“The mortgage company told me they were calling in my 40-year, 0-down mortgage. I have paid nearly sixty thousand dollars towards it, but, nearly five years in, I have yet to touch the principal.”

“There are few other words out there that carry the sense of shame and failure that “bankruptcy” and “foreclosure” do. They are words about having commitments that you couldn’t meet; they are words about loss.

They also carry judgment, don’t they? As though if you go bankrupt it must be because you went to a five-star resort with your lover, spent money you didn’t have on extravagant things. And foreclosure? Well, that’s just the little matter of losing your family home. Of sitting down in the living room and pulling your children close and saying, “We’re going to move, my loves, because Mama can’t pay the mortgage anymore.” Bow your head in shame.

So you can imagine how shredded I was about a month ago, when those words blew into my life, when the house of cards I had so carefully constructed over the last eight years came crashing down. I had constructed it after my marriage split up, when as a single mother-of-two, with a high school education and no work experience, I moved back to Canada, tried to find a job, found one, then bought a little home, and then got laid off, and started university full-time. All the while, I was eyeing nervously the fiasco of my finances and hoping like hell we were going to make it to solid ground. You can imagine that when the house of cards finally collapsed, I was devastated.

And I was shocked. Because in my mind, we had just made it to that solid ground. I got through university, I got a wonderful job. But then the tidal wave I’d been running from for the last eight years crashed over me still.

I had had a sense it might. It was the accumulation of all that time out of work, all that time in school, all those months in which I bought the groceries and school supplies on credit cards, all those late payments.

Seven times in the preceding two years I had approached the bank that held the lion’s share of my credit card debt and asked them to reduce the interest from 20 percent to something more manageable, something more like 10. I explained that I had been laid off, that I was now not only a single mom but a full-time student, living on student loans. I explained that I was trying my best to pay it off but I couldn’t even make a dent in it with interest that high. Seven times they turned me down. The last time I met with a bank officer, she told me to make all my payments on time for a year and then come back and she’d consider it. I shuffled off, head bowed.

And then the mortgage company told me they were calling the mortgage – a forty-year-mortgage with no money down, made back in the day when you could still do that. I have paid nearly sixty thousand dollars towards that mortgage. Nearly five years in, I have yet to touch the principal. Get a new lender, they told me or come up with the pay-out amount, the same amount of money I borrowed initially. Impossible. I cried.

For a week I walked around numb, as though everything I had been fighting for, so hard for so long, had just collapsed. Vanished. As though I had lost my children their home. I couldn’t believe, I told my boss, sobbing, that after all that effort, everything had all fallen apart in the end. I told her I had always been afraid I was going to die alone and be eaten by dogs and here I was – losing the house. I can’t believe, I said, I can’t believe it ended this way.
My boss held up her hand. “Hold on,” she said.”The dogs haven’t gotten you yet.”

And with that I entered into a long period of stillness, and when I emerged I went to a credit counseling place, where they took one look at all my debts and my non-existent assets and went straight to suggesting I declare bankruptcy. And then I went to a bankruptcy trustee who suggested exactly the same thing. He reviewed what that would mean for me.

“I have been paying a thousand dollars a month in credit card debt,” I said, “for more years than I can count, and I haven’t even made a dent in what I owe, never mind that I’ve paid the debt some four times over. And you’re telling me that I can pay less than that, a lot less than that, for 21 months – and then this is over?” He nodded. “Do you just make people happy all day long?” I sniffled through the tears. He said, “If it feels this good to you, you know it’s the right thing to do.”

I keep thinking I should have done this two years ago. But I kept going, kept borrowing, kept paying, kept trying, month after month. And I kept doing that for two reasons. For one, it’s the right thing to do, isn’t it? You borrow money, you pay it back. For two, there was shame. To admit defeat would be to admit failure, would be to announce to myself and the world that I couldn’t cut it.

Now I feel like, hey. I accumulated that debt to take care of my family, and I am grateful for it. And I paid that credit card debt four times over. The bank is NOT getting ripped off here. They’ve done just fine by me. And my house? We loved our little house, it has been just lovely for us. And now it will be just lovely for some other family who needs a home. We’ll find another little house, or an apartment, and we will make it fine for us, too.

Eight years ago, I grabbed my kids and carried them through a whirlwind of challenge and uncertainty. I got us to solid ground. The tidal wave may have crashed over us, but all it did was wash away the wreckage of the past. We are on terra firma. And we are free.”

- from ‘Going Bankrupt’, by Kyla Hanington, The Sunday Edition, CBC Radio, 7 Apr 2013 [hat-tip 4SlicesOfCheese]

109 responses to ““The mortgage company told me they were calling in my 40-year, 0-down mortgage. I have paid nearly sixty thousand dollars towards it, but, nearly five years in, I have yet to touch the principal.”

