<p>No, it does not fit many poor today and that’s too bad. The poor today are generally so deep into the situation nothing will really help much. But that does not mean the few two parent households can’t still make a better life and a better investment than renting.</p>
<p>barrons: “But that does not mean the few two parent households can’t still make a better life and a better investment than renting.”
That is definitely true. I am a big proponent of the middle class (what I think of as the working poor) buying a home. Especially if they live in a city with solid affordable housing in decent school districts.</p>
<p>SOMETIMES they can make a better investment than renting. But SOMETIMES renting allows for a much steeper climb in wealth.</p>
<p>^^ Especially if they happen to be two-parent families, I suppose? Single parents need not apply?</p>
<p>The problem with your assertions Weenie is - at least my perception from your posts - is that your category of poor is a static position. You seem to assume that the people in this group will never improve their lot, never get jobs, never get promotions, never save money etc. As a person who at one time didn’t even have rent money and lived in a car, and then in a homeless shelter, I can tell you with absolute certainty that poor people can do all of the things that you assert that they can not, and in fact, many of them are doing so today, and many more are in the planning stages of so doing, in spite of their limited resources and access to tools, and in spite of congressional representation like Frank. </p>
<p>I think you should reconsider your evaluation of the mathematics of it too - consider a poor person who (1) pays rent to a slumlord; (2) pays utlities, usually higher because the landlord is not investing in quality insulation, maintenance on heating/cooling systems; usually this means higher deposits as well; (3) more money for groceries, owing to higher prices charged in undesirable areas; (4) higher prices for all other services, owing to credit scoring as I’ve already expressed; (5) higher prices for public transportation, if they do not own a car, and so on. </p>
<p>If you add all of that up, a mortgage payment and home upkeep almost brings them out even or ahead, in many situations. In addition, in the event of job loss or other interruption to cash flow, in a rental relationship, no rent = eviction (no wonder they have to move so much) - as opposed to late mortgage payment = working with the loss mitigation department of a lender, who will often have temporary terms and other resources to see the home owner through the rough patch and get the loan back into production. </p>
<p>I think you are viewing the poor as hopeless and disqualified, just like congressman Frank. I think this is a terrible blanket indictment on those less successful - permanently writing them off, instead of extending hope and adopting an attitude of belief and confidence in their improvement (assuming they take steps to help themselves).</p>
<p>latetoschool:</p>
<p>I didn’t see what Frank had to say, so I have no idea if you’re interpreting this correctly or not. But I don’t think that’s the issue here.</p>
<p>I never lived in a car, and I applaud you for pulling yourself out of that. But I have been without a lot of money, and certainly there was a time when there was no way on God’s green earth that I could afford a house. I rented a nice apartment with a view for $300/month when even a modest house in the area, at prevailing interest rates, would have cost about $1,000. Utilities were paid for.</p>
<p>I wasn’t able to afford a house until (surprise) I got a job that would qualify me for a loan that size and that, incidentally, would actually allow me to pay my mortgage. </p>
<p>I’m curious. Based on a past post, it appears you were able to swing a deal in which you were homeless, without a job, and still got a loan. How did you do that?</p>
<p>Tarhunt, it’s a long story, but, it was an iterative process. The cliff notes version goes like this: homeless, no job, lived in car. I had been studying economic information about various cities during my pregnancy, and carefully evaluating things like employment trends, job markets, cost of living, etc. </p>
<p>Bottom line, I sold the car, bought a one-way plane ticket with the proceeds, and brought my daughter, then 9 months old, to a new city oedver 1,000 miles away where all of the research I’d done told me that the cost of living should be far lower, and the job opportunities better, and the barriers to entry lower considering my level of education. </p>
