If the new federal program to help homeowners pay their mortgage bugs you, read a Wall Street Journal article titled, "Bank of Mom and Dad Shuts Amid White-Collar Struggle." It will make you even madder.
The piece reports on six-figure earners who had taken out mortgages bigger than half a million dollars, then lost their jobs. In the meantime, their house values sank.
Now they can't send the kids to Europe this summer. Their grown offspring have to get real jobs. And college-bound children must work after class, apply for student aid and go to less-expensive schools.
"We may have to give up on the idea that our kids will do better than us," Katherine Newman, a Princeton sociologist, is quoted in the piece. "But the idea that they should do as well, that's something we haven't given up on yet."
The question is: Were we doing so darn well before? Amazing how "well" people think they are living when the money is borrowed. Whether the kids will become truly richer than their folks remains to be seen. Chances are good they will be more responsible.
A woman in Orlando told of her downward skid after losing a six-figure job with Bank of America. She and her husband had taken out a $650,000 mortgage on a 3,600-square-foot house. Her husband was a writer not making princely sums, and they had three disabled daughters. When the family had to sell the house, they could only get $375,000 for it. They're now renting a far smaller home, and one without a pool.
"The pool was the only place we could all be together and enjoy ourselves," the woman said. Guess the 3,600 square feet — nearly five times the area of the original Levittown houses — was all dead space.
Timeout on tears.
Why would a family with only one good income and three disabled kids borrow $650,000 to purchase a mansion? Bear in mind that even in the bubble days, half as much could have bought a big house in that part of the country. Why hadn't they saved money as a cushion in the not-unimaginable event that the prime breadwinner lost her job?
The article goes on to describe middle-class parents sad that they can't help their young ones start a business. We hear of a 26-year-old woman in Los Angeles who had to suspend her photography and sculpture career because her parents could no longer support her. "My artistic career is put on the side because I have to make a living," she said. Imagine that, a 26-year-old paying her own way.
The Obama administration's mortgage relief plan targets unemployed homeowners and those who owe more than their houses are worth. The goal, to help them stay in their homes, sounds worthy.
But why help unemployed homeowners and not unemployed renters? The reason is that this program is largely for the banks: It keeps debtors who could walk away from their houses strapped in the saddle. Many of them would be better off renting similar quarters for less money.
Another reason to dislike this idea is that it keeps house values higher than the market wants to take them. Renters who prudently saved money for a down payment ought to enjoy lower prices.
Even before the meltdown, I wondered how anyone who wasn't super-rich could hold a jumbo mortgage and sleep at night. Massive debt and its attendant stress apparently didn't disqualify them from membership in what our society sees as the "good life" club. Hope the grown children moving back in with Mom and Dad take note of the situation and how they all got there.
To find out more about Froma Harrop, and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate web page at www.creators.com.
COPYRIGHT 2010 THE PROVIDENCE JOURNAL CO.
DISTRIBUTED BY CREATORS.COM
??
??
??
??
|
 |
Comments
|
4 Comments | Post Comment
|
|
This may be the first time I have ever agreed with Ms. Harrop. I can't sympathize with people who have been so completely financially irresponsible and consistently lived above their means.
