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When the subprime crisis hits home

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KAI RYSSDAL: The National Association of Realtors delivered the latest drip of bad news about the housing market today. Pending home sales stalled at the end of last year. Unfortunately, the other side of the ledger in home sales is booming. Foreclosures have been breaking records for months now.

The U.S. Conference of Mayors estimates cities will lose more than $160 billion as a result, and that doesn’t even count the human part of the story — like commentator Kevin Mims.

KEVIN MIMS: Twenty-seven years ago my wife and I lost our home to foreclosure. She and I and my two young stepdaughters lived there for less than two years, but it was our first home together. We loved it.

My wife and I met while working together at a title and escrow company. Now a real estate slump had cost us our jobs. The foreclosure process took several months. It felt like a deathwatch. Eventually the bank came along and pulled the plug. Afterwards we swore we’d never allow ourselves to become emotionally attached to another house. We moved frequently, so it was easy to keep our vow.

But four years ago we bought an 80-year-old home in a nice Sacramento neighborhood. My wife, an escrow officer, and I, a notary public, were earning good money. We had every intention of staying here forever, but the subprime lending crisis has triggered another real estate meltdown. Now my wife’s salary has been cut and her bonuses eliminated. My notary work has dwindled to a trickle. It becomes more difficult to make our house payment each month.

Financially it doesn’t make sense to even try. We owe about $430,000 on the house. It’s currently worth no more than $400,000. Selling isn’t an option. Sooner or later we will probably give up another home to foreclosure. The interest rate is competitive, six and an eighth, and it’s fixed until August of 2012. A sudden upward adjustment of our loan won’t force us out. It’s the sudden decrease in our incomes.

I suspect foreclosure will be much more difficult at 50-something than it was at 20-something. We’ve imprinted our personalities on this place more than we ever did on our first home. On the bright side, my stepdaughters are grown up. We won’t have to uproot them. The only downside for them is, they may end up housing us for awhile.

KAI RYSSDAL: Freelance writer Kevin Mims lives in Sacramento, California.

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