<p>Then, once in the new city, we stayed in a hotel room for maybe four days, and then the money was gone (the car was a junker so I received <$600 for it). So we went to a faith-based homeless shelter, and remained there for almost 90 days - it took that long to get a number of jobs (I kept “trading up” rapidly), and save enough money for a deposit on an apartment, deposit for day care, plus utilities, etc. </p>
<p>Stayed in the apartment; when my daughter was six months from starting kindergarten, I made a deal with our parish priest: work in the rectory evenings after my real job in exchange for her tuition. Did that for three years until I was finally making enough money to pay her tuition on my own. Then, got a better paying evening job, saved more money. Finally bought a car. By the time she was in fifth grade, I bought the house. We went without furniture in the main areas of the house until she was a freshman in high school. BUT I did install a brand new central heat and AC system, put a brand new roof on with 30 year guarantee, brand new hot water heater, new washer and dryer, deck, and replaced 100% of the siding - all BEFORE we even had the first piece of living room furniture. Aren’t poor people just terrible about taking care of things? LOL. </p>
<p>The thing is, once I bought the house, my career really took off. I think part of it is that owning a home brings one a sense of peace and confidence that impacts other areas of life. Or perhaps the weight of the responsibility forces a rather intense seriousness into one’s work - that year-end performance review is important, but, suddenly it was critical. (It’s hard to be loyal or committed to a landlord; it’s impossible to NOT be committed to one’s own property.) But I also think that part of it is how you’re evaluated by others who may be considering you for things like board service, etc. </p>
<p>Regarding the loan, I negotiated very, very hard for it and made some very tough demands. The sellers were so angry at me that they would not even greet me or speak to me at the closing, as I was very firm on terms and I would not compromise. But I think anyone is a target for predatory lending or at least unfavorable loan terms. The new car I just purchased, even with an excellent credit rating and loan history, it took over a week, and I sat down to sign three separate times and stopped the process, because the terms were not what I requested. It wasn’t until they finally realized I wasn’t going to buy the car at anything less than what I wanted that they finally caved. I do suspect that if I had gone in on a husband’s arm, or some other male appendage, it would not have been so difficult. </p>
<p>The bottom line is that I think it’s very, very wrong to make blanket assumptions about what poor or poorer people can do or should do. And I think it’s horrible to underestimate the will, intent and drive of any one person. That is why Frank’s comments were so surprising and disappointing to me. </p>
<p>I think what poorer people need most is confidence, because, there are no silver bullets to the elevation out of poverty and there are no legitimate shortcuts to prosperity. One absolutely CAN get favorable loan terms, just like one CAN make deals with the parish priest for part-time work in exchange for tuition. The magic lies in the people themselves, not in any one piece of legislation or even lots of legislation. And it certainly cannot be found in so-called social programs, which in my experience are mostly governed by persons who need to keep poor people suppressed in order to feel good about themselves. It’s disheartening to me to hear poor people spoken of in such a dismissive way, or, as in Weenie’s post, associated so strongly with the word “can’t” (a word that has been forbidden in my house for 20 years BTW). </p>
<p>For poor people, the only way out is through, and Frank’s positioning (as I interpreted it) gets in the way.</p>
<p>The story ends with now I am self employed, as I believe that is the only true path to balance sheet wealth, if one does not have a college degree.</p>
<p>I’m sorry latetoschool. I feel like you just don’t understand what I’m trying to say. I give up.</p>
<p>Weenie, I understand all too well. I have been hearing from you for the last 20 years. You think poor people “can’t”. I’m proof positive that even the most destitute absolutely can, do, and will, and if I have time to help them a few years out, they will do so in record numbers. </p>
<p>Frank’s missed opportunity isn’t about going full steam ahead to get poor people into homes. The question the audience asked him was specific to legislative updates on subprime lending. His response wasn’t “predatory lending is a bad thing”. His response was “home ownership is overrated” etc., and, bottom line, congress isn’t going to do anything about predatory lending. And it’s not just the dems - as I posted, the minority leader’s response to the same question was nearly as irresponsible and ignorant, but, at least he didn’t sink to the level of “poor people shouldn’t try to own homes”. </p>
