Weigh In: The Dip

Above: your author's house, as photographed on July 30, 2006, the day before his family moved in.  Take one last look - it's probably going to belong to the bank soon enough.

Interest works night and day in fair weather and in foul. It gnaws at a man's substance with invisible teeth.
- Henry Ward Beecher

Funny etymology for the word “dip” in the context in which I am using it: today's miscreant youth coined the term “dip” as a way to describe running from the po-po: to dip is to flee law enforcement. Eventually it took on wider meaning, as in simply “to leave” or “to walk away.” People my age used to say “split.”

I like this term. It's fresh and youthful, my 20 year old likes it, and I can foresee a lot of dipping happening. Right here. In my neighborhood. People left and right are dipping every day.

On their mortgages.

While this isn't the epidemic it's thought to be, it is increasingly common, and, it turns out,for good and bad reasons. What good reasons, you might ask? Isn't it a borrower's responsibility to pay, and isn't dipping on a mortgage an ethical issue?

Well, yes and no. It's an ethical issue if you can afford your mortgage and other responsibilities, one might say, but if you simply cannot do it it's just a simple little tap dance into bankruptcy. I mean, you signed the papers, you take the heat right? Still, I am finding boards and mortgage/financial help groups (here's an example) where incensed buyers, their homes worth 40% less than they were when bought, are crying “foul”  t the bankers who shoved crap paper into their hands and said “sign it, you'll LOVE being a homeowner!” amid signs of a market that was destined to fail. “Fat-cat bankers can have my crappy house – I'm renting  forever!” they say.

The consensus – ever growing – seems to be: “I feel absolutely NO remorse for handing my house back to a lender who sold garbage loans on homes they should have known would eventually be worth nothing, and
no, I don't care if they 'didn't know it was coming', because they were paid hundreds of millions of dollars to know – it's their fault.”

But what about the guy who made $37,000 a year as a school janitor, had a wife and 6 kids, and signed a contract for a $450,000 home in Reseda, California? Isn't it his fault? He obviously couldn't afford it...or could he? Or was he lured by predatory lenders? Or was he trying to bilk the system?

What about the house flipper in Detroit who had 7-8 mortgages out there on ratted-up $125,000 properties he intended to flip for $450,000? Was he taking advantage of a strong market that failed and left him in trouble, or was he just being greedy and taking advantage of the bank's insanely stupid mortgage  equirements, then found himself caught out?

Ask the buyers and they'll tell you it was the banks' stupidity and greed. Ask the banks and they'll tell you it was the buyers' stupidity and greed. Either way, buyers are gagging on debt they can no longer afford to satisfy, and they have no options left but to dip, since bailouts seem to be intended as bonuses for failed executives, not simple, workaday scumbags like average homeowners.

Dipping. Seems there are some gray areas.

What's not a gray area: a fairly large subset of homeowners who were more cautious and careful buyers, who shopped in late 2005 and early 2006 for sensible homes at sensible prices, gained a fixed-rate, conforming loan well within their ability to pay, and began the process of home ownership in a home they could easily afford...only to have the real estate market AND the job market fail right under their feet, leaving them stuck with a mortgage for a house worth far less than they own and either unemployed or under-employed meaning: pay cut) and unable to pay that mortgage.

Now factor in the mixed bag of rules, regulations, and remedies available for buyers who have to dip on their mortgage: no two lenders are alike, and some try to be helpful by offering reduced rates and extended terms, but many lenders could care less about the buyer's plight and simply threaten, then force, foreclosure and out you go.

And so: sometimes dipping is – to put a fine point on it – the best business decision a homeowner can make.

It should be noted that dipping on a mortgage is NOT always that easy – you still have a valid contract with your mortgage lender, and walking out can leave you in touchy legal territory: the mortgage lender can come after you with guns blazing for the cash difference between what they make on an auction for your property and the remainder of your loan, plus fees, legal and otherwise. Last year that wasn't too bad an option, but right now, with some $400,000 homes in Las Vegas selling slowly at $185,000, that adds up to a pretty big lien.

My take? Hmm. Look at that description I wrote up above of the “careful buyer.” I was trying to describe myself.

