Posted on 01/22/2008 10:03:19 PM PST by bshomoic
The Foreclosure Crisis: Not everyone is suited for homeownership
Posted by Phillip Morris January 23, 2008 00:01AM
Darnellas Caldwell, a 39-year-old grandmother of five, never thought she would be moving back home to live with her mother. She never envisioned not owning the tan and green house at 20724 Donnybrook Drive in Maple Heights.
She never envisioned being homeless.
But she is.
Few falls from homeownership have been more spectacular. Few stories are more tragic and pathetic. Few stories better illustrate that all homeowners are not prepared to be homeowners.
After owning her home outright, paid for in cash, Caldwell has nothing to show for it. She has nothing to show for the $105,000 in equity that she purchased in one fell swoop. She has nothing to show for the two-story structure that she called a living monument to her deceased son, Dontrae.
The house was bought and furnished in the wake of his tragic death. But six years later, it stands dark and empty.
Her windfall, her dream, now just as dead as the boy.
It's the saddest housing story I have yet to encounter.
Last November, Caldwell pulled a rental truck to the side of the house, emptied her home, and headed south on Interstate 77. In doing so, she joined the thousands of other Greater Clevelanders who have lost their grip on a dream.
The question that must be considered, however, is whether her housing loss could have been prevented? Or is it just possible that Caldwell never belonged in the cute little house in Maple Heights?
AFTER YEARS of bouncing from one cheap rental to another, after years of moving her three sons around so much they were never certain of their apartment address, Caldwell bought her home a few months after the death of her youngest son.
Dontrae, 10, drowned in a swimming accident at a church-sponsored camp. She sued. The church settled out of court for $500,000, and Caldwell, who had never had a credit card, went on a gifting and spending spree.
She gave away tens of thousands of dollars to family members, including the paternal grandparents of her sons. She was also quite generous with friends who sought a piece of her small fortune.
She had never had money. And it showed.
She junked her 18-year-old Hyundai and bought a $46,000, fully loaded Infiniti SUV. "I always wanted that car," she said.
But more importantly to her family's future, the ninth-grade dropout decided to buy a home.
The Akron native, who had long wanted to leave her hometown, found a three-bedroom split-level in Maple Heights. It was love at first sight.
The owner was asking $110,000. Caldwell offered $105,000. He accepted, and the following month she moved into her "dream house."
For the first two years, life was good. The neighbors were mostly friendly and welcoming. She and the boys got used to living without the sound of gunfire and late-night street loiterers.
The nursing home attendant was living out her dream with her live-in fiance, her two surviving sons, and a growing number of grandchildren.
Then a bad hailstorm hit the area in the winter of 2003 and her house began to fall apart. The aluminum siding started to peel. The roof buckled. Repairs were desperately needed.
All of a sudden, she needed money.
"I had spent all of the money from the settlement. I didn't have any savings. But the house had to be fixed. That's when my fiance said, 'Let's get a loan.' "
But Caldwell had never taken out a loan. She didn't even know how to shop for one.
She said her fiance steered her to a local lender, who is no longer in business.
That lender said he would give them a $48,000 home-repair loan, but only if she transferred ownership of the home to her fiance.
"They told me that I had 'good equity' in the home, but said they couldn't give me the loan because of my credit score and my work history.
"I asked them what they meant by equity, I didn't know what the word meant. They said that they knew that the home was paid off, but they thought my fiance should get the loan because he had a better [credit] score and better work history.
"I was so naive. I didn't have any coaching. I didn't understand the [lending] process. I didn't know that I was giving away my house."
So she signed over the home in order to save the roof.
Things quickly deteriorated from there. She lost her job. Then the fiance began to run into financial difficulties, as well. Caldwell said he had problems paying the weekly household expenses, as well as the monthly installments on the house-repair loan.
The house was soon threatened with foreclosure, so the fiance refinanced the house -- now his house -- for the second time in two years. She said he obtained a loan worth slightly more than $60,000.
But soon he defaulted on that loan, and collection agents began to bombard the house with calls demanding payment. They made threats at all hours of the day and night.
"That's when I found out that I didn't own the home," Caldwell said. "They would call and ask for the homeowner, and I would say I am the owner, and they would say no, we need to speak to the man who owns the home."
"That's when I realized how bad my situation was. A house that I owned outright was no longer even in my name. I couldn't even negotiate to keep it, because it wasn't mine."
TO CALL CALDWELL shockingly and painfully irresponsible is an understatement. But it doesn't detract from her horrendous experience in the pursuit of homeownership. The ruthless exploitation of her naivete shows the dark underside of the hawking of the American dream.
The public is constantly told that homeownership is the first step into the American mainstream, a necessary step in wealth creation. But not everyone is prepared to own a house.
Not everyone is suited for homeownership.
In far too many cases, unprepared homeowners quickly find themselves financially and emotionally compromised by houses they cannot afford. Too many subprime borrowers unwittingly find themselves locked in unconscionable predatory loans.
Better credit counseling is needed to help prepare would-be owners. Lenders and community groups must work to help young or first-time home buyers fully understand the responsibility they assume with homeownership.
Limited efforts are already under way with a handful of banks and community development groups in Cleveland. The WECO Fund Inc. works nonstop to increase the financial literacy of low- and moderate-income people who aspire to own homes or start businesses.
In some cases, the fund generously contributes to the down payments of low-income buyers who complete a course on financial management. But increased efforts are needed if the goal of homeownership is to remain a viable pursuit for untold numbers of people in Greater Cleveland.
Such exposure may well have spared Caldwell her devastating loss and her swift return to poverty.
"I feel like I'm stuck in a nightmare," she said as she helped load up a moving van.
"It's hard for me to walk away from this house. Because I owned it. It was mine. And now I have nothing to show for it."
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