5
Life goes on after foreclosure
Mike and Kimberly Teel in their motorhome.
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[This story originally aired on Marketplace, July 27, 2009]
TEXT OF STORY
Tess Vigeland: For all the small signs pointing up in this economy, two huge pieces continue to point down. The first, of course, is jobs. We'll get to that a bit later in the show. The second is the housing market.
We learned this week from the real estate firm First American CoreLogic that more than 10 million homes have negative equity. That means the owners owe more than the house is currently worth. They're "underwater."
And that means there's a good chance some of them will default and end up in foreclosure. We wanted to get a sense of what that's like, to go through a foreclosure. So Krissy Clark of American Radio Works headed to Las Vegas to profile one couple -- and the house they lost.
KRISSY CLARK: You've probably never been to Broxburn street in Las Vegas. But you've seen places like it. When I first visited, six months ago, Broxburn was just another half-empty street in what was becoming a suburban ghost town, a ghost burb I guess you'd call it. Empty stucco houses, brown lawns, a row of signs that said, "For sale -- bank owned." And...
Rob COLE: Smell it?
CLARK: Oh yeah...
A terrible stink.
COLE: It's just a very distinctive, like algae, you know?
Algae, rotting leaves, a drowned bird. The smell was coming from three filthy swimming pools in the backyards of three foreclosed homes, right next to each other. I was with a guy named Rob Cole. His job is to clean pools that have been abandoned.
COLE: There's more things living in that pool than in that house. A lot more.
But there are traces of the people who used to live here. A bird house nailed to a tree, the ruins of a rock-lined fish pond.
And, looking through a window into the living room of 3613 Broxburn...
CLARK: Wow, look at what it says there.
COLE: Oh yeah, that's really sad.
There's a message spray painted in neat black letters on one of the walls.
COLE: After 15 years here, thanks.
So, what happened to the family who spray painted this message, once they moved out? And what happened to the house they left behind?
Kimberly TEEL: Hi, hi how are you?
I found the answer to the first question a few miles away from suburban Broxburn street, but also a world away at the Oasis RV Park. In lot 652, a woman with bleach blond hair is sitting in a lawn chair, holding a Coca-Cola glass full of pink wine.
TEEL: I'm a little nervous. I've had two glasses of wine today, but I have iced tea for you.
That's Kimberly Teel. She and her husband Mike are both in their 50s. They used to own the house at 3613 Broxburn. Kim spray painted the message on the wall right before they left. She gets emotional just talking about it.
TEEL: I wanted the new owners to know. Look, this is my home, take care of it.
Now, Kim and Mike have a new home, a 25-foot motor home.
KIM: This is where we live.
Mike TEEL: Now.
KIM: Now. This used to be our party rig, OK.
The tour of the party rig doesn't take long. It's just one room, plus a toilet in a closet and a nook in the back for the bed.
Kim: I gutted it all out, put in all new wall paper in, and...
Mike: It's home.
Kim: It's home.
They've barely finished showing me their new home, before they turn to memories of their old one. The only one they ever owned. Where they lived with their two daughters, and their aging parents.
HOME VIDEO: Happy thanksgiving. Happy thanksgiving.
Mike puts on this home movie from Thanksgiving a few years ago.
HOME VIDEO: And this is our turkey this year, looks kind of good.
Kim can't take her eyes off the screen where her smiling relatives flicker by.
HOME VIDEO: You've got a beautiful home here.
Kim: I used to have a nice house, huh? Look at it.
Mike: Yeah, we did it all ourselves, just her and I. We redid all the cupboards, put all new appliances in, redid the floor, everything in there is all brand new. For somebody else.
Kim: For somebody else.
The Teels lost their home in a way that's become painfully familiar. They refinanced, for the second time, at the peak of the real-estate boom to an adjustable-rate mortgage. But they didn't read the fine print about how much the interest rate would rise after a few years. Once it did rise?
Kim: I actually read the fine paper work, and we got screwed.
They couldn't afford it. Kim was at home full-time taking care of their sick parents -- one had Alzheimer's, another cancer. And as hard as they tried to stretch Mike's income as a slot machine repairman, it just wasn't enough to cover the mortgage. Finally, last November, the bank gave them three days to get out.