Back in late 2005 when I bought the home I am in now, there was plenty of talk about a “housing bubble” that was “going to burst” some day. I knew it was coming. Indications were that a year or so after my purchase housing prices would begin to fall, there would be a period of adjustment, then prices would recover, although perhaps a little slowly. Meanwhile, the year or so of increase in price after I signed my contract would make up for some of that loss, especially since my house was a new build, and besides, we wouldn't have a mortgage payment for seven months, so out payments would start on a house worth a little more than we paid for it. Even with a minor “earnest money” down payment which left us technically 100% financed, I could easily see useable equity in my home in 2-3 years or so, and since I qualified for $350,000 more than I spent I wasn't house-poor. Best of all: the area I bought in had never seen a “bubble” like Detroit, Southern California, or Las Vegas, so there would probably be no significant drop in prices. No worries. Home ownership makes it worth it, and the risk wasn't that high.

Who told me this? My mortgage banker. My realtor. The builder. Everyone who was on the other side of the sales fence, who else? Besides, when we signed our paperwork in February of 2006, the news still hadn't changed, and non-bankers like me were assured all would be OK.

Ah, and here we are three and a half years later, living the Reagan Dream: awash in all that money trickling down from big business and especially the bankers, and every day is like opening another treasure chest filled with success and cash in my middle-class life. Since I bought my home it has plummeted 22% in value, and I was laid off and had to take a new job...earning 20% less than I was after 4 months of unemployment. Layoffs happen, but it was particularly ironic that I was working for a bank that bought a mortgage company with over $100MM in bad loans, so they got gobbled up by another bank with less problems who immediately set about cutting heads, including mine. That also meant the area I live in began to hemorrhage  jobs, since the bank I worked for was the second largest employer in the region. Bonus: the CEO was paid $23MM in bonuses to fail in so spectacular a fashion. Trickle down, Ronnie said, trickle down...

Now I spend from savings accounts every month to make ends meet, and those savings are almost gone. The job market is slow and still low-paying, and I see no alternative in my immediate future: if my mortgage company opts not to help, I will dip. And I won't feel bad at all.

Before I sum up: to add insult to these injuries are reports – as numerous now as they were sparse when I signed my contract – that the second wave of foreclosures, an even bigger wave than the first, is yet to come, and the average half-million dollar home bought in 2007 and worth about $300K now will be worth $175K in 2011. Isn't that nice? I paid a heck of a lot less that half a million for my home, but why, I wonder, do I continue to drop that payment into a mortgage lender's pocket every month on a home that will be worth 50-60% or less than I paid for it in a few years? Why am I funding an obvious loser? I wonder if I should dip simply because I may not live long enough to see real equity in this place.

Saddest thing of all: I love this house. My wife and I picked it. We picked the tile, the carpets, the appliances, the siding, the color of shingles on the roof. I was here every day while they built it, on my lunch hour, walking through the sawdust and workers and taking thousand of pictures. This was my house. I do not relish the thoughts of the day we will walk away from it.

Your turn to weigh in – to dip or not to dip: is this a moral and ethical thing? Is it a simple business decision? Would you dip even if you could pay your mortgage?

STC =^oo^=

Weigh In: Beauty Promises Everything, Gives Nothing.

Beauty is not in the face; beauty is a light in the heart.
~Kahlil Gibran

NOTE: I have re-written several elements of this article, due to some historical and factual inaccuracies: I reported Ms. Prejean was a runner-up: that happened in 2005, and the pageant in question, in 2009, she won it, then was dethroned for being a snotty princess and not doing her job. It all works out, I think, but I apologize - it's on me to do better research.

Hard not to know who Carrie Prejean is. The prickly blonde Miss California contestant got body slammed by Perez Hilton in the Q/A round by his interestingly placed question about gay marriage, which of course she had to answer truthfully, and damn her if she didn't do just that. She won the competition anyway, pissed off Donald Trump, the owner of the Pageant, by spending more time at Fox News defending her gay marriage answer than at shopping malls and other settings doing what pageant winners do, which is...look pretty and smile and wave at people and say something about fuzzy puppies and world peace, I guess. Anyway, he fired her, and Ms. Prejean has become the dictionary definition of the word “polarized viewpoints” to those who would consider her at all and a minor celebrity in the mix. Seems if she is known, it's as either heroine or whore. Her answer about gay marriage alone made her a ton of fans and enemies both, but that was barely the start.

I say Hilton's question was interestingly placed, by the way, because it seems the pageant rulebook warns contestants against offering religious viewpoints in their answers, and a question about gay marriage is bound to bring our a few verses in the contestants. So why ask? Ah, la. It certainly made for a long run of other...interestingness, as well. A little like instructing a student not to speak of Evolution and then asking “what are your views of Darwin's 'Origin of the Species'?”

Dirtypillows. We heard all about the gratis boobies. Those shapely orbs of womanly pulchritude were, it seems, not hers, nor did she pay for them: the pageant did. Word got out and the noise storm started – what kind of two-faced Christian slut gets a boob job? How can she claim to be a Christian? This is an outrage!

