Episode 5 transcript of the United States of Debt for Slate Plus members.

America’s Foreclosure Crisis Is Still Seriously Affecting Us Today

America’s Foreclosure Crisis Is Still Seriously Affecting Us Today

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Nov. 10 2016 1:07 PM

The Collapse of the American Dream

Read a transcript of the United States of Debt’s fifth episode, which looks at aftermath of the foreclosure crisis.

ASAP's Tamara Zahaykevich with evict landlords, not people, sign. ASAP, Artists Studio Affordability Project, capped a day of protest in front of the Brooklyn Museum with an tongue-in-cheek installation of indoor furniture and signs decrying the displacement incurred by gentrification.
A protest in Brooklyn.

Pacific Press/Getty Images

To listen to Episode 5, visit the show page.

Helaine Olen Helaine Olen

Helaine Olen is a former columnist for Slate and co-author of The Index Card. She was the host of the Slate Academy series the United States of Debt.

The transcript below supplements the United States of Debt, a Slate Academy. To learn more and enroll, visit Slate.com/debt.

Janet: Lovely green yard, gorgeous plants and rhododendrons and American dream. No picket fence, but other than that, just a dream home.

Almost all Americans want to own a home of their own. It’s the American dream. But more than that, it’s a way for many of us to grow our savings and build a nest egg.

Or, maybe I should say it was a way to build a nest egg.

As we all know, this turned into a nightmare for millions of Americans.

“The walls came tumbling down on Wall Street Monday as two financial giants, Merrill Lynch and Lehman Brothers buckled under the real estate and credit crises.”
“People will lose their jobs, more people will lose their homes, people will have difficulty getting loans. We are now in historic territory…”
“Immediately, when the boards went up, all of our mortgages went under water. Our hopes, our dreams, our savings.”

The destruction of wealth over the past decade has been extraordinary.

In the wake of the housing crash and foreclosure crisis, home ownership has sunk to its lowest rate in 50 years. The recovery’s been uneven. Yes, a two bedroom teardown in the Silicon Valley is now easily worth seven figures. But numerous other regions are still wrestling with the fallout of the crisis. Many continue to own homes worth less than what they owe on them. And the situation is worse for African Americans, who were frequently targeted by unscrupulous lenders or brokers.

The result? Millions of people of Americans—regardless of class, race, or ethnicity—have found themselves in debt, with their credit destroyed. Their crime was buying or refinancing a home at the wrong time.

I’m Helaine Olen, and this is the United States of Debt. In this episode, we’ll discuss home ownership. How did owning a home of one’s own become the American dream? And why were so many people foreclosed upon over the past decade? Who was responsible for the crisis anyway?

And why—in 2016—do we talk so little about it?

Chapter 1: “Looking Back on the Past”

A lot of us don’t know this, but for most of United States history, only a small minority of Americans owned a home.

Financing was hard to come by and few of us could raise the cash necessary to put their name on deed.

It took the Great Depression to change things. President Franklin Roosevelt introduced the 30 year mortgage in the 1930s, as a way to help the country recover from the economic crisis it faced.

“We have a long way to go, but we are on the way…”

Then afterwards, the GI Bill, in the 1940s, began to help World War II veterans buy homes in newly built suburbs.

In fact, home ownership was thought by some as a way to fight communism.

“No man who owns his own house and lot can be a Communist” said William Levitt, the man who famously built Levittown.

Because of all of this, a majority of us began to own our own homes.

Slowly but surely, owning a home became a way to do everything—from building a nest egg for retirement to making neighborhoods safe. (For example, researchers even claimed crime occurred less in neighborhoods with high homeownership rates.)

Then things changed. Housing, at least for some of us, became a get rich quick scheme.

During these three days, we’re gonna teach you how you’re gonna generate a lifetime of unlimited wealth.
You, too, can generate a substantial, spendable monthly income. Extra, spendable cash.
I love real estate. I think it’s the best thing going. Better than sliced bread.
When I was just nine years old, my rich dad began to teach me how to become a real estate investor. And the way he taught me was through that game most of us know about, the game called Monopoly.