So Mike and Kim moved into their motor home. Not long before, both their elderly parents had passed away, and their older daughter had already moved out of the house. But their younger daughter had just graduated from high school, and was still living at home. Now, she's couch surfing with friends.
KIM: Do you know what that does to my heart? I've worked my whole frickin' life to make sure my kids have everything, and now the whole family is...
Mike: They're all over the place.
Kim: They're everywhere, because they haven't got a centering point.
Mike: It's really hard to see, I'm sure, to see your parents go from a house, into a motor home, in a park.
Kim: Tell her how they treated you at work. Tell her that. "Trailer trash."
Mike: Oh yeah, they call me trailer trash. I'm sure they don't mean any harm in it, it's just a joke to them, but it's not a joke to me.
And it's hard to forget the home they used to have. The Teels haven't gone back to their home on Broxburn street. But I have to see what life-after-foreclosure has been like for the house.
CLARK: I'm standing in front of the house. Looks like somebody has moved in.
There were moving boxes stacked on the front porch. Three dogs barked at me through the door.
A woman in her 50s named Keri Michelle Reeves bought the house in April. With cash. For $120,000. That's 10,000 less than it cost when the Teels bought it 15 years ago. Reeves didn't want to talk on tape about how she'd benefited from someone else's misfortune. But she did let me come inside and see the house.
She's gutted the place. Knocked down walls. Repainted everything, including the spray-painted message that said, "After 15 years here, thanks."
I asked her how she felt about that message that the Teels had left. And she said, "I feel sad for them. But they made bad decisions. Their loss is my gain."
KIM: OK, this is our local bathroom. Now you think I'm a weirdo, come on in here.
Kim Teel is taking me past rows of motor homes to the public bathroom at the Oasis RV Park. This has become her refuge.
KIM: If you turn this on steam, and you sit in here and put your music on. OK, now you're going to do yourself all in salt and olive oil, and then you're going to dye your hair, cuz you can't do it in the rig.
When she's not giving herself spa treatments in the public bathroom, Kim is busy looking for a job. It's hard in this economy, but not as urgent. Now that the Teels don't have a mortgage. The income that they do have goes farther, and they can spend it on things they couldn't when they owned the house on Broxburn street.
Mike: Fixing her teeth up.
Kim: Yeah, I got a lot of money in my teeth, OK.
Mike: So there were a lot of things we let lag behind, like going to the doctor for the skin cancer I have.
Kim: But you have to have co-payments. But we wouldn't even think about that. But we are taking care of ourselves a little bit better now.
Kim's gotten into photography recently, and she shows me a picture she took on her cell phone, from the door of their motorhome.
Kim: Look at this.
One of those perfect sunsets, with the light streaming through the clouds.
Kim: I mean if you have to go to bed every single night and look at this. It can't be that bad, can it?
In Las Vegas, I'm Krissy Clark for Marketplace.
I lost my home to foreclosure through my own faults. I tried Bob Patrick's program above and 9 months later he is still holding onto the $2,600 I gave him to start the program, there was no budget planning or training. It was always one things after another with him as to why I was never his priority. He belittled me, talked down to me, and in my opinion is out for himself and will not help anyone. He does not put his clients first and is only looking to nmake a quick buck.
I have a program that will put families/people that have gone through foreclosure back on their feet and into a home. The program requirements are that the client: maintain a budget (income and expenses), learn to live a debt conscious life and maintain their future home. The program is made up of three phases: the first takes the client through a financial training period that qualifies them to live in their future home, the second requires them to live and maintain their future home which provides proof that they are capable of maintaining the mortgage, everything that comes with owning that home and the everyday costs of life, and finally we provide lenders that will qualify them for a mortgage. Through this process the client develops a history of making finance habitual allowing us to present proof to a lender that the client will not fall into the debt trap that we have all been taught is a way of life.
I feel sorry for them. Predatory lending practices in particular by those loan brokers has contributed a lot to this. In 2006 I bought a condominium at $259,000 and later sold in foreclosure in 2009. I got chapter 7 discharge in 2008 but the bank delayed the foreclosure by more than 18 months. I moved out of the property in 2007, before filing bankruptcy and stayed out for more than two years. The bank sold the property at $85000 and I was sued to pay condominum fee for all the 18 months during which I had no access to the building. The locks were immediately replaced by new ones by the bank. The property is located in Alexandria VA. Currently, I'm unemployed and living on Unemployment Insurance. My profession is Network Engineer and couldn't get job. I don't know how I'm going to pay the fee for a service I didn't get? ..Is there any institution that protect consumers?
