Foreclosures were up 30% in February, but an important group of Americans remains sidelined in the current tug-of-war between the bailout cheerleaders and those fiscal conservatives ready for a new tea party. They aren’t the whiners standing on their homes refusing to leave after borrowing more than they could afford, and yet, they aren’t a part of the justifiably angry American mob forced to strap on a load for their shortsighted house-flipping neighbor.
They are the forgotten ones.
They are the lower deck passengers on the Titanic, who by no fault of their own, bought a ticket, er, a house, when destiny had set an iceberg in the name of Fannie, Freddie and Barney Frank in their road.
Homebuyers who purchased a house in 2002 or 2003, who’ve had to relocate for work or personal reasons, qualify. Perhaps they have been forced to default on their homes and blacken their credit for the very first time. And no journalist, action group or even the President has mentioned what will happen to them.
As the statistics continue to shock, regular Americans with good credit are facing an inescapable reality—ditch the house or keep the 763 credit score. At the end of last year, 12% of all mortgage holders were at least a month late on their house payments or in foreclosure. Just how many of those 5.4 million homeowners were formerly upstanding borrowers but simply caught in an impossible situation? They didn’t buy too much house and they didn’t do a $60,000 bathroom remodel with a sauna, Jacuzzi and a flat-screen overhead. They simply bought at the wrong time and were forced to move at the wrong time.
While Citi and Bank of America are considered to big to fail, everyday Americans who were unlucky enough to get caught in the crisis will be forced to pay for a very long time. Their credit score qualifies for used car lenders who scream ‘bad credit ok’ and little else, while Citi and BoA’s reckless decision making has garnered not a single negative consequence, apart from Uncle Sam approving which five star resort will hold their conferences. Maybe they’ll have to endure a four and a half star hotel without the private Sheryl Crow concert and forgo the private golf clinic with David Leadbetter. Poor things…
But what will become of those ’02, ’03 Titanic lower-deckers? Will their credit remain ruined, and if so, won’t these same irresponsible banks miss out on a large opportunity for profit?