More than a million homes have been lost to foreclosure in the last two years. And according to data from Mortgage Bankers Association, banks are in the process of foreclosing on an estimated 1.5 million more.
The impact of the mortgage crisis has been obvious in both the worldwide credit crunch and the recent presidential campaign. But the specific personal costs of home loss have been less evident, at least to those not paying them.
Not surprisingly, the forced loss of a home — the place where many of the memories that define a life and a family are made — is deeply traumatic, according to Dr. Robert Gifford, an environmental psychologist at the University of Victoria, Canada. This is true, he said, even when the loss is due in part to a homeowner’s own financial mismanagement.
“When you choose to move, of course you have to pack up and move, but you’ve probably chosen a better job, a better place, there’s an upward trajectory to your life.” Gifford said. “When someone tells you you must leave,” he continued, it undermines “a key part of well-being: perceived control over your life.”
And given that “the home is the center of the psychological universe,” Gifford added, “when people lose it, it’s like their planet blew up.”
Dr. Rosalind Dorlen, a clinical psychologist in Summit, N.J., whose patients include many Wall Street workers, sees the home as a potent symbol of one’s place in the social universe, of “how you see yourself and how you want to be portrayed in the world.” Losing that symbol can produce depression and a great sense of anxiety, she said.
For those with few financial resources, finding a new place to live can also be challenging.
Forty-four percent of employees live paycheck to paycheck, according to a survey conducted by MetLife in late 2007, and 48 percent of American households have less than $5,000 in liquid assets according to Edward Wolff, an economist specializing in the study of poverty and income distribution at New York University. When people in such straitened circumstances can’t keep up with mortgage payments, the resulting damage to credit ratings can make it nearly impossible to qualify for a lease. These families often find themselves at the mercy of friends or relatives, who may or may not be able to take them in.
Some people are taking refuge in tent cities and parking lot communities across the country that have cropped up or expanded recently, from Santa Barbara, Calif., to Athens, Ga. Compared to them, the families profiled here are lucky. They have found accommodations, at least for now. But all are dealing with the emotional tumult of losing a home, and the discomfort and uncertainty that accompany it.
More Top Picks Best Intel Core Laptops
Relieved to be renting
Although they lost their three-story tract house in Newbury Park, Calif., to foreclosure in May, Mike and Kristin Bertrand, both 36, describe themselves as lucky. For nearly a year before it happened, they lived in near-constant panic. Mike Bertrand, an Internet marketer, had been laid off twice in two years, and though he found new jobs relatively quickly, each one paid less than the last. When their income had seemed stable, they had twice refinanced both a first and a second mortgage, increasing their debt from $370,000 to $668,000, and their monthly payments to $4,000 a month. They spent every spare minute, they said, searching for ways to increase their income and trying to persuade their lender to put them on a more manageable payment plan.
Then, in February, Mike Bertrand lost his most recent job. He began feeling desperate and even contemplated suicide. But after an investor who had considered buying their house offered to rent them another one in nearby Thousand Oaks, Mike Bertrand said he felt renewed. The family moved there in May after selling most of their belongings online and at garage sales.
“I was just so happy to get away and get this behind me,” he said. “When we signed the lease for the rental and I was writing out the check, I told the landlord, you have no idea how good this feels,” Mike Bertrand said. He said it was a relief to know “no one’s going to be kicking me out. It was a huge weight lifted off our shoulders.”
Kristin Bertrand felt the same way, although some days she is consumed by guilt over the foreclosure. “I made a commitment to make the payments and all of a sudden, no matter how hard I tried, no matter what we did, we couldn’t. Then to look at your kids and say: ‘You know what? Mom and Dad failed.’ It’s overwhelming.”
To help them deal with their emotions, the couple in April started Moving Forward, a foreclosure support group (wearemovingforward.org), which has attracted as many as 40 people to its meetings every other week and thousands of visitors from around the country to its Web site.
In April Mike Bertrand began focusing full time on the e-commerce consulting he had done occasionally in the past, and for the last few months the family has comfortably managed the $2,100 monthly rent.
More recently, however, Mike Bertrand found out that his current consulting contract would not be renewed, and some of the feelings of anxiety have returned. “I think there’s part of us that still thinks we could lose this at any time, too,” Kristin Bertrand said.
Taking in tenants to get by
It has been several years, and several real estate transactions, since Kianoush Etemadi, 57, and her daughter, Paris, 16, had a home of their own. Etemadi, who grew up in Iran, owned a house in Rockville, Md., until 2005, but sold it after deciding she could save money by moving into the Bethesda home of her younger sister, Azar.
In 2006, with the Bethesda real estate market booming, the sisters decided to put an addition on that house, an 800-square-foot rambler with a kitchenette, for which Azar took out a $200,000 loan; during construction, the three would live nearby in yet another house, which Etemadi bought the same year, planning to flip it, for $505,000 with no money down.
By 2007, however, the sisters were overextended and the market had slowed. They did not make payments for three months on Azar’s mortgage (they say they were told that payments were not required during the construction process), and the bank started threatening foreclosure.
Kianoush, who had been struggling to keep up with the $4,700 mortgage payments for the new, temporary house, now had to begin helping her sister with her payments — especially after Azar was laid off from her job working with special-needs children. Kianoush began working as a real estate agent. They tried for six months to sell either house, but couldn’t get even a single offer. In August, the family moved back to Azar’s house, and Kianoush focused on saving it from foreclosure. “I used my savings, I got help from friends, I sold all my jewelry,” she said.
Now, she and her daughter live not only with Azar, who is 51, but with three roommates that they took in to cover costs. The close quarters are particularly hard on Paris, who likes to have friends over. “When I remind her that somebody is sleeping in the other room or in the basement, she gets upset,” Kianoush Etemadi said. “She says, This is my house! This is our house! Why shouldn’t I have fun on Friday night?”
Kianoush Etemadi, who took a second job as a seamstress at Bloomingdale’s last December, knows she is unlikely to have her own home again. And she doesn’t hide this fact from Paris. “She always tells me, Mommy, when we can have our own place? I tell her, look, I don’t have any education and I don’t have very good job to have my own place. It’s better you try to go to college and get a better education and try to have better job than I do and then you can have your own place. That’s all I can tell her.”