What happened to the Teels was caused by the immoral and unethical practices of loan sharks posing as benevolent bankers. What I cannot understand is why the banks turned good people out of their homes and then turned around and left them vacant for almost two years. Then paid to auction them off at a third the original loan. Why didn't they reduce the original loan holder's loan and let them remain in their home? Obviously there was some type of tax advantage for doing what they did. I have detail figures on two homes. One near us was left all winter, the water pipes froze and broke. The property was then sold at auction two months ago for $168,00 when the original loan was $485,000. However, the new owners had to gut the house, remove mold, replace plumbing and more. It is now on the market for $319,000.
This is another smoke and mirror situation because these home sales are being reported as an increase in "existing home sales" however, they are "speculator or flipper sales" not real sales.
The following is a quote from Most Reverend William F. Murphy
Catholic Bishop of Rockville Centre
Chairman, Committee on Domestic Justice and Human Development in a letter to Henry Paulson on September 26, 2008.
"The scandalous search for excessive economic rewards even to the point of dangerous speculation that exacerbates the pain and losses of the more vulnerable are egregious examples of an economic ethic that places economic gain above all other values. This ignores the impact of economic decisions on the lives of real people as well as the ethical dimension of the choices we make and the moral responsibility we have for their effect on people.
• Responsibility and Accountability: Clearly, effective measures are required which address and alter the behaviors, practices and misjudgments that led to this crisis. Sadly, greed, speculation, exploitation of vulnerable people and dishonest practices helped to bring about this serious situation. Many blameless and vulnerable people have been and will be harmed. Those who directly contributed to this crisis or profited from it should not be rewarded or escape accountability for the harm they have done. Any response of
government ought to seek greater responsibility, accountability and transparency in both economic and public life.
• Advantages and Limitations of the Market: Pope John Paul II pointed out that “the free market is the most efficient instrument for utilizing resources and effectively responding to needs…But there are many human needs which find no place on the market. It is a strict duty of justice and truth not to allow fundamental human needs to remain unsatisfied.†Both public and private institutions have failed in responding to fundamental human needs. A new sense of responsibility on the part of all should include a renewal of instruments of monitoring and correction within economic institutions and the financial industry as well as effective public regulation and protection to the extent this may be clearly necessary.
• Solidarity and the Common Good: The principle of solidarity reminds us that we are in this together and warns us that concern for narrow interests alone can make things worse. The principle of solidarity commits us to the pursuit of the common good, not the search for partisan gain or economic advantage. Protection of the vulnerable – workers, business owners, homeowners, renters, and stockholders – must be included in the commitment to protect economic institutions. As Church leaders we ask that you give proper priority to the poor and the most vulnerable.
• Subsidiarity: Subsidiarity places a responsibility on the private actors and institutions to accept their own obligations. If they do not do so, then the larger entities, including the government, will have to step in to do what private institutions will have failed to do.
This is a challenging time for our nation. Everyone who carries responsibility should exercise it according to their respective roles and with a great sensitivity to reforming practices and setting forth new guidelines that will serve all people, all institutions of the economy and the common good of the people as a nation. This includes not just the leaders of the economic life of our country. It means the political leaders and all those whose own expertise can contribute to a resolution of the current situation.
Our Catholic tradition calls for a “society of work, enterprise and participation†which “is not directed against the market, but demands that the market be appropriately controlled by the forces of society and by the state to assure that the basic needs of the whole society are satisfied†(Centesimus Annus). These words of John Paul II should be adopted as a standard for all those who carry this responsibility for our nation, the world and the common good of all."
"Reeves didn't want to talk on tape about how she'd benefited from someone else's misfortune."
I don't blame Ms. Reeves for not wanting to talk on tape given the slant that Marketplace is putting on this story. The original owners did not read the fine print, couldn't understand they were taking out an ARM "balloon" mortgage? Yes they are in a sorry state and we can take pity on them, but they made a huge financial mistake, and Ms. Reeves should not be made out to look like an unethical mercenary. Her actions are actually stabilizing and improving the neighborhood and she should be commended.
NPR, SHAME ON YOU.
