The Real Estate Pandemic

In a time where credit card debt is common among everyone (even among high school students), and 'living beyond our means' has become the official mantra for this generation, is it really a surprise that massive amounts of existing mortgages have become unmanageable, and that so many people are losing their homes (and more) as a consequence?

There have been mixed reactions to this pandemic. People in Chicago & San Antonio are either shocked because they cannot believe their situation, or are unconcerned because fluctuating interest rates do not apply to them. At a quick glance, one could assume that the affected home owners are responsible for their own plight, because, as some renters or fixed-rate mortgage home owners in Chicago & San Antonio have said "they should have read what they were signing."

But what if they didn't know what they were signing?

Hispanics make up about 65% of San Antonio's population. However, most of this population is English-speaking, and English is actually their strongest language. For Chicago, on the other hand, the majority of its Hispanic population can speak Spanish, and as a whole, Spanish is used more often in public than in San Antonio. Chicago, despite its geographic distance to Mexico and South/Central American countries, actually has a higher influx of both legal and illegal Hispanic immigration than San Antonio.

People in San Antonio react differently to this crisis than people in Chicago. For example, when I lived in San Antonio, one of my neighbors was directly affected by the fluctuating interest rates. We did not know about the foreclosure until we saw the bright orange foreclosure note on her door one day. A few months passed, and new neighbors moved in. When asked about the situation, the new neighbors responded, "their loss is obviously our gain." As it turned out, the new neighbors had only paid half of what the house was actually worth, and less than half of what had been owed by the previous owner. But that was not the only foreclosed house in the neighborhood that year. In fact, enough people had left the neighborhood that we had to take a slight loss on the sale of our house in San Antonio because the market was flooded with foreclosed homes, quickly turning it into buyers' market. The reaction of those unaffected by the interest rate increase in San Antonio is that of marked indifference.

In Chicago, on the other hand, those who are unaffected by the interest rate hikes have mixed reactions. Instead of indifference, some individuals adamantly believe people should be left accountable for their own actions. These individuals have little to no sympathy for the affected persons. However, others believe this issue stems from multiple variables, and to take a one-dimensional look at the situation would be unfair.

Imagine this: you are an immigrant looking to establish your new life in a new country. All official documents are in a foreign language which you can slightly understand with the help of your family, mostly with the help of your young son. You go to the bank and decide to obtain your first mortgage. The loan officer does not speak Spanish, and you cannot speak English proficiently. Your 12 year old son speaks on your behalf, helps both you and the loan officer communicate, and walks you through all the necessary forms. When asked what the best option for the loan is, the loan officer replies that it depends on the situation. He spells out the benefits of the two loans, variable-rate and fixed-rate mortgages, and your son explains the differences as best as he can to you. You choose the option with the lowest monthly payments because the key differences get lost in translation. A few years later, your monthly payments drastically increase, you are unable to keep up with the monthly payments, and you will undeniably lose your home.

Maybe you were a victim of a language barrier. That, or a first-time homeowner confused by the process. Maybe you were just a victim of an overzealous loan officer, and guilty of not reading the fine print. That, or you simply could not fathom this as a possible outcome: a lost home.

Many people locally and nationally have been affected by this pandemic. But what can we do in order to minimize adverse outcomes? First, we should rid ourselves of our indifference. If we are indifferent, we are encouraging ignorance because of our disinterest. Research and understanding the plights of others will help us understand the 'whys' and 'how-comes' in certain situations. This would ultimately help us identify key triggers (in our own personal lives, finances, etc.) that could turn out to adversely affect us in the future. Even if we are not comfortable with research, we should pair ourselves with someone who is. Having a guide, or being our own guide, can help minimize potential problems.

The old adage, "history repeats itself,' is undeniably accurate when it comes to finances. If we learn from the experience of others, maybe there would be no need for us to experience certain things ourselves.