Tuesday, February 23, 2016

99 Homes and the Law School Bubble: We Got Emotional About JDs

My husband and I recently watched a movie called 99 Homes, starring Michael Shannon (Boardwalk Empire) and Andrew Garfield (The Amazing Spiderman). It’s a thriller about the foreclosure crisis that happened just a few short years ago, and when I say thriller…

I mean thriller.

I went in thinking it would be more of a drama – the streaming service we used billed it as a thriller and I thought, “No way, what could be so thrilling about adjustable rate mortgages?” But there is a dread that hangs over every scene and a tension that pulls the viewer along, all the way to an ending that didn’t quite feel right (watch it and you’ll see what I mean).

In it, Michael Shannon plays Rick Carver, a real estate broker who represents banks that have
foreclosed on properties in the Orlando, Florida, area. His job is to evict the foreclosed homeowners and make the houses marketable again. I’m not giving anything away when I tell you that the movie begins with Rick Carver evicting Andrew Garfield’s character, Dennis Nash, from his home. Dennis lives with his son and his mother (played by Laura Dern), and they end up in a motel – one of those rent-by-the-hour-or-by-the-week places – post-eviction with a number of fellow evictees. The movie is about Dennis’ journey from bitter victim of the housing crisis to Rick’s powerful right-hand man. When he starts making serious money by taking on some of the eviction work himself – and by aiding and abetting Rick in a scheme to defraud the government – Dennis has a simple goal in mind: earn enough money to get his house back. When he does, Rick advises him to consider buying a different home, maybe even a nicer one, but Dennis is unpersuaded. The house has been in his family for years. It’s his home.   

That’s when Rick offers Dennis a piece of advice: Don’t get emotional about real estate.

That got me thinking. The reasons we got into the foreclosure crisis are the same reasons we got into the law school bubble/student loan crisis. Homeownership used to be something you’d partake in once you achieved middle-class status. I remember my grandparents telling me how many years they rented an apartment after they were married and how long it took them to save up enough money to buy a house once they’d obtained a certain level of financial security. But eventually, people started buying houses not because they’d achieved middle-class status, but because they thought buying a house conferred them middle-class status. I'm not sure exactly when people started buying into that lie, but my father, a baby boomer, certainly believed it. When I was growing up, we mostly rented because my parents couldn’t afford to own. And I knew that always bothered him. He bought into a lot of lies about middle-class status. He always told me the only way to achieve success in life was through a college education. Maybe that’s because he never went to college himself and he was never financially secure, so he attributed causality when maybe there was just correlation. And he never owned a home, but the people he knew who had money all did. Again, he saw causality when really there was probably just correlation.

Eventually, when banks started offering no-doc and zero-down loans, my father jumped right on board, even though there was no way in the world that a person who (along with his wife) only brought home around $40,000 per year could ever possible afford a $275,000 house. I believe the year was 2000 when he bought it. By the end of 2002, he was in foreclosure. After the bank took his house, he declared bankruptcy. And you would think he learned his lesson by then, but no. Because a few years later when he was eligible to buy again, he did. And again, he and my step-mom bought a home they could not afford, signing up for a loan that comprised almost 50% of their take-home pay. There’s no way in the world to make that work over the long haul, so again, shortly after buying it, he ended up in pre-foreclosure and had to do a home loan modification. The interesting thing about this is that my father always used to say the same thing about people who rented apartments and who had wash their clothes at laundromats: “Life just didn’t work out for them.” And all the while, while he was going through foreclosures and bankruptcies, I never once heard him say that about himself. He didn’t see it that way because he had a house. Technically the bank owned it, but as long as his name was on the deed, he was middle-class.

He got emotional about real estate.

The same thing happened with student loans. College used to be for people who intended to go into professional jobs when they graduated. Eventually, it became a marker of middle-class status. Now, college isn’t just for people who want to be accountants or doctors or teachers or lawyers or engineers – it’s for everyone. And it is always worth it, no matter the cost.

Law schools jumped on this bandwagon by selling the lie that being a lawyer isn’t just for the well-connected or the exceptionally bright. Anyone can be a lawyer, whether the JD comes from an online diploma mill or a glorified clown college that charges $40K per year and boasts a17% employment rate. All you have to do is sign up for six figures – and one lifetime – of crushing debt, and you, too, can be a lawyer. But as we all know, just because you’re a lawyer doesn’t mean you have a job.

We got emotional about education. About law degrees.

Homes, college degrees. They represent middle-class status and if we don’t have them, we’re nothing.

When I was younger, a social studies teacher of mine told the class that if you ask an American where he or she falls on the economic scale, they will always say middle class. It could be someone barely getting by or someone making more than 90% of other people in the country. Why is that? I guess the less well-off person might say middle-class in order to feel better about themselves. And the richer person might say it because they imagine there are tons of people out there doing better than them.

And that’s what it comes down to, isn’t it? Everyone in this country thinks everyone else is doing better than they are. We’re bombarded with ads on a daily basis, telling us we’re not thin enough or pretty enough or we don’t have enough gadgets or we don’t have the right clothes or we need to go on this vacation or drive this car or get this degree or this job. If we have these things, we will have made it.

The problem is, there are always more things just around the corner. And there will always be other people who get them. And you will always have a reason to feel bad about yourself.

Chasing the American Dream doesn’t always end well. Maybe you end up in foreclosure. Or maybe you find yourself in six-figure student loan debt for a degree that most likely did not lead to a job that justified its sticker price. When I think about all the people who faced foreclosure during the height of the recession, or the people whose paychecks are being garnished by Sallie Mae, and the idea of being middle-class and achieving the American Dream, I can't help but wonder:

Are we there yet?

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