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And Homeowners Make Fun Of Renters?

As citizens of the United States, we’ve been brought up to believe in something called the “American Dream.” As part of this “dream,” we’ve been told that we should aspire to own the roof over our heads. At no other time was this more apparent than with the dawn of the new millennium. Back on December 16, 2003, President Bush declared:

This Administration will constantly strive to promote an ownership society in America. We want more people owning their own home. It is in our national interest that more people own their own home. After all, if you own your own home, you have a vital stake in the future of our country.

And so homeowners were held in the highest esteem throughout American society. But, there were still the renters, who were incapable of holding a mortgage (let alone a decent job). Those scum of the earth. Back in the glory days of the housing bubble, I read about a landlord here in Chicago who complained that she couldn’t find any decent tenants. What she really meant to say is that she couldn’t find any decent human beings to rent from her. And the cesspool was shrinking. Why was this? Well, there were some among the untouchables who aspired to become homeowners, and did just that, regardless of cost. I believe a lot of it had to do with the stigma attached to being a renter in American society. And the inevitable comparison to the Joneses (who are, if you haven’t figured it out by now, a commercial invention). The situation reminds me of an MTV commercial in the eighties where a teenage couple is talking, and the boy says, “Nobody likes me.” The girl reaches out for him and says, “I like you.” He whines back, “No. Nobody GOOD likes me.” Then silence (they don’t show her embedding her Doc Martens boot in his face).

Which brings us to the two million new homeowners (and falling as I type this) that were estimated to have been created by the housing boom. Mortgages were made available to these individuals so that they could leave the ranks of the houseless heathen and participate in the glory of the “ownership society.” And the aspiring Joneses diligently researched and familiarized themselves with the available mortgage products before signing on the dotted-line. Or did they? A recent study conducted by D.C.-based Peter D. Hart Research Associates discovered the following characteristics among borrowers:

• 51% say they are very informed about their mortgage’s terms and conditions
• 18% say they don’t know their current interest rate
• 25% say they don’t know when their lender will next be able to raise their rate
• 73% say they don’t know how much their monthly mortgage payment will increase the next time their rate goes up
• 40% say they don’t know whom to turn to for guidance if they have difficulty paying

Responsible borrowing? Hardly. It gets worse. On November 2, Brian Montgomery, Assistant Secretary for Housing with HUD, told a congressional hearing that more than 40% of delinquent borrowers do not respond to contact from their lenders until it is too late. Which is really quite sad, considering that industry sources say 50% of those who seek counseling or go to their lenders for help end up staying in their homes with new mortgage products.

As author Charles Simmons once said, “Ridicule is the first and last argument of fools.”