I saw this at Obscure Store, but it’s really pretty much a microcosm of what we’re all about to spend $700 billion unsuccessfully papering over.
Court and property records show that Polk took sole ownership of the home in 1995, when her husband, Robert, died. They had bought the 1,200-square-foot house in 1970 for $10,000. It was paid off in 1982.
In 1997, Polk took out a $21,000 mortgage; in 2001, she paid off the original loan with a $46,400 mortgage. She refinanced again in 2004, taking a 30-year mortgage for $45,620 from Countrywide Home Loans.
Later in the story, there’s a comment from neighbors about Polk complaining that her late husband’s pension has been eaten away by inflation. So we can kinda reconstruct things from the court records: When Polk was 79, possibly because she had money problems, she took out a mortgage and either invested or spent the proceeds. In 2001, when she was 83, someone at Countrywide convinced her to take on a loan more than twice the size. Then three years later there’s another loan — either to get out from under the increased payment of a re-indexed ARM, or to make some numbers for a fast talker at the local Countrywide office — and then three years after that the foreclosure starts.
In a kinder, gentler century, there used to be things called reverse mortgages, in which elderly people would trade the eventual title to their house for a stream of payments that lasted until they died or went into a nursing home. This kind of thing would have been perfect for Addie Polk. Nowadays it’s easier for the lender to hand out someone else’s money up front and then get a stream of payments coming back every month rather than a stream going out, with much less uncertainty about how long the stream will last. And they still end up getting title to the house.
(You see the same kind of thing with people who advertise to buy “structured settlements”, i.e. any kind of payout over time, for cash up front. The imputed interest rate is enormous, but it’s probably not as high as what you get charged by a payday lender or a credit-card company in full fee/penalty mode. So once one arm of the sleazy-finance industry has gotten you sucked in, it’s nice to know that another arm will come to bail you out…)
Update: I got comment spam on this from someone who claims to help people avoid being hauled into court for bad debts. I forgot about that arm of the industry.)