transition thinking, “what’s the worst possible thing that could happen, and let me make my plan as if that was 100% likely”?

We mostly don’t.

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January 29, 2008. politically motivated.

10 Comments

  1. Narya replied:

    Hmph. You mean like getting married and going to pastry school and planning to open a bakery, only to have your spouse leave you? Yeah.

    Bummer about your parents. My grandparents had a place in FL for years, and then my parents had it. They sold it last year–and for less than they’d been offered the previous year–after my mom got on the transplant list, and now they’re just happy they were able to get rid of it. My guess is that they’re going to have to decide which property to keep and, more important, what they’re willing to accept for the one they want to get rid of; good luck to them.

  2. thordora replied:

    We tend to be pessamistic with our decisions ourselves-I get scared by the thought of carrying two mortgages. But you can’t blame people 100% for following the markets. Shit happens, pardon my language. There was some show on TLC a few weeks back about similar situations-people by another house, try to unload the old one and get stuck.

    Scary stuff indeed.

    I hope they can sell it so they can get going on enjoying their lives. 🙂

  3. landismom replied:

    Narya: exactly. Things happen in life that are not in our plan, and then we’re left trying to pick up the pieces. And hopefully getting stronger/smarter/wiser, whatever as a result.

  4. anna replied:

    How sad for your Mom. I’m sure her optimism has stood her in good stead in other parts of her life!

  5. alala replied:

    We did. After my mom died and we sold her house, I had all this money on my hands, and my husband’s contract was expiring with no replacement job lined up. If you’re facing unemployment, it’s a lot better to be paying off a house than to be sitting on $100,000, so we bought a house. Then he got a job in another country, and we can’t move there to be with him, because we have this house. So hey, even if you do plan for the worst, you can get stuck.

  6. Anjali replied:

    There are people out there who make foolish decisions, and then people out there who make sensible decisions that are relatively low risk, but then the situation becomes foolish. What your mom did was not foolish – she was carefully planning for retirement by downsizing, which is almost never a foolish financial decision to make. There’s no way she could have predicted how bad things would get.

    Most of the people I know who are carrying two mortgages are very careful with their money — they just had no idea things would get so bad so quickly.

  7. Becky replied:

    Ugh. That sucks. I hope things work out. While it would have been incredible to have sold our house here last year (this year? not so much), we could have only done so by moving somewhere ELSE.

  8. MommyWithAttitude replied:

    Because Oregon is not considered a declining market yet, I don’t see too many of the really terrible stories like this — but I see enough of them. I see a lot of people who made financing decisions a few years ago (like took an adjustable, interest only or negative-amortization to have a low payment) assuming their house would appreciate and they could refinance later. And now they owe as much as their house is worth, lending requirements have tightened and their payment is about to double. It’s so sad. I am one of those pessimists who always buys the least amount of house that meets our basic requirements, but still — anything could happen to any of us, so I try not to get smug with others!

  9. chichimama replied:

    I feel for your mom. Having been stuck with two house for a very long time, the stress of it all really stinks. I so hope that it works out for them soon.

  10. brettdl replied:

    I’m more like thordora, though I like to think of it as being objective rather than pessimistic. Can your parents lease the bigger house out?

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