Real estate promoters like the ones you just heard—Robert Kiyosaki, Carleton Sheets, and Robert G. Allen—either ran commercials on late night television or hosted seminars in hotel ballrooms and stadiums preaching their gospel…that real estate was the way to quick wealth.

One way to do that? Pull equity out of your home. Another? Buy and sell homes rapidly, flipping them as a way to get money. They argued it was the key to financial independence.

And even Donald Trump’s Trump University got in on the act.

Want the secret to making more money than you ever thought possible? Then plan to attend a free Trump U introductory class coming to your area. For the first time ever, Donald Trump brings his years of real estate experience straight to you.
At Trump University we teach success. That’s what it’s all about. Success. It’s going to happen to you.

But many weren’t using their homes as get rich quick schemes. They were using their homes as a last-resort piggy bank—refinancing and taking the money out to pay for everything from renovations to keeping up with the cost of living and stagnating salaries.

Alyssa Katz: But very often, they felt that they didn’t have a choice.

Here’s Alyssa Katz. She’s the author of Our Lot: How Real Estate Came to Own Us—a book about how the country got swept up in real estate mania.

Katz: If that old home has a roof falling in, you need to fix the roof, you need cash to fix the roof, well, this lender is really saving you. At least that’s the thinking initially.

But home prices were rising quickly—all but doubling between 1996 and 2006.

It was only after prices began to fall that the majority of people began to realize that they hadn’t made a sudden amount of money, but that they had lived through a real estate bubble.

And when people couldn’t keep up with their bills, and the value of the homes plunged, the greatest wave of foreclosures since the Great Depression occurred.

Even people like famed financial guru Suze Orman, who had been quick to tell people to buy homes, even at the top of the bubble, suddenly changed their tune. Here she is in 2011 on Nightline:

“I’ve always said to you, real estate would be the best investment you ever could make. Well guess what, it didn’t turn out that way. So now there’s nothing wrong if you’re a renter for the rest of your life. I did not say that back in 2005—I can’t believe what I’m hearing. Yeah. And it is important that you hear these things. We live in a new America. We live in a new time. And I think you’re going to see 60 percent of America are going to be renters.”

For all too many, housing wasn’t building wealth. It was destroying it.

Chapter 2: “I Can’t Buy a Home Anymore”

Cherie: I’m very happy with my life. I would prefer to have a house with a yard and so would my dog, because he loved having a yard to run around in, but that’s gonna have to wait.

That’s Cherie. She’s living in an apartment in Idaho. She recently retired at the age of 62.

And that yard?

She doesn’t have one. And the reason why has a lot to do with her last home, which she bought in San Antonio in 2007.

Cherie: I needed a yard and I need to place to my keep my dogs. And it’s hard to find rentals when you have multiple pets, so the easiest thing for me to buy a house. It was a three bedroom, two bath, two-story on a small lot, and I paid a $127K for it.
At the time she had four dogs and was breeding rat terriers on the side. But a few years later, she got a new job in Seattle and moved there. And because she didn’t want to rent out the house and become a long-distance landlord, she decided to sell.
And that’s where the problems began.
The home was going to be a short sale—that’s the legal terminology for when a home sells for less than the homeowner owes the bank. Cherie didn’t think it would be a big problem. It was, after all, a matter of a few thousand dollars, that her bank JPMorgan Chase would need to forgive.

Cherie: In February, we got a full price offer from a young couple who were getting ready to have their first child and they wanted the house. So we sent the paperwork in and my realtor sent the paperwork into Chase. We waited about three weeks and hadn’t heard from them, so I called Chase and asked about it and they said, “Oh, well your paper was incorrect and you didn’t respond to your letters so we File 13’ed it.”

Helaine Olen: You filed—they filed for what?

Cherie: There’s a term in business. File 13 is the trash basket. So, they trashed all my paperwork that was sent in the first time. And I said, “Why didn’t I know about this?” “Well, we sent a letter to your house.” “OK, but I’m not living in the house. The mailing address is XYZ.”

Cherie says the complications with paperwork were messy. The sale fell through.

Cherie: I started calling one a week and there were three or four things I could count on every time I called in. I would be speaking to a new person who would not give me a last name, would not give me an extension, and in a number of cases I was misinformed about status of my paperwork. One minute they said it was trashed, but I had no evidence. Another minute they said, “Oh, no. Wait a minute, it’s over here, or it’s over there, or it’s in process.” But I never got a definitive explanation of what the process was, where my paperwork was in the process, how soon I could expect an answer.

