Vicki Taylor

I work as a Realtor in Stockton, California, one of the top foreclosures cities in California. I grew up in Silicon Valley, where home values have skyrocketed beyond what m grandchildren, my children, or my husband and I can afford. Our family loves California, so we moved to California’s Central Valley. Many families like ours are happy here, but increasing numbers are suffering, trying to make ends meet and pay their mortgages.

So it has been distressing to me as a Realtor as well as a homeowner to try to help people in California’s Great Central Valley who are facing the difficult challenges of escalating monthly mortgage payments that they somehow weren’t prepared for, for whatever reasons. Certainly the rising cost of gas and food contributed to the problems in the Central Valley, as people here found it increasingly difficult to make the expensive commute to jobs in the Bay Area. Poor planning, greed, carelessness, naiveté, poor investment timing, tragic personal losses of jobs, health and marriages… all have contributed to homeowners’ distress.

I am sympathetic to homeowners in financial distress, but I’m also frustrated because even as a Realtor I can’t help ALL the homeowners who come to me for help. I can only help some of them. So this morning when I read the CNN Money article dated 2/6/08, I still found it SHOCKING that it could take CONSCIENTIOUS homeowners who choose to struggle to pay their mortgages LONGER to repair their credit than homeowners and investors who choose to WALK AWAY via the bankruptcy or foreclosure route! I thought what is wrong with our credit scoring system?!
If I understand correctly, the FICO scoring system will apparently OVERLY penalize homeowners for trying to pay their mortgages, if they are late or miss payments, MORE than they will penalize homeowners who completely fail to try to pay the mortgage at all?!
To me, this sounds distressingly similar to the worst aspects of the American financial welfare system, where it often seems that honest people who declare all their income and assets, and request short term financial assistance (”welfare”), may be PENALIZED for their honesty, while dishonest people who misstate the facts (”lie”) about their cash-under-the-table income and hidden assets may be financially REWARDED.

It seems neither FICO scoring systems nor bureaucratic welfare systems that can deal with such basic issues as honesty and people’s conscientious efforts to do the right thing: i.e., struggle to make payments to keep one’s home, or tell the truth about one’s income and assets.

Of course homes were never intended to be ATMs. They are not liquid assets. So it does distress me to see people pull money out of their homes to pay for cars, boats, education, consumer goods and vacations, and then when there is no more cash value or equity left - they blame the house! Our homes were never meant to pay for everything else we want in life.

It is distressing to watch so many people in so many places around the world pull too much money out of real estate, too fast! Effectively, people have killed the goose that laid the golden egg by killing (or perhaps temporarily stunning) the American housing market.

As a homeowner, parent, grandparent, AND A REALTOR, I know PEOPLE NEED SHELTER. We cannot all live under bridges. And most of us would rather own a home than rent one, if it is at all possible. Personal residences are generally a wise investment and foundational in a diversified investment portfolio, but homeowners still need mortgages they can afford, because home values do fluctuate. But home is first and foremost shelter.

So I believe we all need to calm down, count our blessings, take care of our homes, whether we rent or own, and remember that not only do we all need shelter now, families will continue to need shelter in the future. They may find it wiser to go back to the basics of looking for a starter home first, rather than a McMansion, and then building their equity the old fashioned way, with a down payment or by paying down the principal over time. In the long run, as rents rise – and generally they do - as people get older, they will be glad to own their own homes, however modest they may be, and some day they may even celebrate, as some of my friends have, with a “Mortgage Paid Off! Party!”

Finally, I also believe that while God is making more people around the world as the population increases, God is not making more land on this earth. So habitable land will continue to be rare. What is rare and desirable will increase in value. So in the long run, investing in a home and land for one’s family will provide much needed shelter, and will almost always be a good investment and a wise use of one’s resources.

Vicki Taylor, Prudential CA Realtor - Wed Feb 6 2008, 09:36