Say what you want about Donald Trump — the over-hyped businessman, pretend candidate for the 2016 GOP presidential nomination and soon-to-be featured guest of Horry County Republicans, but he’s no fool, unlike me.
Since the worst economic downturn since the Great Depression, thousands of American homeowners have taken the kind of steps that Trump is known for and have made out like bandits because of it.
Meanwhile, me and millions of other homeowners, like suckers, took a different route, one that could have been avoided had the Obama administration been as bold about helping struggling homeowners as it was helping poor people attain long-sought health insurance coverage. We kept making on-time monthly mortgage payments, even when the financial crash and foreclosures in our neighborhood pushed us underwater, kept on paying even when banks refused to work with us — because we kept making on-time monthly payments.
According to a recent analysis by the New York Times, an untold number of Americans are on the verge of owning their homes outright — because they stopped paying on their mortgages.
Thousands of Americans are in line to own a home they either couldn’t afford when they bought it or succumbed to market forces over which they had little control because they refused to keep up with payments and refused to leave the premises. Others stopped paying long enough to convince banks to rewrite their loans, saving them tens of thousands of dollars.
One such homeowner prominently featured by The Times, Susan Rodolfi of Miami, Florida, recently celebrated an odd anniversary — the fifth year since she last made a mortgage payment on a home in which she still lives. Because of statute of limitations in Florida, it means her bank may no longer either collect money owed it, or claim her house.
The bank is challenging that potential outcome in court. Rodolfi, for her part, said she isn’t satisfied with that outcome, either, wanting to be responsible. She wants a loan modification.
“I screwed up and they screwed up, so now what?” she told The Times.
That’s the rub. She screwed by buying too many properties at the height of a housing market she didn’t know was about to crumble.
Banks screwed up by financing too many pricey and iffy loans during the run-up to the financial collapse, then couldn’t get their act together to deal with the fallout, even as almost 7 million Americans lost their homes to foreclosure.
The federal government screwed up, too. The Times said the feds over the past several years made “69 changes to its mortgage modification programs, forcing lenders repeatedly to scrap previous offers to homeowners and extend new terms.”
In addition to that, the Obama administration failed to enact a massive refinance-modification program at the height of the crisis. It didn’t make sure that banks, which were receiving what effectively became trillions in taxpayer-backed loans, would help millions of American homeowners hurt by a crisis that was largely the creation of decisions made by executives at the nation’s largest banks. The crash hurt even homeowners who made responsible decisions about when and where and how much house to buy. (Contrary to what some claim, the federal program that encouraged banks to help poorer Americans attain homes was not the cause of the crash. Those loans did better than conventional loans.)
Had a nationwide refinancing-modification program been enacted in 2008 or 2009, the economic recovery would have taken root quicker, millions of Americans would have been able to keep their homes, and banks would not now have to go to court against people like Rodolfi.
But I can’t be too angry with homeowners like Rodolfi. They are simply taking a page out of the big banks’ book and following the example of people like Trump, who make irresponsible business decisions then take advantage of bankruptcy laws — written by and for the richest Americans, supposedly to spur risk-taking and innovation — to dump debt.
We celebrate billionaires like Trump who walk away from much of what they owe and become richer because of it. Why not celebrate the Rodolfis?
For the rest of us, who can’t stomach such big-boy-big-girl financial games, we’ll continue living by the adage that you pay what you owe — even as others willing to play the game keep laughing all the way to the bank, and sometimes into a free house.