But we know that paperwork was one of the banes of the housing crisis. People who wanted to refinance or sell would call their mortgage lenders and say they found themselves shunted and shuffled, over and over again. They would repeat their story to different representatives each time they called. They said they were told to do one thing, and then later were told to do something else. They would send in paperwork, and then, the next person they spoke to would say there was a problem with it, or there was no record of it. Experts say the number of people experiencing housing woes simply overwhelmed the system. That was likely true in many cases. That’s one explanation.

So it wasn’t a surprise that even the simplest things couldn’t get accomplished.

Cherie: Additionally, every time I called in, I had to give them my mailing address all over again because they sent any correspondence to the house. And if they wanted something from me, the correspondence will say, “If we do not hear from you in 10 days, we will cancel this sale.” But since they were mailing it to San Antonio and it had to be routed back to Seattle to get my mailing address, invariably the 10 days would have been expired.

When we reached out to Chase to ask about all this, they wrote back to us and said, “We make multiple attempts via written correspondence and phone to contact the customer to explain the documentation required to meet guarantor guidelines and identify document errors.” As for the paperwork, they told us they send all mail to the address on file, and that it is the customer’s responsibility to update it.

Cherie says she got a few offers. One was a lowball, but it probably wouldn’t have mattered anyway. According to Cherie, she got a higher offer, and the bank wouldn’t accept that one either.

Though it was really disappointing, it was technically OK—the bank didn’t have any legal obligation to accept the fact that they’d lose money—which is what would’ve happened in a bank-approved short sale.

A spokeswoman for Chase, told us that Cherie’s loan was guaranteed by the Federal Housing Administration. And that the offers on Cherie’s home did not meet their guidelines since they were, “well under market value at that time.”

Regardless of the reason, this happened to many people during the crisis, whether a few thousand or a few hundred thousand dollars were an issue.

We’ll let Elyse Cherry explain. She’s the CEO of Boston Community Capital, an organization that helps low and middle income homeowners at risk of foreclosure.

Elyse Cherry: So right now, if a mortgagor, that is a homeowner with a mortgage, has a mortgage in which the principal amount is substantially larger than the market value of the home, then the problem is, if you go to sell the home, they’re only gonna pay you the amount of the current value of the home. So, you then have this differential. You could have a mortgage for, say, $400,000, but your home is only worth $200,000. If your lender is not prepared to reduce that amount back to $200,000, you’re stuck. I mean, most of the homeowners we’re talking about can’t simply write a check for the remaining $200,000, and there’s no way out of it, and so they wind up stuck with a home that they can’t afford and they can’t sell.
Olen: And so, what happens to them?
Cherry: Well, often, they go into foreclosure.

And that’s what happened to Cherie. She said she stopped paying her mortgage in 2012. By February of 2013, the bank foreclosed on her home.

Cherie: I stopped paying because I was so frustrated at the total lack -lack of cooperation with Chase that I just figured screwed it, you can have the house.

Chase quickly sold the home to American Homes 4 Rent Properties Two, a company specializing in buying up foreclosed homes and renting them out.

Though the government encouraged banks to help their customers, no one said they had to. In many cases, the help was less than advertised. And as the fees piled on and homeowners fell further and further behind, housing prices in many areas continued to fall.

It sounds crazy, but in many cases, banks and mortgage lenders and mortgage processing servicers stood to make even more money if their customers lost their home.

Again, here’s our expert Alyssa Katz to explain:

Katz: The bank would much rather just go through the foreclosure, take the write-off on its books, and then it has an asset to sell, and has the home. And so, economically, the incentives weren’t. I mean, there were some subsidies from the federal government, which certainly helped. When people were not too overleveraged and property values hadn’t collapsed so much. But in many cases, it just was kind of bureaucratically and financially easier for the lender to just take the foreclosure and move on.

When it all comes down to it, the big banks and institutions are doing just fine. It’s regular people who aren’t.

The foreclosure problem is still continuing. Real estate information company RealtyTrac cites that half a million properties were lost to foreclosure in the first six months of 2016.