<p>Along the way, it’s not just the poor people that are targeted by predatory lenders. How many people even on this board - the highly educated, mostly middle class - run and examine their own credit scores before approaching their lender? Or verify that debts are not re-aged on their credit reports? Or challenge reporting and demand corrections, and verify them? Or demand hand rescoring of credit prior to borrowing? Of for that matter can even find the telephone numbers of the three major CRAs? Or even know that there are four or five minors CRAs that they can request reporting through instead? </p>
<p>Frank overlooks a MAJOR opportunity to rebalance the lender-borrow relationship for everyone, and he evades his responsibility by playing the “can’t” and “shouldn’t” and “don’t need” cards. By his logic, poor people don’t need decent clothing, either, after all, they don’t tend to have very good jobs so they don’t need the clothes. And they don’t need quality food, either, what’s the sense of decent nutrition since they don’t really have any useful purpose to be burning calories…while we’re at it, let’s not make any effort to help them get healthcare - after all, why do they need to be healthy…</p>
<p>“I think it’s very, very wrong to make blanket assumptions about what poor or poorer people can do or should do. And I think it’s horrible to underestimate the will, intent and drive of any one person.”</p>
<p>True, but if you’re in government and trying to serve a large population of people, it is wise to think about what poor people are LIKELY to do. Government isn’t in the business of estimating anything about any one person; it’s about serving populations.</p>
<p>As you acknowledge, middle-class people in this country, in huge numbers, run up big consumer debts, fail to save enough for retirement, put their entire savings into Enron options, and make myriad other bad financial decisions. I’ve made plenty of them myself. Not to mention all the foolish, shortsighted decisions we make in every area of our lives – we eat those dozen Krispy Kremes, have unprotected sex, keep smoking, go back to that jerk we dumped, etc. etc. Yes, some individuals are unusually driven, patient, and clever (sounds like you’re in this group), but you can be absolutely certain that a group of 100,000 people in a Congressional district won’t all be like that.</p>
<p>I don’t believe that poor people are gifted with more foresight, maturity, wisdom, etc. than any other group. They’re human, and they’ll make the same mistakes everybody else makes. So if you’re trying to predict the behavior of a population, it’s a very safe bet to assume that there’s going to be a lot of rotten decision-making. And if some subgroup – like poor people – is going to suffer far worse consequences from that rotten decision-making because they lack the safety net that middle class people have, it seems reasonable to take that into account when you’re talking about policy.</p>
<p>Now, I’m all for predatory lending reform, free financial counseling, credit bureau transparency, the whole works. And I think it’s a crying shame that Congress isn’t doing anything about this. But you’re not just decrying that inaction, you’re decrying Frank’s remarks. I just don’t see the evil in acknowledging that home ownership will be a financial pit for some portion of the population. I don’t see the parallel between saying that and saying that poor people don’t deserve decent food and medical care.</p>
<p>Hanna, I hope you don’t smoke.</p>
<p>No, my foolish and shortsighted mistakes usually fall into some of the other categories I listed (and, naturally, a bunch more that I could never fit into one thread).</p>
<p>OK. Back to the thread.</p>
<p>Homeownership certainly didn’t help all those people in the 9th Ward. With inadequate insurance you can’t recover from disasters. Not to say that I don’t think that homeowner ship for most is a the first step to a more secure financial footing.</p>
<p>Late:</p>
<p>Thanks for the explanation. It’s an inspirational story. But is it fair to say that, by the time you bought the house, you were no longer poor?</p>
<p>As for Frank, I just have no opinion, not having seen what he had to say. Clearly, this is a trigger for you and you care very deeply about it.</p>
<p>Tarhunt, it depends on how you define “poor”. I cannot remember my exact income at that time, but, I started out with this precise goal in mind (in addition to a few others). When we moved in, we had so little furniture that it took two people less that 30 minutes to get it into the house, and as I’ve said we moved in the middle of the night so the neighbors wouldn’t see the furniture. It was nearly a year before I could afford to put a telephone in the house. And the month I closed, I couldn’t really afford to eat, because it took every available dollar to pay the closing. I didn’t even really know where was the closest grocery store for a few weeks, because I didn’t have any money to go to it, so, it took a while before I had any reason to find it.</p>
