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Tuesday, February 10, 2009


(with acknowledgement to Frank Rich, NY Times, Sunday, February 8, 2009 )

President Obama sent me an email yesterday asking for an “economic crisis” story.

Our economic crisis began in 1991 when we moved for job reasons from Philadelphia to Brooklyn.

We had just bought a house in 1990 & over the next 5 years watched as the value became 30% lower than the outstanding mortgage. In 1996, when the last group of U of Penn students moved out and left behind a monster gas bill, it was time to call it quits.

Our options were zero. We could not sell it; could not afford to rent it. So, facing foreclosure & after hiring a lawyer, we devised a strategy. We asked FannieMae to take the house; we would turn over several months of mortgage payments that we had escrowed on advice of our lawyer. After months of agonizing letters, phone calls and assembling many pages of back-up documentation, we had gotten no where. Finally, I used a professional contact and made a call to a FannieMae executive in Washington, D.C.

The local Fannie Mae office finally returned our call. The negotiations were quick and dirty. Fannie Mae would take the house and the escrowed mortgage payments; we got to sign two loan notes from the mortgage insurance company to repay the loss over the next seven years. The only concession was that the notes were “no interest” loans. Fannie Mae came out whole; the mortgage insurance company was fine as long as we continued to have income and us, - well, we lost the $55,000 we had put into the house, and we dutifully felt guilty, repaid the notes and paid a substantial amount of Federal taxes every year thereafter.

Fast forward.

2001 - Facing the sale of the Brooklyn apartment we had rented when we left Philadelphia in 1991, we finally had to buy a place to live.

2007, our current mortgage was 42% of the market value. That's great news!

Last week I was trying to complete our 2008 tax returns. What a revelation!
Income in 2008 was 70% lower than in 2007 -
2008 basic living expenses were 45% higher (no vacations, clothes or
electronic purchases included!) -
And we will pay Fed taxes for 2008.
Our mortgage remains our “only debt.

How low can it go before it is an economic crisis?

So, having a "Yes We Can" outlook, I began to consider 2009:
2009 income is projected to be another 20% lower.
My retirement account statement dated December 31, 2008 had a loss of over 26% in less than 5 months.
Health insurance costs us $8800 a year.
Our monthly costs exceed current income by 30%; our mortgage is our only debt.

This is as low as it goes. What happens next?

How about an “economic stimulus” package or affordable health care. About $5000 a month will make us “whole.” We could settle for less. I’ve been reading and listening; I haven't found anything in the proposed “economic stimulus” bill that will provide any relief in the next 12 months.

So, I think we will have to use the $50,000 credit limit that I noted while cutting up a credit card which had changed its terms to charge 23% interest on any outstanding balance during the month, even for being one day late with a payment).

Then we could really qualify for being in an economic crisis. Can we will apply for a bailout from “TARP.”

So, President Obama, would you please ask Secretary Geithner to give us some advice?
or maybe a job.

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