by Jack Cashill
Published in ingramsonline.com - August 2009

A few months back Mary Sanchez of the Kansas City Star recounted the home foreclosure saga of the Ellers of Lee’s Summit, an otherwise worthy family of ten so uniquely unfortunate that Mr. Eller would make Job look like Ferris Bueller. 

If Ms. Sanchez were trying to make a point about the foreclosure epidemic, she failed.  A reporter does not get a handle on the problem by studying exceptions, however compelling their story. A reporter gets it by studying—and understanding--the rule.

The stories that Sanchez chose not to tell flip the Tolstoy maxim that “happy families are all alike; every unhappy family is unhappy in its own way.” In the world of foreclosure it is the unhappy, bankrupt families that are all oddly alike.

A representative case is that of Melanie Gainsboro*. Were she to die unrepentant, which seems likely, she might well find herself in Dante’s fourth circle among the “prodigals.”

A word used less today than it ought, “prodigals” have long been with us.  “For, as has been said,” Aristotle writes in the Nichomachean Ethics, “he is liberal who spends according to his substance and on the right objects; and he who exceeds is prodigal.”

Fortunately for Gainsboro, she has the sympathetic David Koeppel of MSN Money to chronicle her tale, not the judgmental Dante. As Koeppel tells it, in 2004 Gainsboro contracted to buy a $470,000 home in Boston’s Dorchester section with no down payment. She claims to have been looking for an apartment, but those that suited her fancy cost about $5,000 to $6,000 a month. 

At that time, the amount was more than she could afford. Landlords, after all, demand rent. Lenders can be more flexible. Ambitious beyond her means, Gainsboro heeded their siren song.

The first question the obliging Koeppel asks her in a recorded interview is, “Was your loan a predatory loan?” Gainsboro answers without hesitation, “It definitely was.” 

To swing the deal, she took out a fairly standard 8.5 percent loan on 80 percent of the purchase price. Lacking the traditional 20 percent down payment—saving apparently was not her strong suit--she took out a second loan at a “whopping” 12.5 percent.  Her combined monthly payment ran roughly $3,500 a month to begin and rose as the loan adjusted. 

Historically, lenders would not have allowed that size of a payment for anyone making less than about $200,000 a year, presumably more than Gainsboro made as a part-time teacher. But that was in the era before the government started pressuring lenders to make home loans to the “LMI”—the low and moderate-income.

Rarely mentioned in the reporting of the credit crisis is that female headed households are seriously overrepresented among the LMI, especially among subprime borrowers. This should not be surprising. The average income for married couples has been running about two and a half times higher that of households headed by divorced women and nearly five times as high as households headed by unmarried women.

What is surprising, shocking really, is that the government thought it a good idea that women without means should own their own homes.  Lenders, even the genuinely predatory ones, were doing what the federal government and its media accomplices had been telling them for years was a good and noble thing—namely “’lowering the barriers to homeownership” for those who had been “traditionally excluded from the marketplace.”

If folks simply got married and stayed married, the pressure would not have been necessary. The homeownership rate for married couples typically checks in the mid-80 range, at least 30 percentile points higher than for single headed households. Their default rates are dramatically lower as well. 

Unfortunately, there are fewer married couple than there have ever been before.  By the year 2000, married couples with their own children made up only 24 percent of all households, down from 40 percent just thirty years earlier. Had the 1970 figure held stable, there would have been no credit crisis.

In any case, Gainsboro got the money. Still, she claims her lender told her that she could soon refinance into a lower-cost, fixed-rate mortgage. “That is where it became predatory,” she reassures herself and Koeppel.

There is nothing unique about Gainsboro. A million Americans just like her have unwittingly conspired to wreck the world’s economy.  Writing 23 centuries ago, Aristotle sniffed out their ambitions:

They become apt to take because they wish to spend and cannot do this easily; for their possessions soon run short. Thus they are forced to provide means from some other source. At the same time, because they care nothing for honor, they take recklessly and from any source.

What has changed over time is the media-shaped perception of the relationship between the prodigal and the “predatory lenders” who sustain them.

To fix her innocence, Koeppel asks Gainsboro no questions about her ex-husband, her income, her seeming inability to save money, her job prospects, the alleged cost of rental housing, or any potential plans she might have had to surf the rising tide of real estate prices and flip the house for a profit, plans possibly swallowed in the subprime morass.

Like most in the media, Koeppel thinks less harshly of prodigals than those who enable them. In this comprehensive article, the reader hears not a word from Gainsboro’ lenders or any other lenders. They remain as alien and heartless as Shakespeare’s Shylock, more so really. Shakespeare, at least, gave Shylock motivation.

Koeppel gives the final word—like every word before it--to the predators’ presumed prey. "If you're given fraudulent loans,” says still another bamboozled woman, “someone needs to go to jail. Someone needs to be held accountable."

Unlike Dante, Koeppel does not think of prodigals as sinners, preferring instead to think of them as they think of themselves, as “victims.” Indeed, it could be argued that the real divide in America today is not between left and right, but between those who would be inclined to sympathize with Gainsboro’s story and those who would not.

The latter, for lack of better words, we will call “traditionalists”; the former, “neo-puritans,” a shorthand for a fire-and-brimstone Calvinism without God, the devil, or individual guilt.

When neo-puritans survey the moral landscape, they see aggregates of predators exploiting aggregates of victims, the goodness and badness of each fixed by little more than fashion. Koeppel, for instance, titles his article “Single women slammed by housing mess.”  A traditionalist might have titled it, “Single women help cause housing mess.”

As should be evident, traditionalists like Dante and Shakespeare have a distinct artistic advantage: they believe in sin. When they survey that same moral landscape they see a thousand different souls struggling with a thousand different demons. 

Nor do traditionalists attempt to exculpate sinners by downgrading their demons to disease, depression, addiction, or “circumstances beyond Melanie’s control.”  Sin makes for much better drama. It might also make for a much better economy.

(* Real story, changed name.)

Who is Jack Cashill?