The harsh reality and aftermath of foreclosure: personal stories of financial loss from Foreclosure Alley.“You know you’re in trouble when the lawn is brown and the pool is green.”
Something making the rounds of the web is a haunting, somewhat gloomy video on foreclosures — the scenes of which show some surprising, unexpected details. We hear about the foreclosure statistics and the stories in the news, mostly on a detached level. But as I find out more about the personal stories of people whose lives have been greatly upturned by the real estate bust and what seems very much like an economic recession borne of the financial crisis we’ve been hit with, I can’t help but feel sadness and dismay for the things that have transpired.
Despite all the talk that we should just let the market do what it will do, it doesn’t change the fact that financial loss has wrecked people’s lives significantly. The news is littered with many such stories, including this one about a family with a toddler who is forced to live in a tent, and a desperate 90 year old woman who shot herself while in the process of being evicted from her foreclosed home.
For many, a home to live in has become harder to find, as people with damaged credit are finding it harder to find a place to rent. Landlords are becoming much stricter about whom they sign up as tenants, no doubt, due to difficulties with previous renters.
Remember the infamous poster boy for foreclosure and real estate decline: Casey Serin? From his example, we see that when things go wrong financially, it can escalate quickly and significantly. Once you make a few financial mistakes, it can be one short step from missed payments to homelessness: your credit gets damaged, your debt load spirals and before long, you’re evicted.
The Story Of Foreclosure Alley: Main Points
What struck me most about this video about foreclosed homes in Southern California (in a suburban development of large, spacious homes now dubbed as “Foreclosure Alley”) were these facts:
1. One in two homes sold last month was a home that was previously repossessed. 700 families lose their homes to foreclosure everyday.
2. The typical foreclosed home is a newer house in a newer neighborhood that was purchased over the last 5 years.
3. Many families that abandon their homes no longer care about what they leave behind. You’ll find so much stuff in these homes when the cleaning crew comes by. All the items they come across — even brand new large, flat-screen television sets, appliances, computers, printers and other electronic gadgets will be thrown out to a landfill! Ironically, the cleaners claim that it takes too much time and money to donate these items to charity. Some surprising materials that people leave behind: photo albums, pink slips for vehicles, birth certificates and other important documents, and in one case, even an urn carrying remains of a loved one. These latter items are eventually returned to their owners.
4. People leave behind many valuable material possessions during a foreclosure because they may no longer be able to pay for them (as they try to walk away from debt and financial obligations) or because they are at a low emotional point and just want to “get things over with”. It’s a point of despair and abandonment when they leave their foreclosed home still stuffed to the brim with their former lives.
5. The business of “trashing” is done by a cleaning company that specializes in cleaning out foreclosed homes. Such companies are doing very well at this time, with business currently booming.
6. Part of fixing up a foreclosed home (other than cleaning it out) is to spray paint a dead lawn to get it ready for resale. It’s done for instant curb appeal.
7. How far have prices gone down? Original prices for these foreclosed homes just a few short years ago: $399,000. Today, they’re worth $180,000.
My Guidelines For Avoiding Financial Potholes
This video made me conjure a few thoughts on how to avoid making financial missteps of this caliber. I try to live conservatively, and embrace a few rules of my own. I use these tenets as a guide for myself and continually work to try to stay true to them:
1. Don’t take anything for granted. Just because things are going well doesn’t mean they’ll go on indefinitely. I try to keep the mindset that all things should be cared for and handled with appreciation, for who knows how long these items will remain available to us? Part of thinking this way allows me to think defensively about our financial future.
2. Make hay while the sun shines. As the well-worn saying goes: be prepared for that rainy day. Preparation is key. When things are going well, you have the resources to prepare for tougher economic times, so take advantage of the “good times” to build a financial cushion as best as you can.
3. Avoid taking too much risk. As we build our net worth, I often feel that it’s a process of taking one step forward and two steps back. In my opinion (and I’m sure many of you will agree), it’s much easier to lose money than it is to gain it. So be wary and careful about the steps you take when it comes to managing your money. Know how to manage risk and avoid making overly aggressive financial moves. And if you’re going to borrow money, work on protecting your credit and stay conservative with your debt load. In my case, I try to limit our borrowing by only taking on good debt as much as possible.