Chapter 3: “Race Makes It Worse”

Prince George’s County, Maryland, is a suburb of Washington, D.C. If you visit, you’ll find cookie-cutter, two-story homes, manicured lawns, and woods, since it’s still almost rural in spots. It’s also one of the wealthiest predominantly African American counties in the United States.

But that money didn’t protect PG County, as many call it, from the mortgage crisis. It is, in fact, the epicenter of the foreclosure crisis in the Washington, D.C., metropolitan area.

Janet: Our old neighborhood, our subdivision has probably a house or two on almost every block where a family has lost their home. And some of them are vacant. And some people just chose to stay until they could, you know, until they actually had to go.

That’s Janet.

She and her husband bought a house in PG County in 2003. By 2014, they’d lost their home.

And since you can’t see her, I need to tell you, Janet and her husband are African American. That’s important because one of the lesser known stories of the twin crises—that is, the housing AND financial crises—is the unequal impact it had on minority communities.

Maya Rockeymoore: Once you have foreclosures happening left and right, property values in the neighborhoods where you tend to live, or in the cities where you tend to live start heading straight down. And that actually happened.

That’s Maya Rockeymoore, president of the Center for Global Policy Solutions. She’s an expert on the subject. You might remember her from Episode 2—when she talked with us about wealth disparity and minorities.

Rockeymoore: So for African Americans, Latino Americans, and Native Americans, Asian Americans, they fully lost half of their collective net worth as a result of those two twin crises by 2009. And many of these households—most of these households have yet to recover.

So—a bit of history is in order again. When we talked in the earlier chapter about how Americans became homeowners, one group in particular was left out. African Americans were rarely granted mortgages. Banks all too often redlined—that is, refused to give out mortgages—in black neighborhoods.

Things eventually changed but, the result? They were late to the real estate party. The great gains of the 1950s and 1960s—in many cases, passed them by, leaving them behind on wealth accumulation since, after all, a home is the number one way Americans build wealth.

And something else happened too. They were frequently the target for predatory loans.

Cherry: Essentially what happened was, the people who were getting mortgages were nurses’ aides, and bus drivers, and, you know, plumbers, and people who—who did janitorial service, and so forth. They were people who understood how to do their jobs well, but they knew nothing about mortgage finance.

Here’s our expert Elyse again.

Cherry: And under the system that we had, the folks who were working with them to provide a mortgage, either a mortgage broker or a lender, had no obligation to really tell them about the risks they were taking on. We’ve had a number of people come in and say, “I had no idea how I could afford this mortgage. It didn’t seem to make any sense to me. But the person I was talking to, who was the expert, told me not to worry and said it would be fine.” And so that’s a lot of what happened. It’s not that people went out and intentionally got mortgages that they couldn’t afford. And there was a clear racial component to this. We’ve had a number of people of color come in and say, “My mortgage broker told me that this was how white people made money. And, you know, I could either, you know, continue on as a poor black person or make money the way white people made it. And it didn’t make any sense to me, but they were the expert.”

And wealth didn’t protect African Americans from this sort of treatment. As a result, Maya says that even before the financial crisis hit, there was already a mortgage crisis happening in the African American community.

Rockeymoore: Unfortunately, we saw in communities around the country—people of color were targeted for subprime mortgages when they were actually eligible for prime mortgages in many instances, but weren’t aware. Oftentimes mortgage lenders, mortgage brokers, were leveraging networks, family networks, social networks, that allowed them to go in and use the veneer of trust to actually lure these population groups into mortgage terms that were unsustainable.

No, this isn’t just experts mouthing off. There have been a number of lawsuits and settlements over allegations of discriminatory lending:

“One of the nation’s largest banks is coming under fire for reportedly discriminating against black, Latino, and Asian homebuyers, all while offering loans to less qualified white borrowers.”
“Discriminatory lending practices during the 2004-2008 housing boom resulted in two of the largest cash settlements ever between mortgage lenders and the Department of Justice.”
“The charge was that they were charging folks of Hispanic or who were African-American, more money on their loans. Wells Fargo did not admit any wrongdoing, but they did pay the second-largest fine of its kind.”
“Mortgage discrimination is illegal.”