Nah. That all died down right quick – plenty of Christian women head to Boobs-R-Us to buy new and improved ta-tas, see. Boobs, it should be remembered, are really neato-cool. Bible thumping babes can have them too. Why not?

Dirty Pictues. Then we heard about “The Pictures.” Semi-nude. Beach shots, very well done with nicely balanced lighting, I might add. Obviously taken before Trump footed the bill for the implants, I might also add. Took roughly .004 attoseconds for them to circle the entire goddamn universe via Perez's TMZ site, accompanied by all the attendant hullaballoo and blend of support and outrage and dust that many felt might take a bit of time to settle. I mean, for the love of all that's holy and pure and American – what kind of wholesome church-attending young lady would pose for such filth?

Um, I dunno. Lots of them? I mean, lets face it – Christian women, I assume, can look just as good naked as heathen women, and while I don't agree with the religious side of their world I presume in all other ways they are functional humans with all the proper parts and pieces and plenty of intellectual/emotional distraction as all us heathens. I mean, mommy and daddy Christians do the church-sanctioned version of the wango tango to make little baby Christians, right?

All this was shaping up nicely for America's favorite Polarized Sexual Object – book deal, plenty of airtime on Fox News, tons of support from conservatives everywhere – I mean, what's she done that's so bad, after all? She's just a good girl who made a few bad choices, trying to better herself, right? Book deal in the hopper, Ms. Prejean is basking in the cat bird seat for a bright future.

Amid all this, after she got whacked she opted to sue the Miss California pageant for pretty much everything wrong that's ever happened to her, from hangnails to sleep loss, never mind the nice titties they bought her. She was seeking a million bucks, chicken feed when you consider the amazing press Donald Trump's pageant organization has gotten from her for relatively cheap.

And I van only imagine the incredible – and entertaining – effects of the defense's top bit of evidence.

Dirty Movies. Oh, hell, it had to happen, right? Apparently there were some negotiations underway when The Pageant's legal team started up a little home movie. It was a girl, alone, evidently doing something sexual. Ms. Prejean reportedly said “that's disgusting” and denied that it was her depicted in the film, but when the camera panned up to her face it's said that “...it took about 15 seconds for Carrie to drop her $1 million dollar demand.” I bet.

Well, hell. I don't watch Fox, but I cannot imagine they had the lovely Ms. Prejean on last night detailing her masturbatory techniques. I read that her pastor said “everyone is a work in progress” which is certainly true. Plenty of people have made sex tapes, and plenty have used them to launch or bolster their careers, Paris Hilton and Pamela Anderson to name but two, but these people were not held up to the microscope of “decency” – you know, “no gay marriage” style decency – as Carrie Prejean.

I wonder if this might be enough to finally send this woman out of the spotlight and into a career in, I dunno, fast food, or maybe porn. A place where all she can say is “would you like to super size that?” or “oh my, I never met a guy with a name like Dick Hunglow before.”

So weigh in: most people find it hard to keep simple answers about this woman when discussing her. When she's praised, it's as if she's Joan of Ark, Mother Theresa, and Wonder Woman all in one. When she's not, she's a dirty lowdown whore of the worst order and not worthy of the sweat off a warthog's ass. I read that somewhere, Reddit, I think, I don't remember. Pretty gross. I like it.

Me? If I really reign it in and try to be as objective as possible I just think she's a snotty little overindulged shithead who's ambition and looks could launch a rocket, but her intelligence, basic decency and common sense are essentially missing. By “decency” I don't decry her free tits, the pretty pictures, or the probably-awful movie – c'mon people, I think we would be both stunned and possibly pleased to personally know how many others have done the same damn thing. I also don't mean “decency” in the vein of the original issue, her answer about gay marriage. Agree or disagree, I actually admired her public attempt of professional suicide when she stood her ground and said exactly what she meant to say, and I thought the look on Hilton's face in the reaction shot was worth the price, frankly. Anyway it's that whole “I may disagree with what you say but will defend to the death your right to say it” thing.

No, by decency I mean her flagrant, cheesy prostitution of whatever assets she has remaining to further herself at the expense of anyone and anything in her way; a waifish, once-prettier-but-fading Princess Bitch with a rusty wrecking ball for a mouth, elbowing her way through people and courtrooms and television for way, way longer than the 15 minutes she's barely good for and due, all the while holding herself to some better standard we all aren't privy to despite the painful truth that she's really just a mutt like all of us.

Just so.

Your thoughts?