Economics

Seems like every time you turn around there's another hard-luck story that you're gonna hear…

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… and today's comes from The New York Times, which describes why you should not take financial advice from The New York Times. Our heroine is 63-year-old laid-off office assistant Eileen Ulery, who demands in the name of all that's sacred that her mortgage lenders (Bank of American by way of Countrywide) haircut the $143,000 she owes them.

Thrifty Americans don't just live in their homes: They use their homes to pay for lunch.

What supposedly makes Ulery the "face of the latest wave of troubled American homeowners" is that she wasn't just some arrogant house-flipper. The Times goes to great lengths to establish her Yankee frugality. (Do they have Yankee frugality in Arizona?) She visits yard sales. She has a "round face" and "staccato laugh." She drinks $6 screwtop merlot -- a mark of thrift in the eyes of the apparently Fred Franzia-hating Paper of Record. She "tracks her monthly expenses on a color-coded spreadsheet." (Does she dot the i in "debit" with a frowny face?). And the clean living doesn't end there:

Far from being one of those who used easy-money loans to speculate on homes proliferating across the desert soil of greater Phoenix, she has lived in the same modest, stucco-sided condo in suburban Mesa for a dozen years. She bought the two-bedroom home in 1997 for $77,500.

But somehow she now owes $143,000 on the dump, which after ballooning above $200,000, now assesses around $122,000. Where did the money go?

Like tens of millions of other American homeowners, she added to her mortgage balance as the value of her condo swelled, at one point exceeding $200,000. She refinanced to pay off some credit cards and settle into a 30-year, fixed-rate loan. Later, she took out a home equity line of credit to buy a new Hyundai. She refinanced again in 2007, borrowing $20,000, mostly for a new roof.

I think we need to see one of those color-coded spread sheets. Subtracting the current $143,000 mortgage from the closing price of $77,500, I get $65,000. According to HyundaiUSA.com, the MSRP for the most expensive Hyundai in the lot, the four-door Genesis, is a cool $32,250. Even if we assume the humble-as-Uriah Heep Ms. Ulery bought that top-line model, and we add that to the cost of the roof, there's still $13,250 unaccounted for. And I say it all went right up Ulery's nose!

I hope Ulery gets out of her predicament, but it is offensive to the proud tradition of true cheapskate-hood to see Times reporter Peter S. Goodman build this person up as a model of thrift who became a victim of circumstance. (Or not even that: Thanks to the inevitable "stress-related illness," Ulery has chosen not to "pursue another paycheck.") This is a protagonist who, after all her bargain-hunting and spreasheeting, looks in the mirror and realizes the true villain is the bank that lent her all that money when she asked for it:

As she sees it, the same banks that generated the mortgage crisis are now getting public money to fix it, while doing little more than seeking new fees.

"I don't think the government gets it," she said. "These are the same people you couldn't trust before."

Well, she's right about that last part; just not in the way she thinks.

I know there's nothing as inescapable as blogs that are indefatigably called "indispensable," but this link is courtesy of the truly indispensable Calculated Risk, which nicely explains the madness of leveraging your most valuable asset to pay your most insignificant debts -- which of course is the real story the Grey Lady buried here.