October 23, 2008
After the House Is Gone
By JULIE SCELFO
MORE than a million homes have been lost to foreclosure in the last two years. And according to data from Mortgage Bankers Association, banks are now in the process of foreclosing on 1.5 million more.
The impact of the mortgage crisis has been obvious in both the worldwide credit crunch and the presidential campaign, where there has been a lot of talk about the plight of overextended homeowners. But the specific personal costs of home loss have been less evident, at least to those not paying them.
Not surprisingly, the forced loss of a home — the place where many of the memories that define a life and a family are made — is deeply traumatic, according to Dr. Robert Gifford, an environmental psychologist at the University of Victoria, Canada. This is true, he said, even when the loss is due in part to a homeowner’s own financial mismanagement.
“When you choose to move, of course you have to pack up and move, but you’ve probably chosen a better job, a better place, there’s an upward trajectory to your life.” Dr. Gifford said. “When someone tells you you must leave,” he continued, it undermines “a key part of well-being: perceived control over your life.”
And given that “the home is the center of the psychological universe,” Dr. Gifford added, “when people lose it, it’s like their planet blew up.”
Dr. Rosalind Dorlen, a clinical psychologist in Summit, N.J., whose patients include many Wall Street workers, sees the home as a potent symbol of one’s place in the social universe, of “how you see yourself and how you want to be portrayed in the world.” Losing that symbol can produce depression and a great sense of anxiety, she said.
For those with few financial resources, finding a new place to live can also be challenging.
Forty-four percent of employees live paycheck to paycheck, according to a survey conducted by MetLife in late 2007, and 48 percent of American households have less than $5,000 in liquid assets according to Edward Wolff, an economist specializing in the study of poverty and income distribution at New York University. When people in such straitened circumstances can’t keep up with mortgage payments, the resulting damage to credit ratings can make it nearly impossible to qualify for a lease. These families often find themselves at the mercy of friends or relatives, who may or may not be able to take them in.
Some people are taking refuge in tent cities and parking lot communities across the country that have cropped up or expanded recently, from Santa Barbara, Calif., to Athens, Ga. Compared to them, the families profiled below are lucky. They have found accommodations, at least for now. But all are dealing with the emotional tumult of losing a home, and the discomfort and uncertainty that accompany it.
Piling in With a Relative
BEFORE the four DeCicco children crawl into the king-size bed they sleep in with their mother, Jamie, in the bedroom they all share with her cousin Carmen Calderon, they call their father to say goodnight. Mrs. DeCicco and the children — Elijah, 8, Carmen, 6, Sara, 4, and Mauricio, 3 — are staying with Ms. Calderon, an art director at a Manhattan design firm who lives in a small town house in Wappingers Falls, N.Y. But Sebastiano DeCicco, Jamie’s husband, works in Norwalk, Conn., so to save money on gas he stays with a sister in Bridgeport during the week, reuniting with his family on the weekend.
Last month, Mrs. DeCicco, 32, was laid off from her $35,000-a-year job managing a hotel business center in Orlando, and the family moved north where Mr. DeCicco, 28, a security guard supervisor for SecurAmerica, could earn $13 an hour instead of $10. The bank that had financed their $85,000 house in 2004, and refinanced it for another $65,000 two years ago, told them that it would not even consider allowing them to sell it for less than its value, Mrs. DeCicco said, until they began missing payments. So the couple abandoned the house last month, and are now two months in arrears.
The separation from Mr. DeCicco has been hard on Sara and Mauricio; their father worked nights in Florida and used to stay with them all day while their mother was at work. Sometimes when the children return to the town house after a trip to the grocery store, Mauricio, who has enormous almond-shaped eyes, howls in protest. “No, Mommy, I want to go to our house,” Mrs. DeCicco recounted. “He doesn’t quite understand yet.” For her part, Mrs. DeCicco longs for the privacy she enjoyed in her own home. When her husband visits on weekends, there are six of them in the bed, and seven, including her cousin, in the room. Belongings are stored in a single dresser.
Mr. DeCicco’s income and his wife’s unemployment checks barely cover basic living expenses, she said, but the couple is still paying $200 a month for a storage unit in Wappingers Falls, where they keep most of their possessions. These include a four-piece marble and mahogany bedroom set for which they paid $8,000 after they refinanced their house two years ago. Mrs. DeCicco recently posted an ad at craigslist.org offering the set to any landlord who would accept it in lieu of a security deposit and first month’s rent. So far, no one has expressed interest.