Unfortunately, that wasn’t the only problem. Thanks to hundreds of years of discrimination, African Americans lack the wealth that other ethnic groups enjoy. The result? When financial troubles come, they don’t have the resources that many others can turn to keep their homes, or keep their finances from collapse.

Chapter 4: “We Can’t Keep Up”

When Janet’s family bought their home, both Janet and her husband were employed, and earning a good living. He was an IT contractor and she worked as an executive assistant at a local small business.

But things changed. Janet’s husband became ill, had complications with diabetes, and suffered some major back problems which required surgery.

He was in and out of the workforce for years. Today, he is disabled, and not working at all.

Janet is now the sole breadwinner for the family.

And there was more. Both of Janet’s children have had expensive and painful medical issues. Her older son, in 2006, was hospitalized and needed brain surgery, something that has happened more than once since then.

And then a little over a year later, her younger son was diagnosed with cancer at the age of five.

Janet: My baby traded in his childhood at Children’s Hospital at age five in kindergarten. He was thrust into the world of chemotherapy and cancer and a lot of harsh realities and pain.

Things were rough.

Olen: So you suddenly went down to being not only just a one income family, but that one income was the lower income.
Janet: Yeah. Yes.
Olen: OK. And how did that impact you guys?
Janet: In every way imaginable. We, you know, we had to do a lot of cutting back. You know, just the general budget things with meals and things like that where we might have eaten out a few times a week. We, you know, cut that out completely, began to negotiate with creditors.
And, you know, started getting payment plans for utility bills and things of that nature. My father passed away during that time period and my mom moved in with us to assist us with the kids as well as the situation.

And don’t forget they were raising two kids.

Janet: You know, we were basically super budgeting and doing bare minimum. We started the establishment of old fashioned fun. Like renting a movie maybe. One or two of those on a weekend for four people.
Four bucks is way easier that, you know, spending almost $40 to go to the movies. So it was much easier when they were younger. But as they got older and their problems continued, it was much more difficult.

Unsurprisingly, Janet and her husband fell behind on their mortgage, even as the home was falling in value.

At first, Jane got help from a Maryland state program, the Emergency Mortgage Assistance Program—.

Janet: On one hand it was a blessing. On the other hand, it wasn’t, because they had been told basically I guess to just fix it and to make it work. So, I answered a series of questions over the phone and we tossed around numbers and out of desperation and a desire not to lose my home I agreed to something that was—it was higher than what we had been paying before.

But Janet couldn’t really keep up. And that’s not unusual.

Experts say that even when people were able to get help, it often didn’t work out for them. Instead of reducing the amount owed, everything got tacked onto the mortgage. That increased the amount owed overall. Sometimes, it even increased the monthly payment.

Here’s Alyssa Katz—our expert from earlier in the show.

Katz: Right. So, there was a whole alphabet soup of programs to help people stay in their homes. HAMP, HARP, other programs. And then they all rested on cooperation from lenders to help people modify their mortgages. But this ended up becoming incredibly difficult, both for financial reasons. That, you know, people just owed so much more than their homes were worth, or that they were actually able to pay back.

People were overwhelmed.

Christie Peale: So, let’s say there’s value in your neighborhood, there’s value in your property, but there’s a catastrophic event in your life—illness, death, loss of a job.

That’s Christie Peale. She’s the executive director of an organization called Center For NYC Neighborhoods, which helps local homeowners threatened by the subprime lending and mortgage foreclosure crises.

Peale: So you may fall behind on your mortgage and your only chance for saving your home is bringing your mortgage current or else you have to sell your property. I mean, it sounds logical until you are in the midst of it and a servicer says to you, “Listen, you’re three months behind. I’m not gonna take a penny from you unless you can pay me the entire three months. And that’s when it gets really tough for people, because, you know, maybe they could make a partial payment. You know, maybe they could pay half of what they owe at that point, but the servicer says, “Look, I can’t bring you current unless you pay me everything that you owe.”

It wasn’t in the banks’ best interests to go out of their way to help people out.

So they also resisted something called “cramdowns,” which would reduce the full amount owed.

And in the view of the experts, this would have helped many more people than simply than refinancing or a loan modification. Here’s Elyse Cherry again.