<p>But it’s interesting to note that my boss congradulated me, was thrilled at the move, and within 60 days I was promoted to manager, and 18 months later to director, and 36 months later to vice president. Being able to have that VP title on my resume has helped my career a great deal, as well as having the experience of running an operation with a large staff. (But I still didn’t buy any furniture lol.) I’m not saying that he promoted me just because I bought a house, but, it did calculate into his overall assessment of stability and seriousness of his employee. Or, perhaps once on the hook for mortgage payments, I suddenly became deeply serious about my work, triggering promotions and the accompanying salary increases and career responsibilities. </p>
<p>(As an aside, also in play was the realization that high school was just a few years off: I chose that particular house because - among other reasons - the public bus route to the catholic high school was within safe, well-lit walking distance (though my daughter never had to use that bus route as thankfully I was always able to drive her to school) and I knew that the higher tuition was just a few years away, and that I wasn’t going to be able to make a deal with a priest, as I did with grade school. In any event, I knew I HAD to be able to make those tuition payments, and that was a very, very critical goal, because how else was I going to position her to reach for the best possible options for college?) </p>
<p>I do know what owning a home did for me psychologically in terms of refreshing my intentions to be very successful, and today, since I spent time in two or three different cities, I can attest to how I feel when I walk into a home that I own, vs. the one I rent. I do very much like our new rental home but at the end of the day it isn’t mine. When I walk in the door, I’m momentarily happy, because there is no fear of paying the rent, and because my child’s presence is evident, but, it’s buying a roof over our heads in 30 day increments. </p>
<p>MY home inspires very different feelings when I walk through the front door: it’s MINE, I earned it, it belongs to me, and it’s a constant, incontrovertible, hard data point that verifies for me over and over again that regardless of one’s starting place, if one works hard enough, one can achieve home ownership and the foundations of financial stability, and perhaps even eventually affluence: proof positive of the total inaccuracy of Weenie’s long list of “can’ts” as applied to poor people. It’s verifiable evidence that force of will combined with consistent hard work and clear goals can overcome even the most challenging obstacles, and it’s incredibly empowering. Some of those now-empty rooms are also incontrovertible testimony that this is the place where I raised a child who will - days from now - file the paperwork for college graduation. 
It is also a hard asset that my child will one day inherit, and the decisions to sell or rent or live in it will be hers. This is the experience that Frank seemed to dismiss with his comments, and this is what I translated to mean that he arbitrarily decided a certain class of people do not need to be bothered to even make the effort to try. It’s not about the four walls and the roof or even about the equity: it’s about the human experience of setting clear goals, of working and trying very hard, and achieving one segment of a very important dream that Frank seemed to be saying that poor people shouldn’t even bother to try for.</p>
<p>Hanna, you do make some excellent points about the hard numbers, and it’s true that no congressional rep can make policy formation based on one person’s experience. Yes, I take major exception to Frank’s remarks, although, to his credit, I think he was not feeling well, and I also believe he was on a red eye flight the night before and addressing this particular audience with little or no sleep. </p>
<p>Beyond that, I do wish congress would do something to rein in the issue of subprime lending, and also the practices of credit rating agencies: we cannot even get to the bottom line of the secret algorithms that CRAs report out to credit grantors based on data they’ve collected ABOUT US. And these agencies are making a profit - on US!!! </p>