Camped Out With an Ex-Boyfriend
SITTING on a shabby green couch in her ex-boyfriend’s loft-style apartment recently, Jody Crispin, 39, gloomily surveyed the toy- and garbage-strewn rug and coffee table in front of her and explained to a reporter why she has no other place to go. In 2006, after three consecutive years of earning more than $100,000 as an ad salesperson for an automotive Web site, Ms. Crispin bought a two story, 2,000-plus square-foot house, her first real estate purchase, in the Green Run neighborhood of Virginia Beach, for $205,000. The house, for which her monthly payments were $1,650, had bedrooms for each of her sons, Christopher, now 18, and Rush, now 6, and a covered patio where Rush could play outdoors. But almost as soon as she closed on it, Ms. Crispin saw a decrease in her sales commissions. Then in August of that year, after a supervisor reassigned some of her clients to another staff member, she made a decision she came to regret: “They told me they were giving accounts I made to someone else. I quit.”
Initially, she set out to become a real estate agent. But three months into her coursework she noticed that the for-sale signs in her neighborhood had been lingering for months, and decided it was not a good time to get into the business. Over the next year and a half she found other jobs with a property management company and at a car dealership, but the salaries never came close to her previous earnings.
At first, she said, she kept up with all her bills — in addition to the mortgage payment, her sons needed three operations within three months — by drawing on $15,000 she had put away as a safety net before buying her house. On Aug. 15, after she had missed three payments, the bank sold her house in a foreclosure auction, and over Labor Day weekend she and Rush moved in with her ex-boyfriend, Rush’s father. The arrangement is especially difficult, she said, because she still has feelings for him, though he is dating someone else and has made it clear that they will never get back together. (He did not return phone messages requesting an interview.)
The apartment is a consummate bachelor pad, with a black leather chair, few pictures on the wall and no dining table. With no walls dividing the upstairs bedroom from the downstairs living space, Ms. Crispin can’t help but overhear phone conversations. With no bathroom of her own and her vanity table locked up in a storage warehouse with most of her clothes and furniture, the only place for her lighted makeup mirror is on the bedroom floor, where she squats in the morning to apply her makeup.
At night, she and Rush sleep together on the full-size bed, while Rush’s father sleeps on the couch downstairs. And because the place is so small, Christopher, who graduated from high school in June, stayed with a youth pastor from his church until Saturday, when he began renting a place with friends.
“It’s amazing, when you have a home, you’re thinking about vacations, or who you’re going to have over for dinner, or when should you do spring cleaning,” said Ms. Crispin, who wore a necklace with three rings bearing the words “faith,” “hope” and “love.” “When you don’t have a home, you don’t think about any of that stuff. All you think about is when I’m going to have a home again?” She missed two days of work last week because she was too emotionally distraught to face colleagues, and is now worried about losing her job.
On Friday, her ex-boyfriend asked her to move out, but she has saved only $130 toward renting her own place. So she posted a flier at Starbucks offering her big screen television for sale, and, without a destination, began packing her van.
In the Landlord’s Place
TWO years ago Tim and Lindsey Knopf felt as if things were going so well that they refinanced their 1,800-square-foot house in Palmetto, Fla., borrowing about $110,000 on top of their $169,000 mortgage to pay off bills and install a backyard pool. “I was making plenty of money,” said Mr. Knopf, who was working as a service supervisor at a local cable company. “I was able to pay all my bills.” Then, in 2006, his position was eliminated. “Later, they actually offered me a lesser one, making less than half of what I was making.”
After nearly a year of lobbying their lender to accept a loss, the couple was able to arrange a short sale, allowing them to walk away without the taint of foreclosure on their credit histories. In December, the house sold for $214,000, which was $25,000 more than the Knopfs paid for it in 2004, but $65,000 less than what they owed after refinancing.
They found a rental right away, but moving during the holiday season was hard, said Mr. Knopf, 33. It was even harder for their daughter, Ashton, 12, and son, Chase, 9. “I grew up in a house where Christmas was always special for us, and I always tried to make it special for my kids,” he said. “We were in the rental for a week before Christmas. So we got a tree and put up some small decorations, but nothing major. It wasn’t like normal.”
And even though they have been in the rental for nearly a year, Mrs. Knopf, 30, says she has not bothered with curtains. “It’s not our home. It doesn’t feel — it’s not my home,” she said. “It’s always the landlord’s home. Within three years the landlord wants this house on the market, or sold. So we only have three years, at most.”