  1. Being a single parent is hard, I’m glad she wrote about how smoothly the debts enveloped her life.

  2. This is an important piece of journalism.

  3. What an entitled #####! Living off debt, *not* working to pay it down, full-time student when she could not afford it. She was not *really* trying to take care of the debt. She wanted a free ride.
    Still, it’s nice that the bankruptcy is mentioned. When it’s over, it’s over…

    • f off….geez….this lady only had a highschool education, how much can she make? She put herself through univ with 2 kids, that’s hard work!!! Plus she was paying on time for 5 years and approached the banks repeatedly for assistance when she can’t handle the outrageous interest charges and banks turn her down. Frankly I say good on her for going through bankruptcy. The banks made out ok like she said and if anything it’s their own loss since if they had done a debt consolidation loan for her at 10%, she would have carried on paying off the debt rather than bankruptcy.

      • “She put herself through univ with 2 kids, that’s hard work!!!”
        She wanted a free ride. It would have been hard work, if she actually worked to cover her expenses. Instead, she lived off loans. This whole thing is a sob story.

        As for the banks, they are 50% guilty. They should not have loaned her the money.

      • Burnabonian

        Life is about choices.

        This lady made some very poor choices and then refused to accept the consequences of those choices. By her own account, she made every choice herself but then claimed to be a victim when she gambled wrong. (There is a victim subtext to the entire essay.)

        Yes, she was enabled by lenders. These lenders could be described as amoral or even predatory because they did not care that she was too stupid and entitled to stop and ponder the wisdom of:

        a) not having a job, while
        b) paying university tuition, while
        c) FEEDING AND HOUSING THREE PEOPLE, while
        d) paying for it all with her VISA card,
        e) WTF

        I would not do more than one of those things at one time as an adult, and at my age any of the three terrifies me. Doing all three simultaneously year after year and then crying “why me?” is not something with which I can identify or empathize.

        Anyway she is now begrudgingly accepting the “consequences” of her choices, but only because the slate has been wiped 95% clean by the Canadian taxpayer. (That mortgage would have been CMHC insured.)

        She will keep the education, by the way, which is more valuable than the house was. And you and I paid her to get it.

        I suspect that this story will play out one million more times in Canada (in which 2.85% of the population pulls the pin on their consumer debt) over the next 5 years, and it will drag down those of us who live within our means and make responsible choices.

        Blame the lenders, blame the regulators, blame the generation, blame the bubble. Whomever or whatever is at fault, it’s going to hurt all of us.

      • @Burnabonian – +1
        I do not see any signs of a planning here. What was she thinking carrying a credit card debt and buying a house and I am wondering how she could get approved for a mortgage at all?

      • So all of you think she shouldn’t gone to university? She had highschool education and divorced with 2 kids. What kind of job prospect is there for her with just a highschool diploma? You would rather she go on social assistance for her entire life at a likely cost of over $2K/month to the government, high risk of her kids dropping out of school, go in foster care while she become homeless, etc?

        She shouldn’t have bought a house. However taking student loan to go to school like most other people is not a wrong choice! It’s the right choice and frankly her family and society is better off because of it. As for renting, a single mom with no good job and 2 kids is going to have an extremely hard time to find appropriate rental housing that’s not subpar. The wait to get into social housing is also very long.

        If this lady did what a lot of you were saying, chances are she will at best have a minimum wage job, at worst either be on social assistance her entire life or become homeless while kids be taken away from her and also less likely to grow up into successful adults.

        I rather these people go bankrupt with CHMC on the hook than condo speculators go bankrupt and stiff banks and CHMC with the bills.

        Lastly, she tried to pay all her bills for 4 or 5 years before going into bankruptcy because she had absolutely no choice left. As she said her self, if she got interest relieve she likely would have kept paying the debt and there would be no debt writeoff. But banks and mortgage companies are too greedy or stupid for that and now they get a bankruptcy instead. Maybe they figure they made enough $$ on interest off this lady it’s ok, but the fault lies 100% with the lenders. I actually put no blame on her. Frankly, the only stupid decision I think she made was not declaring bankruptcy earlier and save herself all those interest payments.

    • I might be more upset if she went in with eyes open and still beekayed. But in all honesty I’m not.

    • I don’t see that “she wanted a free ride”. It sounds like a very expensive ride. It sounds like she got stuck in a tough space because of a) a few bad decisions (e.g. taking on the debt), b) bad luck losing her job and c) because the banks charge such outrageous interest on credit cards. Once you get behind it is really hard to ever get ahead again and the banks don’t help by pushing more and more ‘products’ at you. If the banks weren’t sales oriented they would never have given a mortgage/more credit to her once she started to get behind.

      Do I think she is responsible for her situation – yes. But I don’t think for a minute she is solely responsible.

      • I put the blame 50% on her, 50% on the bank.
        I agree with a) and b), disagree with c), because the interest rate was known to her before she took on the debt. You also forgot to add another bad decision on her part – being a full-time student when she should be earning money to take care of the kids. Her priorities were wrong.

      • Agreed that she’s at fault (at least 50%).

        However, I would say that from her POV, she had her priorities right. She could go to school for free and feed her children. Bankruptcy was always an option (in the back of her head). There was always an out.

        Imagine for a moment that you couldn’t borrow ANY money and that there was no social assistance. Or rather, you can borrow money, but from loan sharks w/ connections to men w/ saws… I think the choices would definitely have been different then.

