Wednesday, October 22, 2014

Doing the right thing is expensive, guest blogger Michael Smith

My wife and I bought our perfect house in South Carolina in 2007. Acre lot, backed up to a private golf course, 4000 sq.ft., 3 car garage. In 2008 the market crashed. In 2009, we moved when I accepted a much better job.

We put the house on the market and for two years it sat empty as we tried to sell it. We finally leased it but the lease market was saturated due to so many unsold houses on the market, so the monthly lease payment we received only covered 60% of the mortgage payments. Two years ago we lost our homestead exemption and our property taxes went from $1900 a year to $9200 per year and our insurance doubled from $1400 to $2800 a year.

We kept hoping that the market would rebound but it never has - but we never missed a mortgage payment. In 7 years, we were never even late.

This Friday, I close on the house - finally it is sold. It was the second offer that we received on the house in 5 years.

It sold for $120,000 less than we paid for it, so we lost every dime of equity we had in it. The selling price was less than what was left on the mortgage, so I had to make up $35000 in deficit to pay off the mortgage and with all the fees and prorated taxes and such, to sell my house cost me right at $67,000 out of pocket this week.

And yet I personally know of people who just walked away from houses in similar situations. Of course, they took a huge hit on their credit rating but they don't really seem to care, nor has it visibly affected their lifestyles.

I guess I may just be stupid but I was taught to live up to my commitments. We made a bad decision in 2007 and that decision cost us nearly $200,000 in actual cash - but it was our decision.

We decided to take the painful loss now because I can see no signs that the economy will recover any time soon because of the structural damage that has been done in the past 6 years. It was time to move on before things get worse.

So this is my view of what the President's people call a "recovery".

There is no recovery.

I thank God that we have been blessed with the financial means to survive Obama's "stewardship" of the economy and I have a special empathy for those who are struggling with the same decisions or simply cannot free themselves due to their financial situation.

We are witnessing the worst performance of a post recession economy in our history. In spite of an energy revolution, the US economy can't seem to get up off the mat. Economic policies and regulations matter. Presidents may not control the economy but they at least have the responsibility not to screw them up.

This economy is screwed up - normal capitalistic/free market economies will naturally generate growth on their own but Obama and his merry band of progodytes have ours tied down as sure as the Lilliputians did with Gulliver

Michael Smith lives in Utah and blogs at Rio Norte Line and on Facebook, where this post resides.

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