Taking Tenants, Just to Get By
IT has a been several years, and several real estate transactions, since Kianoush Etemadi, 57, and her daughter, Paris, 16, had a home of their own. Ms. Etemadi, who grew up in Iran, owned a house in Rockville, Md., until 2005, but sold it after deciding she could save money by moving into the Bethesda home of her younger sister, Azar. In 2006, with the Bethesda real estate market booming, the sisters decided to put an addition on that house, an 800-square-foot rambler with a kitchenette, for which Azar took out a $200,000 loan; during construction, the three would live nearby in yet another house, which Ms. Etemadi bought the same year, planning to flip it, for $505,000 with no money down.
By 2007, however, the sisters were overextended and the market had slowed. They did not make payments for three months on Azar’s mortgage (they say they were told that payments were not required during the construction process), and the bank started threatening foreclosure. Kianoush, who had been struggling to keep up with the $4,700 mortgage payments for the new, temporary house, now had to begin helping her sister with her payments — especially after Azar was laid off from her job working with special-needs children. Kianoush began working as a real estate agent. They tried for six months to sell either house, but couldn’t get even a single offer. In August, the family moved back to Azar’s house, and Kianoush focused on saving it from foreclosure. “I used my savings, I got help from friends, I sold all my jewelry,” she said.
Meanwhile, she stopped making payments on the house she had planned to flip, and soon received a notice of impending foreclosure from her mortgage lender. Last month, she was told that the house would be auctioned on Oct. 15, but, she said, her lawyer negotiated a delay.
Now, she and her daughter live not only with Azar, who is 51, but with three roommates that they took in to cover costs. The close quarters are particularly hard on Paris, who likes to have friends over. “When I remind her that somebody is sleeping in the other room or in the basement, she gets upset,” Ms. Etemadi said. “She says, This is my house! This is our house! Why shouldn’t I have fun on Friday night?”
Ms. Etemadi, who took a second job as a seamstress at Bloomingdale’s last December, knows she is unlikely to have her own home again. And she doesn’t hide this fact from Paris. “She always tells me, Mommy, when we can have our own place? I tell her, look, I don’t have any education and I don’t have very good job to have my own place. It’s better you try to go to college and get a better education and try to have better job than I do and then you can have your own place. That’s all I can tell her.”
When Debt Rises and Income Shrinks
ALTHOUGH they lost their three-story tract house in Newbury Park, Calif., to foreclosure in May, Mike and Kristin Bertrand, both 36, describe themselves as lucky. For nearly a year before it happened, they lived in near-constant panic. Mr. Bertrand, an Internet marketer, had been laid off twice in two years, and though he found new jobs relatively quickly, each one paid less than the last. When their income had seemed stable, they had twice refinanced both a first and a second mortgage, increasing their debt from $370,000 to $668,000, and their monthly payments to $4,000 a month. They spent every spare minute, they said, searching for ways to increase their income and trying to persuade their lender to put them on a more manageable payment plan.
Then, in February, Mr. Bertrand lost his most recent job. He began feeling desperate and even contemplated suicide. But after an investor who had considered buying their house offered to rent them another one in nearby Thousand Oaks, Mr. Bertrand said he felt renewed. The family moved there in May after selling most of their belongings online and at garage sales.
“I was just so happy to get away and get this behind me,” he said. “When we signed the lease for the rental and I was writing out the check, I told the landlord, you have no idea how good this feels,” Mr. Bertrand said. He said it was a relief to know “no one’s going to be kicking me out. It was a huge weight lifted off our shoulders.”
Mrs. Bertrand felt the same way, although some days she is consumed by guilt over the foreclosure. “I made a commitment to make the payments and all of a sudden, no matter how hard I tried, no matter what we did, we couldn’t. Then to look at your kids and say: ‘You know what? Mom and Dad failed.’ It’s overwhelming.”
To help them deal with their emotions, the couple in April started Moving Forward, a foreclosure support group (wearemovingforward.org), which has attracted as many as 40 people to its meetings every other week and thousands of visitors from around the country to its Web site.
In April Mr. Bertrand began focusing full time on the e-commerce consulting he had done occasionally in the past, and for the last few months the family has comfortably managed the $2,100 monthly rent.
On Friday, however, Mr. Bertrand found out that his current consulting contract would not be renewed, and some of the feelings of anxiety have returned. “I think there’s part of us that still thinks we could lose this at any time, too,” Mrs. Bertrand said. “Every month we write the check and say, O.K., we’ve got another month here. But that could be it.”