Comment: #1
Posted by: mary frank
Wed Apr 7, 2010 8:32 AM
|
|
|
|
This is an OK article. It has been published 1000 times since 2008 and I'm happy that there continues to be at least a whisper as to "what is really going on" which is: My tax dollars are going to millionaire bankers pockets while real estate is experiencing price supports. I rent and make a six figure salary. I would like to buy a home but won't pay the over inflated, price supported "Obama Houses" currently on the market. I've been looking at houses in several locales and twice in the last 6 months, when I called the real estate broker, she was 1) vacationing in the Caribeean and 2) vacationing in Peru. Wow, times are tough for real estate people? (Now for a little, good olde-fashioned Fear mongering) If you take the time to study a little history, RECENT HISTORY, the history of the German people (I'm of German heritage) as told by the US government during WWII, you will see who the US Gov't. blamed (and rightly so) for Germany's 4 time attempt to rule the world. Here are the four groups the US Gov't. Propagandists sited as the cause, over a one hundered year period (1840-1940), for getting a decent people, a hard working people, a clean people, to take part in Genocide; 1) bankers, 2) land owners, 3) big business and 4) the permanently "elected" politicians. Do these four groups sound familar to you? Gee, if nothing else, maybe term limits could save a race of people? These four groups now rule the world and the most powerful single entity on the planet, The US Government. What dumbfounds me is that all the liberal arts majors (bankers, business majors and oh yeah, artists) don't have a clue as to the increasing verility of this system of control. History, science and mathmatics get in the way of the artist's creative juices, the business majors' "Free Market" and the Bankers' "selective" accounting. Yes folks, the Big Boys (sorry ladies, but they are, and will remain, BOYS) are running the show. The US is being steadily reduced to a fifedom complete with Princes (US Gov't. officials) Dukes (Bankers) and Earls (Wall street trader pupae) who find absolutely nothing wrong with taking everything you have. That's not only good business, it's "just business". Since when has it become OK or socially responsible to take everyone's "fortunes" just because you can (and there's no law against it)? When did a morass of over indulged self interst become the "American Way". Well, since Bankers and Politicians began sharing gated neighborhoods and the Presidency became a place to put "a distraction" dumb enough to play along. I was very surprised about Mr. Obama. I though this time, we got a guy with brains! I have no doubt, the bankers, the Wall Street Execs. and the Landed Gentry will be able to elect the next stooge, claiming that, the Democrats have screwed everything up (THE DISTRACTION) and they will, AGAIN, get the less economically viable (indentured servants) people to vote against their own self interest! I'm glad I'm a anglo-saxon type. I don't believe I belong to any group which the blue-bloods could possibly choose to be the scapegoat of the eventual world crisis. THE FAILURE OF THE EDUCATIONAL SYSTEM TO TEACH PEOPLE THE FACTS OPENS THE DOOR FOR FANATICISM OF MANY TYPES, RELIGIOUS ARE MOST OFTEN THE MOST VISIBLE, BUT THE FLAG WAVING, GOOSE STEPPING AMERCIAN (OOPS) PATRIOT IS THE GUY YOU GOTTA WATCH OUT FOR. So much for Family Values! If they're your family, family values are good. If your not part of the family, your screwed..... Legally, of course. I'm just sore because I'm not one of "the boys", right? Why is it that people think being a great "huckster" or "shell game" artist makes for a great leader? "Back in the Day" merchants were forced to live on the outskirts of town while people who actually produced goods and services were held in high esteem. My how the tabels have turned? I hope I have followed all the rules for posting? Good Luck and, of course, God Bless! (lol)
Comment: #2
Posted by: D
Wed Apr 7, 2010 8:39 AM
|
|
|
|
Like mary frank, I don't think I have ever agreed with Ms. Harrop prior to reading this article. But she nails it on the head with this one.
Comment: #3
Posted by: Brett
Wed Apr 7, 2010 8:51 PM
|
|
|
|
Hello,
I read your article in the Arizona Republic. I am not familiar with your other articles, but the title peaked my interest.
Thank you for writing such a commentary on the idea that the "wealthy" are sometimes only wealthy outwardly. How many are really wealthy, well, that depends on how one defines the word. It appears, in our society that one is wealthy who has all of the outwardly noticable signs of success--AKA "Stuff" and "Bling." What is not clear is how the person obtained those items, whether by outrageous debt and over mortgaging, or by as you say, living within your means.
These kind of values are quickly and efficiently being passed down to the next generation. As they become (or have already become) adults, whether they follow the same path will determine our next generation of the overextended. Your article immediately reminded me of the book, "The Millionaire Next Door" which expresses the idea of "Economic Outpatient Care," meaning the parents continue to subsidise their offspring even after they become adults. The children remain dependant and are helpless to learn to support themselves and rarely know how to live within a budget. They continue on the path they have learned of borrowing and putting on a facade of success. How sad it is that our educational institutions are forced to further the facade by encouraging extreme debt to attend higher education facilities, with marginal hope of securing employment after they graduate. The colleges should have some kind of disclaimer such as "You will spend all your borrowed money here but we are not responsible to see that you can get a job after you graduate. We can't afford to teach you not to borrow."
Just my 2 cents worth. Thank you.
B.D.
Comment: #4
Posted by: B.D.
Fri Apr 9, 2010 9:45 AM
|
|
|
|
|
|
