Get to know your neighbors: Dish that mortgage dirt
This morning a group of neighbors were huddled at the corner, gossiping over the sale of a house on the next street for $150,000, a price not seen in this neighborhood for at least 20 years.
The son of the owner who died last winter sold it -- probably sight unseen -- to an investor who, at least in the good old days, would have slapped on a little paint, mulched the flower beds and made a fortune.
But I live only a few miles from the Detroit city line, where there are more foreclosures than almost anywhere in the country, so walloping profits on real estate are hard to come by.
There's only been one foreclosure on my street. It was a beautiful property when it first sold in 2005 at a price that was $100,000 higher than any other property on the block had ever gone for. The buyers who replaced long-time residents and seemed to have more money than sense, used to pull their sofa out of the living room onto the front lawn so they'd have some place to sit while they smoked the hookah, a habit that appalled the rest of us.
After a few months, the hookah smokers disappeared overnight and the property was back on the market. The subsequent buyer was a football-player-sized single man, who drove a top-of-the-line white Mercedes Benz. He let the weeds engulf the shrubbery and the Canada geese poop in the swimming pool.
His tenancy was short-lived. Since he disappeared, the place has gone down hill faster.
The neighbor across the street calls the city daily and due to her persistence, a crew has showed up occasionally to mow the front lawn. The back yard is a jungle of weeds and fallen tree limbs. The pool cracked and most of the water has leaked out and even the Canadas have jumped ship.
The attorney who lives next door to me says we have to leave the property alone so we don't incur any liability, so we just avert our eyes and hope Countrywide Financial, the deadbeat mortgage lender that owns the property, will find a responsible buyer.
Will the federal housing bailout help? Possible, although Fannie Mae and Freddie Mac were in the news again this morning reiterating their reluctance to buy mortgage-backed securities. If these quasi-governmental banks don't do what they were formed to do, then mortgage loans are going to be even harder to get and more expensive, especially for property that appraises poorly.
About one-third of all U.S. homeowners don't have a mortgage at all -- including, I suspect, almost everybody on my block. If you don't have a mortgage, the declining value of your property may make you feel less secure, but it doesn't change much. It just makes standing on the corner and complaining seem like a good thing to do.