Cherry: The general theory coming out of the home mortgage industry was that the only problem here was that we had a bunch of deadbeats with loans, right? Not that, in fact, they had made loans that were inappropriate, that people would never have any ability to pay. So, basically, they just kept kicking the can down the road and, in fact, in some circumstances, provided modifications for homeowners which allowed them to pay a mortgage based on a current market rate but continue to leave the outstanding principal amount on the back end of the mortgage, and this was on the theory that appreciation would solve the problem. And, of course, we’re five years out. The modifications have run out, and they have not solved the problem.

Eventually, Janet and her husband declared bankruptcy. In 2014, their home was sold for foreclosure.

Olen: OK. So, what was it like getting the foreclosure notice? Were you expecting it?

Janet: It’s kind of like someone tells you that there’s a group—That of monsters hanging out in the trees down at the end of the field and don’t go down there, but you decide to go down there anyway. And you know the monsters are behind you, but you don’t want to turn around. You know? That’s kind of what it was like. We knew that it was coming. I just couldn’t make ends meet. We knew it was coming. It’s a very sobering feeling.

But even though that happened, Janet’s family wasn’t forced to leave their home for over a year and a half. That happened to many people too.

Now, they’re now living with her mother-in-law, and trying to put money aside to make a fresh start.

And they’re not the only ones, according to Elyse.

Cherry: It’s clear to me that communities of color, particularly the African American community, have lost billions and billions of dollars in family net worth as a result of the foreclosure crisis. That money is not coming back.

Chapter 5: “Wrong Place, Wrong Time”

Buying a home at the wrong time could be fatal to your finances too.

Brian: We were looking for a place to live that was pretty close to my work and was affordable. And we found a townhouse, actually, not even a single-family house, but it was a just right for our size at the time. My wife and I were the only two in the family at that point.

That’s the story of Brian, who is a geophysicist in Hawaii. He and his wife bought a townhouse on Oahu in 2005—when they were just fresh out of grad school. They didn’t have much money, but they decided to go with it because rents were high and everyone told them—“This is the time to buy.”

There was only problem. Brian didn’t have a down payment. But no one seemed too concerned.

Brian: So what we did was, we had a zero down mortgage, and because of that we had to do a double mortgage, a first and second. You know, so that’s how we financed the home. And of course, all the advice we were given at the time was, oh, don’t worry, this is Hawaii, you know, property values only go up, they only go up.

But as we all know, that’s not what happened.

Brian: The bubble crashed and it lost more than half of its value almost overnight, and we started questioning things after that.

Brian was soon spending around $3,000—about half his monthly income—on mortgage and utilities alone.

And by 2011, there were two new additions to his family.

Brian: My first child was born in 2007, and the other one in 2011. But at that point we were realizing very rapidly we were outgrowing the space. It was just a small townhouse and now we were a family of four. Um, moreover, my wife had stopped working when we had kids, so we had gone from a family of two living on two salaries to a family of four living on one salary. So, that’s the crunch that we felt, you know and yet we’re paying for a place that is not even worth what we’re paying, you know?

By 2011, Brian decided to go with a short sale—which again, means that that his home would sell for less than he owed the bank.

And unlike many of the other people who we interviewed for this story, Brian and his family were approved quickly. Their home was sold, and they’ve been renters ever since.

But to make it all work, Brian and his wife had to wipe out almost all of their savings.

Brian: We gave them $12,000. So, that’s what we had. That’s what they took. So—
Olen: Was that in retirement accounts or was that—
Brian: No, retirement accounts they don’t touch. So, it’s just what you have in the savings accounts that they can get, and checking too for that matter. I forget what the closing costs were, but there were some closing costs ….—but as I recall, it ended up being about $12,000 in total. But even though we had a lean budget, we still stuck to it, and never went over. But ever since that happened it’s sort of introduced this instability into our monthly cash flow where we had to resort to credit cards and so forth. And we’ve never recovered from that since. So now we’ve kept balances on our cards these past few years. We just can’t quite gap the even line yet.

What makes this even worse? Had Brian and his wife had been able to hold on for a few more years, their financial position would likely be significantly better.

