You Are the Vanishing Middle Class

by francine Hardaway on October 12, 2009

I began trying to refinance my home in Half Moon Bay on the day Obama announced the supposed homeowner retention program. At first I wanted to do it because I was having trouble making payments during the fall and winter financial crisis. I’m still trying to do it because I’m about $150,000 under water, which wipes out my second lender completely and makes it impossible to refinance the house when the ARM adjusts. I have no equity, but I like living in the house. Eventually, the ARM will adjust and I will be kicked out or the payments will get higher.

Because I own my own business, Aurora Loan Services asked me for three years of tax returns, three months of bank statements, a year-to-date P&L, a hardship letter, and a personal financial statement. I sent them all, at a cost of about $100 by the time I printed everything at Kinko’s and FedExed it to them. And then I had to turn around and do the same thing for Citibank which holds my home equity line, because the “mortgage” I was given is actually a melange of a mortgage and a HELOC (common in California avoid the very high rates for jumbo loans).

After about 60 days Aurora told me 1) I was not eligible for Obama’s program because I didn’t have an FHA loan, and 2) they couldn’t do anything for me.

After I heard the government had put more pressure on the lenders to restructure mortgages, I reapplied. Once again, I had to send all those documents, and once again I was told they couldn’t help me. Their “investors” had said no.

In April, I learned that if I could break even on paper I could refinance, so I sent everything again.  This time Aurora asked for my 2008 return, and I sent it. They told me they were now very busy trying to restructure loans, and to wait 90 days.

I heard nothing, so I called: they said they were missing my tax returns, proof of the contracts responsible for my income for the rest of the year, and three months of current bank statements. I sent those in July. I called in August, and they asked me whether I remembered that I had to wait 90 days.

Last week I emailed them. And guess what? They told me they needed copies of my 2008 tax return, a year-to-date P&L, those contracts again, and proof of which  bank deposits came from those contracts. You have no idea how hard it is to keep generating and updating these documents, even for me a person whose information is mostly in the cloud as mine is (not the contracts, which are sent to me by municipalities for signing as hard copies that I have to mail back).

It has been 9 months since I began trying for relief. So it’s only fitting that this afternoon I went to see Michael Moore’s “Capitalism: A Love Story.”

I urge you to see this film.

I am the first to agree that Michael Moore exaggerates. But in this movie, not so much. It is 100% true that Congress is owned by the financial institutions lock, stock and barrel.  I don’t care WHICH party you belong to–I’m an independent –you should be outraged by this movie if you are young, or have children, or work, or build businesses.  Because America has been, and continues to be, ruined for the rest of us by about a hundred people on “Wall Street” who have all the money and therefore run the government and your life. It’s everything from credit card fees to subprime mortgages, to Ponzi schemes, to health insurance reform.

In Phoenix, the real estate market has bottomed and the “investors” are coming in and beating first-time home buyers to foreclosed houses with all cash deals. The banks don’t care who they sell to; the people who want to take advantage of the tax credit can’t get in on the deals.

Because Moore shows a lot of archival footage in the movie, I got to think about how much American life has deteriorated for the middle class during the past 25 years. When I started my business in 1980, I made a great deal more money doing essentially the same thing, and I had a pretty good life. Twenty-five years later, my standard of living has totally deteriorated. I personify the vanishing middle class, and so do most of you. I wouldn’t ignore it if I were you. As my friend Fred says to me every Saturday night, “it’s a good thing we’re not going to be here to see what’s coming.”

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Niland Mortimer October 13, 2009 at 3:09 pm

Sadly, this rings so true. A few years ago, the Chinese government was quoted as saying “In China, the government owns the businesses, in the United States, business owns the government.”
The impossible and designed to discourage red tape you describe is exactly the same experience I had last year applying for financial aid at the $54,500 a year college my youngest son attends (and which I also attended as did my oldest son.) Colleges make it easy on themselves by outsourcing the entire process, but at the end of the day, after sending years worth of tax returns and net worth statements, etc. I was told, despite being unemployed, I earn too much money (from where?) to qualify. So I mortgage my own future by digging into IRA's and paying the bills from dwindling savings. I'm happy to do this for my son, but I will certainly think twice, if at all, the next time I get solicited by the Alumni Fund. I write this knowing that I am among the fortunate, that in the words of a guy I used to counsel in a drug treatment program in New York, “man, you got rich man's problems.” Add to this my growing sense of alarm and doom with the environmental issues we face [and by all means everyone should see The Age of Stupid] and my anxiety quotient goes from Worry to Despair to Heartsick for my children. We are all taught that we will/should live “better” lives than our parents, but I know I will never live the life of luxury and ease I did as a child. I am learning to redefine the basis of “better” and that is a blessing. I know my own sons have different measures of how they want to live their lives than I did. But will the world give them the chance?

hardaway October 13, 2009 at 5:48 pm

I know. Rich man's problems. But it is really hard to keep adjusting one's expectations down and down after being sold such a bill of goods by the country about upward mobility. I was a foster parent, and I think I sold my foster kids the same bill of goods.

crazieshamrock October 16, 2009 at 3:06 am

I'm having similar problems because I have a VA loan. I couldn't refinance because I am upside down. At this point I'm looking into short selling. I heard that could take month did even get an approval.

rogerlay October 22, 2009 at 10:00 am

You are so right!
I am trying to refinance my home in Phoenix. Long story short – I have had so much trouble over the past 90 days that I have decided to stop payments on my home until I get their attention, and then go for a mortgage modification. I don't know if this is the right thing to do, and I know this will hit my credit score, which has been over 750 for many years. But I have also taken a hit on my standard of living and my house is more than $125,000 upside down.
I am also a (former) member of the middle class who is now struggling. I just found out that my company is closing down and laying everyone off!
I haven't seen Michael Moore's movie yet – maybe I'll go see it today.
I'm pissed!

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