4. Live within your means. This principle has been echoed far and wide in the financial blogosphere and in many financial articles I’ve read. But it never gets old. Make it a goal to keep your expenses lower than your income.
Copyright © 2008 The Digerati Life. All Rights Reserved.
{ 23 comments… read them below or add one }
Yeah it’s sad story but that’s how life is sometimes, you make you bets and sometimes they come through, other times they don’t. I feel for them but sometimes life isn’t fair. 🙁
Yes, it is hard to hear, but life isn’t fair, I agree. As we grow older, and get past more experiences (good and bad), this is something we’ll realize more and more. I reflect on these stories and I always come back to the thought that “we all have our own crosses to bear”. To some, their problems may be financial in nature, and to others, the monkeys on their backs could be something else — difficult relationships or family arrangements, health issues, or other forms of hardship.
And not to be a downer, but sometimes, we can only prepare so much, and life still deals us a heavy blow. There are things we can and cannot control and it is always my hope that when stuff happens that I can’t really prepare for, that I’ll still be ready to work through it and accept it (at least at some point).
sad, but that’s the reality. anyway, i’m learning a lot from your site. good one!
It is really very bad when we lose our money. But this is life: sometimes you earn less and lose much.
I saw this video yesterday. What got me was that the one couple who was still in the culdesac that had all those foreclosures bought their house because their accountant recommended it for the “tax right off.” I bet they are wishing they had rented for a few more years after this mess.
Jack,
Yes, that couple bought at the peak — when those new houses cost around $400,000. They say that the homes now in foreclosure or for sale are valued at $180,000, less than half of what it used to be!
That’s just stunning — a more than 50% drop in a few years? And these homes are practically brand new. It’ll take them forever to get those home values shored back to where it used to stand (they’d have to double in price), given that historically, home values don’t rise up so dramatically. They’re facing a real loss, unfortunately.
I haven’t watch the foreclosure video, but in reading the post, Point #3 (Many families that abandon their homes no longer care about what they leave behind.) & 4 completely stands out to me.
I was on vacation in the Eastern Sierra’s a few months ago. Camping near Bridgeport, on HWY395, roughly the mid-point between HWY120 and HWY132. About 20 miles southeast of Bridgeport, there is an old abandoned mining (ghost) town, which is now a State Park – Bodie State Park. The town flourished for a few years, and for a a very short time in its heyday (1879) had a population around 10,000…but the boom didn’t last and when people left, they literally left EVERYTHING – food, clothes, furniture, cars, you name it it’s there – people literally walked out – 13 miles to HWY395 and beyond to whatever town they stopped at.
I’m reading this post & I’m seeing the town of Bodie and what’s left. Item #3 & 4 in your post are eerily similar to what people did when they left Bodie. And I’m sure what many people did during the Great Depression – they just up & left. They were in just utter despair, they didn’t want to take anything. Plus it was cheaper to buy supplies in the next town than to hassle with packing.
Thankfully the family who purchased most of the land as people abandoned it hired an armed guard to protect the town for many, many years until they finally realized Bodie was never going to return to what it used to be and sold the town to the State Park system. What’s left is possibly one of the most preserved ‘ghost’ towns one will ever encounter. It’s odd to even think of it as a ghost town because it is so well preserved.
I’m glad to read what you said about people’s lives. I was thinking about this other day. It’s easy to say “tough luck, they made a bad choice, let ’em suffer”, when we are sitting fairly comfortably, confident with our better choices. A lot of people may have been foolish but that’s no reason to damn them to homelessness, or worse. Also, it’s one thing to be foreclosed upon when you’re 25 and single, quite another when you are 45 with a family. It’s a tough situation and my heart goes out to everyone who is struggling, regardless of the reason.
On another note, is Lisa Ling the correspondent for everyone? I see her stories everywhere!
@ SVB – It is my understanding too that some people are simply walking away from such staggering losses in home value rather make their payments (which they can still afford by the way). I think they think that dealing with the massive blow to their credit is worth it compared to losing $200,000+ in equity.