<p>Yes, we all do make bad decisions and unfortunate choices, me included. My car insurance is a perfect example: for years and years I’ve had the same insurance, I just keep paying the renewal over and over and over without really thinking about it. Since I bought my latest new car, however, in discussion with friends, it has dawned on me that I’m paying too much - or at least, I seem to be paying more than my friends, who do not have my spotless driving record, and they certainly don’t have my income and my high credit score. So I’ve been drilling deeply into my insurer’s underwriting policies, and, imagine my amazement to learn that my insurer rated me exactly once: years and years ago, when my credit score was likely in the low 600’s or perhaps worse. Guess what? Would you believe they do NOT rate ever again - unless it’s to their favor - if you have accidents, tickets, etc. </p>
<p>Car insurance companies have held out for a long time that persons with poor credit or less than great credit are greater risks - their philosophy is that persons who are irresponsible with credit are irresponsible on the road as well, and consequently trigger more accidents. This is a debatable point (and I lack the knowledge to debate it anyway) but what they do NOT do is reevaluate credit for improved circumstances, so, my current, far higher credit score and nearly quadruple income - very different financial footprint than what I offered years ago - does not apply, and, my continued spotless driving record doesn’t mean jack either (except that they have nothing to use to drastically RAISE my rates). I’ve been on the phone with their supervisors and underwriters, asking them to re-rate me, and, they will not do it. It’s not their policy. They cannot be bothered. Obviously I will now have to change insurance companies. But it strikes me that between watching one’s credit reports, negotiating for rates, paying attention to charges, managing investments, etc., the entire aspect of financial management of one’s money is consuming more and more time. If congress would just do something serious about helping consumers hold credit agencies to some level of responsibility and transparency, it would help a LOT. </p>
<p>My bad for not paying closer attention to my auto insurance rating, but, hey, I’ve been a little busy…</p>
<p>LTS:</p>
<p>Your story continues to amaze me, but that’s partly because you are not the typical poor person or drop-out. </p>
<p>
</p>
<p>How many poor persons can say the same thing? How many are truly stuck in dead end jobs, or even have no jobs? How many are hobbled by low levels of education, cannot fill out forms, etc… </p>
<p>A problem associated with subprime lending that has not been brought up is redlining. Subprime lenders can prey on poor people because mainstream mortgage companies redline areas on economic grounds: real estate in low income areas is, in their eyes, not profitable. This argument supports the information supplied by JHS. </p>
<p>Another tidbit of information about Europe. When we lived in Britain, we bought a house. In Britain, house deposits are set higher than here; mortgage rates are not locked in. So you never know how much you will be paying from month to month, and the rates can skyrocket into 2-digits.</p>
<p>I would say LTS’s employment trajectory is very exceptional, and worthy of congratulations. However, by no means is her experience even close to the rule for poor people, many of whom do live the “Nickel and Dimed” existence about which Barbara Ehrenreich wrote so poignantly.</p>
<p>Marite - you’re right, many poor persons cannot say the same, because they have CHOSEN to be trapped in dead end jobs, etc. And what often frames that choice is the constant message of “can’t” from leaders like Frank, and from offerers like Weenie. If you’re told over and over and over “can’t”, and furthermore the overwhelming, ever-present physical evidence verifying “can’t” is undeniable, and the message is furthermore layered in media and popular belief, with no view of even the smallest glimmer of hope, you’re going to start believing “can’t”. If hearing “cant” once is a fact, twice is a movement, three times or more becomes an insurmountable trend. </p>
<p>I’m actually a rather “normal” person, but, the one thing that may separate me and those like me from the poor of Frank’s world is that perhaps we are absolutely stubborn in our refusal to accept “can’t”, and we strongly and emphatically argue against it at every opportunity.</p>
<p>LTS–</p>
<p>There’s a large element of truth in what you say, but I also think of immigrants with low English skills; people with learning disabilities or physical handicaps, etc… I’ve met many immigrants who after many years, cannot speak English. They work very long hours for little money. Communication with people who hire them is handled by a foreman, a contractor, the owner of the salon, and so forth.</p>