The Washington Post has a piece today on how a Prince George’s County family, Ghanaian immigrants, went from living the American dream to being bankrupt, via their mortgage. Excerpt:

A decade ago, Comfort and Kofi were at the apex of an astonishing journey they had made from Ghana in 1997, when they had won a visa lottery to come to America. They did not know it at the time, but they were also at the midpoint in their odyssey from American Dream to American Nightmare.

Today, they struggle under nearly $1 million in debt that they will never be able to repay on the 3,292-square-foot, six-bedroom, red-brick Colonial they bought for $617,055 in 2005. The Boatengs have not made a mortgage payment in 2,322 days — more than six years — according to their most recent mortgage statement. Their plight illustrates how some of the people swallowed up by the easy credit era of the previous decade have yet to reemerge years later.

When they moved into the house in November 2005, Kofi was earning $82,740 as an IT consultant for a government contractor, and Comfort, then 43, was making $30,000 as an administrative assistant. But in the overheated mortgage market of the time, they said everyone told them that they could buy a $600,000 house.

They made a $60,000 down payment and all their mortgage payments for more than 2½ years — through September 2008. But the house was financed with subprime loans, which reset to higher rates after short time periods, creating what are known as “shock payments.” The Boatengs said they could not make their new higher payment, and, in the middle of the 2008 mortgage crisis, they could not refinance.

“I think the hardest part was the beginning,” said Kofi, now 55. “It was when I realized we really lost something. . . . Initially, we were arguing. But I guess it was because we were blaming each other for a mistake we both made.”


“I don’t think we really understood everything,” Comfort said. “It’s very difficult to deal with everything, especially when you’re dealing with this huge document that you don’t really understand. We didn’t take it too hard that this was going to be a problem. We thought we’d be able to manage it.”

If you read the whole thing, you may think: what kind of morons allow themselves to be suckered into a trap like this? It all seems so obvious now. But as someone who bought a house at the same time as the Boatengs, I have some sympathy for them.

Julie and I are naturally scared sh*tless conservative about going into debt, and our fear meant that we were not going to do what it seemed like everyone else was doing back then, which was to “buy as much house as you can.” We bought a modest house in a transitional neighborhood. It was as much house as we needed, and we could easily afford it. Yet five years later, trying to sell it after the crash, we ended up losing about $50,000 on it — and were incredibly grateful to have gotten it off our hands. We were living in Philly then, and paying apartment rent and a Dallas mortgage. The loss ate a huge chunk of our nest egg, but we were lucky. One of my Templeton colleagues had to sell a house in the DC suburbs when he took a job at the foundation; he and his wife lost over $200,000 on the deal.

If not for our fear — and thank God for it — Julie and I could have easily been led into getting ourselves into a situation not too far removed from the Boatengs’. Understand, I don’t think they were innocent victims; nobody held a gun to their heads and made them build a $600,000 house. The point is, it should not have been so easy for them to borrow money. They were dazzled by their dreams, and told by the system that this size house was affordable. Let me emphasize: the Boatengs are ultimately responsible for their own choices. But they are not alone; the government and the banking industry created a system that made it easy for people to fall into this trap.

A real estate agent in Dallas told me back in 2005 that everything was bound to crash. She was trying to steer people to houses they could afford, but many, many of them — especially minorities — demanded to see more luxurious houses. The banks were throwing money at these buyers. “A lot of these people are one paycheck away from not being able to make their mortgage payments,” she said. “But the lenders are still approving them.”

I remember sitting at the closing of my Dallas house, as well as the house in Louisiana that we bought last summer, thinking about how little I understood what was in those contracts. I mean, I’m not a dummy, yet the world of real estate and financing is utterly opaque to me. We put ourselves wholly into the hands of our agent, and other representatives of the system. Even if one’s agent is a responsible, upright person, he is only a person, and is subject to the same kinds of groupthink pressures as everybody else.

When we were going through the process of buying our current house — and by the way, on our income, and with our credit record, we could have been approved for a significantly more expensive house — I remembered how it felt to sweat out those six months in Philly until we sold the Dallas house. I recalled the cold fear as I watched our savings drop with each passing month that the house hadn’t sold. That was the time that I first became sick with mono, though it wouldn’t be diagnosed for two more years. Within three months, I had moved across the country, started a new job, learned that my sister was dying of cancer, and had to sit there watching our savings evaporate as we paid that Dallas mortgage in the depth of the bust, with the real prospect that we would not be able to sell the place. The stress of all that made me physically sick. I never, ever want to be in that position again, if I can help it.