now realizes that it was a great deal for the bank, but not so much for his family. Once the mortgage payments ballooned and he lost his job, it was the kind of double blow that almost no family can survive. Somewhere in his heart, Michael knew that his family was doomed. Even so, he held out for as long as he could.
Ashley was now in high school and deeply engaged in her music, playing both the piano and the viola. Michael told me that when it was time to go to school in the mornings, “We did not need to wake her up, because she was so passionate about her instruments, she’d get up on her own.” Ashley was beginning to dream that she could pursue a music career; someday maybe she could play with a major symphony orchestra. Michael and Janet paid for extra music lessons for their daughter. “It was important to us to keep her encouraged and inspired,” Michael said. To make ends meet, they sold one of their two cars, as well as some of Janet’s jewelry. Michael even sold his wedding ring.
While they cut their expenses to the bone, their financial situation kept sliding downhill. Michael looked everywhere for work, taking anything anyone offered. They kept scrambling, but the numbers just wouldn’t add up.
Then the phone rang. Did Michael want to come back to DHL? The company was hiring back twelve people. That was twelve out of nine hundred former employees from his branch. Michael was sorry about the other people, but it felt good—very good—to be one of the chosen twelve.
The offer seemed like a godsend—a good job doing work he loved. And somewhere down deep, it felt like respect as well. It meant that someone like Michael who tried hard and did a great job would be rewarded for the extra energy he put into his work.
But the story turned out a little differently. This time DHL wasn’t offering him his old full-time job with benefits. This time he was offered part-time work, no guaranteed hours, no benefits.
Welcome to work—twenty-first century–style.
Yes, the job moved Michael from “unemployed” to “employed” on the government statistics. Yes, he had a paycheck. Yes, he was grateful.
But Michael didn’t fool himself. “I knew right away it wasn’t enough, because my mortgage was too much for me to pay. It was not enough to sustain myself and my family.” He shook his head. “It was just an unbearable situation.”
As Michael and Janet spiraled toward foreclosure, they desperately tried to work things out with the bank. With hindsight, Michael reflected on how the broker had persuaded him to take on the new mortgage: “I felt like I had been scammed.” At one point, he considered suing, but he backed away from the idea after he thought about how much money it would cost to hire a lawyer and how fast his home was slipping away.
Finally the bank moved in to foreclose on the family’s home. Michael described his growing depression: “I can remember myself many, many times looking out the window of the house in despair, praying, ‘What am I going to do?’”
And then this big, prayerful man—this strong man who had kept the gangs at bay, this determined man who had saved and scratched and purchased a home for his family—this man just gave up.
When Michael and Janet lost their home in foreclosure, their $17,000 down payment disappeared. Their credit rating was trashed. Their financial lives were destroyed.
Michael repeats the date his life changed like a mantra: 10/10/10. That’s the day the family moved out and Michael handed the keys over to the bank.
But for Michael, it still wasn’t over. He and Janet rented a place nearby. Their former home sat vacant, and every time Michael went to the grocery store or one of the local shops, he would pass the house. When it snowed, the snow just piled up. Every time he saw the place, he relived the failure. His house—his house—sat abandoned. So finally he went back to the house again, this time with a shovel, and removed the snow from the driveway and the front walk.
As winter gave way to spring and then to summer, Michael looked after the house and mowed the lawn. He checked on the robins. After he swept up around the place, he would talk with his old neighbors. Several of them had stored the family’s belongings, and when they had garage sales, they included Michael and Janet’s things and passed along the cash to the family.
Michael still keeps a picture of the door of his foreclosed home, with Ashley peeking through the window.
Month after month, Michael kept going by the house, thinking about the life he and his family had once built there. Shaking his head, he told me, “I just got this horrible pain in the pit of my stomach every time I went past it.”
How does Michael describe the 2008 crash? “It broke my heart.”
I CAN’T LOOK at photos of smiling mortgage company CEOs or read about the latest multimillion-dollar bonuses for Goldman Sachs partners without thinking of Michael and his beloved house with the robins in the hedges. The executives of the giant financial institutions figured they had invented gold. The formula was simple: first, make a fortune by tricking families into signing on to really lousy mortgages; next, make another fortune by bundling those mortgages together and selling them to unsuspecting pension funds and municipalities; and finally, when it all blows up, go to the government for a gigantic handout.
I guarantee that not one of those corporate executives who crashed the economy lost his home. It’s also a pretty safe bet that while Michael was shoveling snow or mowing the grass at a house he no longer owned, they had already moved on to their next big financial deal. And now those big banks and those same insiders are partying hard again. They don’t care about the Michaels of the world—they didn’t on 10/10/10, and they don’t now.
There’s another layer to the foreclosure story of black and Latino families around the country: discrimination. Ugly, nasty, vile discrimination.
What did mortgage discrimination against black and Latino families look like? Did mortgage brokers sit around and say, “Here are some really stinky mortgages—let’s push these off to black families”? Or did they think, “Here’s a Latino family, and they probably won’t notice if we just shovel some crazy fees and the highest possible prices on them”? Or did they tell each other, “Here’s zip code such-and-such, and we can sell a lot of garbage mortgages there,” and zip code such-and-such turned out to be a predominantly black or heavily Hispanic neighborhood?
I don’t know what happened in the back office, and the mortgage brokers aren’t talking. But I do know that regardless of what they were thinking, the impact was the same. Whether the brokers targeted black and Latino families or whether they just stumbled over them, they destroyed the lives of a lot of people.
As the eventual investigations showed, even when adjusted for credit ratings, African American and Latino families consistently got the worst of the worst in mortgage deals around. Countrywide, now a subsidiary of Bank of America, admitted that in just five years, it discriminated against two hundred thousand black and Latino families, systematically targeting them for higher-priced, more dangerous loans than it offered to white families with the same credit histories. And that was just one lender.
Mortgage discrimination often starts with redlining—avoiding zip codes where African American or Latino borrowers are more likely to live. For instance, people analyzing loan data say that the California-based OneWest Bank has shunned nonwhite mortgage borrowers for years. And in city after city, from Los Angeles and Chicago to Miami and New York, banks have paid millions of dollars in fines over discriminatory lending practices. The list is long and shameful.
Did Michael’s lender target him because he was black or because of where he lived or just because he was unlucky enough to get the next crappy loan Chase was pushing out to anyone who answered the phone? However it happened, once his mortgage payments started ratcheting up, there was no way Michael could keep that home. And