A Lesson Unlearned

In 1990, the year my only son was born, we were looking to buy a home that would satisfy the needs of a growing family. At the time we were renting a smallish two bedroom home that worked great when there were but three of us. But circumstances being what they were, we truly needed at least a third bedroom.

Farther down the street a home had fallen into foreclosure. It was on a heavily wooded lot with a big yard. There was no visible signs of distress from the outside so we got our real estate agent to get us inside. The inside was, to be polite, a bit more distressed.

There were numerous places where the drywall had been torn out and punched through. Carpet was stained and burned. Cabinet doors were broken and missing. Wood trim was gouged, broken, and much of it missing. Light fixtures? Several gone. I didn't take the time to venture into what I'm sure was a lovely garage or the bathrooms that I'm positive were in sparkling condition. The home may have represented a good buy under the circumstances, but with my skills more honed toward computers and eating authentic Mexican cuisine, I deemed it stood a better chance of proper resurrection with someone else cussing at trim that was cut about an inch too short.

When did the damage occur? Could it have occurred while the residents still lived in the home and held a sound mortgage? Certainly, it could have, but it is unlikely that people who had invested into their own property and were building equity in the property would suffer the effort of intentionally destroying their huge investment. Much more likely the damage to the home occurred after the home owners became temporary residents of a property that was soon to go back to the bank.

Several years later I faced a similar situation, this one a bit more personal.

In the summer of 1994, the season that is much celebrated by Michiganders as the one in which I returned to Michigan, my uncle was dying of cancer. I don't even remember where it started any longer, but when the spots on his liver grew and multiplied, he and his family began to make plans for what future remained.

My uncle owned a portion of what had been my Grandfather's farm, it's 200 acres having been divided up among his five children. On my uncle's portion stood the farmhouse that was built early in the 1900s. It was neither a beautiful nor lavish home, but it was structurally sound and could have, under different circumstances, harbored great country charm.

My uncle lived in Lansing and the home was a rental. He did not charge a lot but instead hoped that the property would at least pay its own taxes. It had been rented for a number of years to very good renters that eventually built their own home but, as fate would have it, as the cancer began to slowly kill him, the new renters, the final renters, would not be so good.

The personal circumstances of the final renters of the home are not completely known to me. I can tell you that the home was rent subsidized and that it quickly became an eyesore and in ill repair. Garbage was strewn about a never mowed yard. Dirty diapers began to appear in the driveway.

Things got so bad that finally the insurance agent absolutely refused to continue to provide liability insurance to my uncle on the property with the home in such condition. This insurance had to be in place to rent the home and my uncle desperately needed to get his affairs in order. Of course, when the eviction notice was sent out, things got worse, much worse. Oh, and rent payments stopped.

For several months the squatters waged a relentless war on the house. With my uncle one month from death they finally departed, leaving nothing of value, only their waste. Even the well pump had been removed--a theft that could not legally be attributed to the renters without proof.

I entered the home with my Father just a couple of days after the eviction and it makes me feel dirty to describe what I saw. The living room ceiling was covered with hundreds of dried fly bodies having been swatted and squished, their cemented carcasses creating a disturbing mural celebrating nothing more than defiance--a mosaic of filth. Walls were punched and gouged and emblazoned with graffiti. (The holes, my Dad opined, may have been created by rats that were trying to escape.) There had been no need, apparently, of garbage bags during those last few weeks of tenancy as the floors themselves had served a fine place to dump discarded food, wrappers, and diapers. The mystery of the missing garbage bags was solved when we peered into the basement. Dozens of overstuffed bags had been tossed down the stairs only to spill their contents on the floor where many had burst upon impact. Hundreds of soiled diapers, some of them split open as if they had been hurled in anger, lay on the concrete. Soiled diapers had found their way into the lawn, the driveway, every room, the basement, and the roof.

I touched nothing in the house. I showered immediately when I returned home.

In a perfect world these sorts of tales would never happen. But in truth, most people I know have at least one similar story to share.

Good renters can often be good home owners while some renters should not jump into home ownership. Good home owners can typically be good renters too, though without ownership many take little pride in where they live. Poor renters make shoddy homeowners and, by definition, are not the perfect folks to be renting the upstairs apartment to.

When mortgage companies took pride in their investments, when they knew that without exercising proper due diligence they might end up owning a damaged home in foreclosure, might lose money on the transaction, and knew that they couldn't make other good loans if their money was tied up propping up bad ones, these sorts of occurrences, though not exactly rare, were largely avoided. In 1990, in Coppell, Texas, someone had to stand front and center when a property went into foreclosure. That is what happened in most places.

The same was true in 1994 in Michigan when poorly investigated renters were given the keys to a rental home. The person that owned that home, in this case my dying uncle and his widow and his children, paid that heavy price.

Is there even a moral to this story, and if there is, does it in any way relate to the financial meltdown we see today where mortgage companies were goaded by busybody bureaucrats into making crappy loans to unqualified people without consequence of loss?

Could there possibly be something to be learned from this tragic mess?

Nope.