I have one cousin who is doing exactly that. I’m not so sure I would feel right doing it myself (my word is my bond), but I certainly can understand why some people think it is a good idea!
I think this whole process is painful. At the same time I hope people that come out of this have more financial responsibility in a similar way to people that lived through the great depression understand a little more about the importance of savings.
Zero sympathy here. It’s going to cost me money (taxes and more regulation) and I made all the right financial decisions concerning real estate, so it doesn’t bother me.
I definitely feel for these folks “Sentient Money”. You have to remember, hindsight is 20/20. Obviously, I don’t know your story but I would assume there are others like you who were jealous/envious when they saw the same people seemingly minting money with their home purchases a few years back. I don’t think it is justifiable to be envious and then spiteful over the same issue once the table is turned.
Wait. Some of these people are walking away from *equity loss*??? Not because they can’t afford the payments? Wow. What a slap in the face to the ones losing their homes because the payment went up. It’s a HOME, not a frigging retirement plan. I can’t buy a house at all and these idiots are throwing theirs away.
My lord. I almost forgot about Casey Serin. A long while ago, maybe two years ago, I read his story and felt bad for the kid. It’s no secret that he lied on apps, committed fruad, but he obviously wasn’t the sharpest tool in the shed. I looked at him having fallen for the whole flipping for profit schemes and making a few mistakes. So I advertised on his site for a month and couldn’t believe the hate mail that I got. heheheh It was so funny to me that people seemed to hate that kid so much that they devoted entire websites to him, forums to talking smack about him, and countless house composing emails to me about how I should expect to reside in various circles of Buffet Hell for supporting him.
It seems like most people have calmed down a bit, but it is still odd to me to see people complaining that the government is helping those close to foreclosure, when it obviously helps not to have foreclosures in your neighborhood. I mean, I’m sure that given the chance to be barely making their payments or to be getting help from the government so they don’t get foreclosed on, most people would rather eke on by.
Joe
read “An Unexpected Tale” at FinancialTales.com
So much to think about when you watch that video. When I first saw it, it just sort of tied everything together.
A big reminder not to get leveraged out. Unfortunately, the big pool of money that helped create this is complex and hard for people to understand.
How about a Casey Serin update? I’ve been wondering what happened to that guy. Something tells me that his old blog would not have anywhere the interest today that it once had.
@Paul,
I actually covered Casey Serin quite heavily when he was still very visible on the web and had a heavy internet presence.
Last I heard, he was working out some divorce proceedings or at least, got banished to a hotel room somewhere (by his ex?-wife). Please don’t quote me here as that was the last I heard of his story. He may have moved on to bigger and much better things!
No doubt, he’s working on more ventures, but that’s just pure speculation on my part. He seems very enterprising though as many have commented, he needed to learn the hard way that his get rich quick schemes weren’t going to get him far.
Wow, that video kind of gets to me. As long as I’ve been doing this (real estate and foreclosures), it doesn’t get any easier to see it happening to people.
Wow! This article presents some really great material to keep us all in check with our personal finances. These personal accounts, even though they are hard to hear, really hit hard with many people. Unfortunately, the truth of the matter is that many of us at least know of one person or are connected to someone who has reached a low and possibly have needed to foreclose. Tough times are ahead of us all during the economic downturn. The author’s personal steps to keep yourself in check that is listed in this article are great strategies to live by. There is hope out there for those who are struggling. I feel that most lenders are most likely willing to work with you are your current situation rather than not helping at all.
These stories are sad. It reminds me when I saw a two-month old getting pulled out of her home with her mom. The father came home to get them.
Its sad to see so many people suffering from this economic crisis. Having your home taken away from you is one of the worst things that happens to people. Day by day the numbers are increasing and I’m sure most people know who really is to blame……
I wanted to get into the foreclosure busniess and doing something related to this industry. I tried contacting banks and mortgage companies but never made any head way until I found a website where they explained the foreclosure cleaning business and the details of this opportunity. It really wound up working!
Arizona has been hit real hard. There is at least 5 homes on my street that have been foreclosed or is going to be foreclosed. Our loan is $205,000. The foreclosed house down the street sold for $81,000 last month. Bummer.
It is real easy to find foreclosures on the county web sites.