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The Truth About the Fact: An International Journal of Literary Nonfiction

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Saturday, March 7, 2009

Oprah on the Recession


“Did you know that you can buy a house for $100?” my friend asked before launching into a story about her discovery of a foreclosure website. If only, I thought, my student budget would allow me to purchase a house like that at this point in our economic recession—never mind that it’s probably located in rural Montana. But this is certainly the type of opportunity that could turn a hefty profit in a few years.

…And this was the first thought that came to my mind when talking about foreclosure. For far too many American families, their first thought is more along the lines of, “Will my house soon be advertised on such a website?”
With a tinge of guilt, I must admit that the current economic situation has not affected me very much. Sure, I’m learning to manage my money better but only in the sense that anyone who just got her first credit card might have to. I buy gas, food, and clothing about the same as I always have. I hardly think twice about going out for dinner or drinks. Or spending $10 at the movie theater ($9 with student ID).

But many people have to think more about these things…if they can at all. This might sound cliché but it was an episode of the Oprah Winfrey Show that opened my eyes to the suffering that many Americans are experiencing—particularly in the wake of the recent tidal wave of home foreclosures.

Oprah’s special reporter, Lisa Ling visited her hometown of Sacramento, the most devastated city in the U.S. in terms of foreclosures and job loss. An epidemic that is affecting the whole country is most prevalent in Sac. This epidemic is the “tent city,” where hundreds of people are forced to live in tents because they do not have a home. Picture a refugee camp, right here in the U.S. In Sac there is an estimated 1,200 people living in these makeshift towns. These people are far from the grungy bums we are used to seeing on street corners. Rather, they are people—or families—that lost their jobs and then lost their houses. And the reason they are living in a tent? Because the city’s homeless shelters are already too full.

They used to have jobs in construction, truck driving, or car sales—the first services that were cut in this recession. Now they have to worry about things like where to get clean water—and let me remind you this is not some Third World country I am talking about, it’s our backyard. The residents report missing the luxuries of their life before. “I miss looking like a girl,” says Tammy, a 47-year-old resident of Sac’s Tent City.


For more insight into what’s actually going on, I highly suggest you check out this segment of Oprah.com.

Although Oprah is known for sensationalizing people’s tragedies, I see no harm in putting a human face to what we hear on the news everyday. It certainly opened my eyes and I’ve realized that something needs to be done to help these people. Afterall, this is America and there should be no reason why hard-working individuals should not be making a fair wage. I must admit that I am skeptical about President Obama’s approach; I don’t believe shallow, short-term fixes are going to cure this kind of problem. I am anxious and a little scared to see what type of effect the government’s actions will have on the economy in the next few years. In the meantime my sympathy and concern goes out to those suffering the most.

Laura Woods

2 Comments:

Blogger Editorial Committee said...

In regards to my latest blog, I thought it appropriate to elaborate a little more on the facts of the situation. Foreclosure is a word we hear nearly everyday and yet I found myself wondering what it actually entails. Therefore, I conducted a little research of my own and wanted to share it with you.

Foreclosure describes the legal proceedings initiated by a creditor to repossess collateral (in this case houses) for a loan in which the borrower failed to fulfill the terms of the agreement. Quite a mouthful. Basically, the lender is confiscating the house to pay what the owner could not. A foreclosure will negatively affect a credit score for seven years, three years less than bankruptcy. However, foreclosures are looked at much more seriously by lenders and will be taken into consideration for any future loans.
According to the Michigan State Housing Development Authority (MSHDA), foreclosure does not begin until the mortgage payment is 60 days late. At this point, in order to avoid foreclosure, the owner must pay the payment in full and no partial payments are accepted. Once the payment is 91-105 days late, an attorney is hired to begin foreclosure proceedings. The owner is informed of this with an acceleration notice. When this begins, if the owner abandons the property or the property is red-tagged (when a building is too damaged to inhabit), the home is automatically repossessed. At this point, up to $2,000 dollars can be added to the debt to cover attorney fees.

Then the house is either sold in a “judicial sale” or by “power of sale.” A judicial sale is settled in court whereas a “power of sale” is sold or auctioned by the mortgage holder. Most states have a similar process but California usually settles its foreclosures out of court.

There is a one year redemption period to allow the owner to reclaim the property. But they will have to pay off the mortgage in whole, including interest, late fees, and attorney fees. And in case the holder of the property paid taxes and insurance, the owner will have to repay these as well.

For a person who does not have savings or a source of income (because they had to have gotten themselves into this position somehow), this seems a nearly impossible task.

The Consumer Credit Counseling Service of Orange County, a non-profit debt counseling service, recommends several options for someone about to go into foreclosure:

• Make and appointment with a housing counselor
• Borrow money from loved ones
• Contact the lender to work out a deal
• Refinance your current loan
• Sell your house

I was surprised about the last option. I had not known that selling could be considered when unpaid debt is involved. But apparently it can be. The owner just might have to settle for a low price for the sake of time.

The problem with this economic recession is that too many people have to foreclose on their homes. This is mainly due to one thing: bad loans. Lending companies somehow decided to lend money to unworthy candidates who were not able to pay the money back. The reasons why this happened are hotly debated and very politicized and best saved for another blog entry.

Laura Woods

March 7, 2009 at 12:27 AM  
Anonymous Cheri Robinson Esq. said...

The one thing that you did not mention in the list of things to stop a foreclosure is the most important. GO SEE A LAWYER. You have alrady identified this as a legal process by which the lender recoups the property. Why is it that homeowners are directed to credit counseling? This is a LEGAL PROCEEDING!!! GO SEE A LAWYER!!!

March 8, 2009 at 7:42 AM  

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