Brian: I wish that I had not short sold the home. Hindsight is 20-20 but if I had stuck it out, you know, I would have broken even, and the advantage of that is that I wouldn’t have cleaned out my savings. Because to short sell it, you know, they take you for everything you’re worth, every dime you have to your name they take.

But how was he supposed to know he was supposed to stick it out?

Because of what happened to Brian, his ability to save for retirement and other things they want or need, There are long-lasting effects on his family.

Brian: We cut out, you know, cable, we cut out everything that we didn’t need. It’s sad, because my kids are growing up over here and not knowing their grandparents and their cousins and everybody else in our extended family who lives on the mainland. And we don’t have money to travel to go see them. So—I haven’t been home, for example, myself in five years and my grandparents never even met my daughter before they died. So there are definitely some sacrifices we’ve had to make for choosing to live out here. It’s a bit of a trap, living on this island, because once you’re here, you might make enough to get by but it’s never enough to quite break free.

Chapter 6: “What Now?”

Even as housing values recover, many people remain in homes that are worth less than the amount they owe on them—something that’s known as an underwater home. According to the most recent figures from the Department of Housing and Urban Development from this past August, that describes more than 4 million homeowners.

Others—like Cherie—find their credit remains damaged. And they might not ever own a home of their again.

Cherie: Here I am, this little old lady living in a rental. Do you think I really want to live in a rental until I go into a nursing home? Hell no. I just want to have my own space. It doesn’t have to be big. But yeah, I think it’s a real possibility that that won’t happen.

Yet the banks seemed to emerge from the crisis bigger and seemingly less accountable than ever. Bank CEOS received millions upon millions of dollars in bonuses and avoided any prosecutions for the housing crisis.

“Our system is so corrupt today that big bank CEOs and Wall Street executives can do just about anything and get away it.”
“Not a single senior executive at these banks has been criminally prosecuted.”
“The bigger implication here is that it just continues this suspicion on behalf of people who don’t think that these people are ever gonna be held accountable. No, and they won’t.”
“We need to stop propping up the banks, throw crony banksters and Wall Street executives in jail. And put an end to both the administration’s too big to fail and their too big to jail policies.”

For all too many, the legacy of the housing crisis goes on. Just because you don’t hear about it means that things are solved for everyone. Though many in America have recovered, many still have not. People who bought homes at the peak in cities like Las Vegas still remain underwater.

So why don’t we talk about it? There’s a thing in the United States where we don’t want to admit defeat. All stories should have happy ends. If they don’t --- we often don’t want to hear them.

But the anger is out there—many political analysts believe the failures of the housing crisis fueled the rise of the tea party—which led to Donald Trump—and also led to Bernie Sanders’ surprisingly popular run for the Democratic nomination.

We could hear it when we did it the interviews for this series.

And people like Cherie who have been through the wringer and they remain angry and frustrated.

Cherie: I just feel like the banks are predators and—and the consumer is screwed no matter what. The vast community of consumers out there is paying their bills on time as much as they can. And for all of us to be treated like, you know, you don’t really count because we’ve decided we want your house. We’re gonna string you along for as long as it takes to wear you down so that we can have that house back.

So what can you do?

1. Reach out for help. There are organizations that work with clients to preserve their home ownership, like Boston Community Capital. And Center for NYC Neighborhoods.

The Legal Aid society in many states offers help as well.

Another way people can find help? Visit AGSCAMHELP.com, which will connect you to a free, well trained non-profit partner. They’ll also let you see if someone seems a little sketchy.

2. Next, seek advice early in the process. The longer you wait the harder it will be.

3. Don’t judge yourself. Don’t beat yourself up for not being able to predict the future. Millions upon millions of people ended up facing homeownership issues. You aren’t alone—even if it can feel that way at times.

Thank you for listening to this episode of the United States of Debt, a Slate Academy. Jennifer Lai is our producer. Many thanks to intern Laura Sim and former intern Rachael Cusick.

In this episode, you heard music from Kai Engel, Chris Zabriskie, Kevin MacLeod, and Sergey Cheremisinov.

I’m Helaine Olen, and I hope you’ll join us next time. And remember, to sign up and hear more stories of debt in America, visit Slate.com/debt.