    • I cried through the whole story. Big fat tears rolling off my chin. That poor banker.

    • I really get an entitled feeling from this story, I got more of a “isnt that what your supposed to do?” vibe. Your supposed to own home right? Your supposed to get an education to better you life right? Your supposed to put food on the table and feed your children, even if it means putting it all on credit right? It will all work out in the end, right?

      I’m glad she at least acknowledges that past actions contributed to this. Some people think its just the job loss or sickness that lead them to bankruptcy, but all that debt and decisions from before just pushes them there.

      • Opps I meant to say: Did Not Get An Entitled

      • Getting an education to better your life is all well and good, but it has to be done carefully. I did grad school as a “mature” student at UBC, with a young child to boot. Thankfully my spouse was employed and I worked as an RA. I also qualified for many scholarships and bursaries, which knocked off a fair chunk of the final cost.

        This is my sage advice for the student loan set, having done it and successfully paid them off without going bankrupt or getting foreclosed on:

        -Live frugally while you are in school so you don’t have to live like a pauper after you graduate.
        -Get a degree in something useful and in-demand.
        -Do not borrow more for your entire education than your expected starting salary after you graduate (this is where the useful and in-demand degree comes in). If you are female and expect to be on mat leave after you graduate, you might want to factor that in, as well.

    • How in God’s name is it a free ride when she’s spent $60,000 on a house and not a damn dime went against the principal? And she has repaid FOUR TIMES what she originally borrowed.

      There’s no free ride there.

      • Just because she says that she repaid four times what she originally borrowed doesn’t make it true. Think about it (really).
        + If you pay one loan by taking out another loan and then declare bankruptcy, you are not spending your own money.

      • Ralph Cramdown

        That part of the article is factually incorrect. 40 year loans amortize, just very slowly at first. I’d bet that she rolled her CMHC fees into the loan and in 5 years, only managed to pay down the loan by about that amount and the mortgage discharge fees. Thus when presented with a payout statement, it said she owed about what she’d agreed to pay for the house.
        Or it was an uninsured loan and the associated fees were higher. She does refer to them as the “mortgage company” rather than the bank or credit union, and she’s definitely subprime material.
        The 4x original borrowing claim (on the credit cards) also has to be taken with a grain of salt. Maybe she did pay that much interest on one of her cards — but at 20%, that means only paying the interest for 7 1/2 years. She had multiple cards. Some of her creditors may have done well over the years while others got stiffed. The mortgage holder definitely got stiffed. Its common for bankrupts to look at all the interest they’ve paid and feel that the lenders collectively ‘got theirs’ when in fact every lender individually took a greater or lesser loss. That’s credit.

        It is important for the monied class to perpetuate feelings of shame and inadequacy surrounding bankruptcy. Loose credit with most people paying most of their bills is preferable to widespread guilt-free default and the subsequent tighter credit which would inevitably result. This woman’s crime wasn’t going bankrupt, it was going on the radio and telling everybody how great it was.

      • “It is important for the monied class to perpetuate feelings of shame and inadequacy surrounding bankruptcy.”

        Did you pull that from the communist handbook? People don’t go bankrupt because it’s socially acceptable. They go bankrupt because they can’t pay their bills.

      • Ralph Cramdown

        This woman spent a long time insolvent, grinding out most of those interest payments month after month. She could likely have made a consumer proposal for the non-mortgage debt, or possibly simply stop paying it and live on cash. But she didn’t. She didn’t know her options and she kept grinding out most of the payments.

        We may soon discover that people who could meet all their payments when they had lots of equity in their home become unwilling or unable to when they’re down a few hundred k. And that, just as in the US, is why we will see an increasing number of stories focusing on the moral obligation of repaying your debts.

      • Many people today are not ashamed of many things – excessive debt, bankruptcy, obesity, stupidity, wearing trashy sweat pants to work… You are supposed to be proud of your achievements, whatever they are.

        That being said, bankruptcy is a valid strategy if everything else fails. What annoyed me about this story was not the bankruptcy (it seemes to have been unavoidable), but the sob story and entitlement of the author.

      • Yes, Bubbly. I agree with you.

      • Real Estate Tsunami

        In German, the word debt is Schulden, which has its root in the word Schuld which means guilt.

      • @bubbly. Agreed. Entitlement and “poor me”.

  4. I wonder what percentage of people out there understand the concept of the mortgage amortization schedule.

    For instance, take a 25 year mortgage at 3%. Monthly payments equate to $2,300. Ask the average joe on the street how much of their monthly mortgage payments go to interest and how much to principal. I would bet 90% think that only 3% of the $2,300 (~$70) is paying interest, and the rest is “building equity”. In actuality, in the first 5 years, you’re actually paying ~50% in interest costs. Of course, stretch that to 40 years, and it gets much worse and people like this fall farther and farther behind once maintenance, taxes etc. are factored in.

    I explained this concept to a highly leveraged couple (two friends of ours) and they spit out their coffee even though they weren’t drinking any. It really is a scam.

    • Ralph Cramdown

      A scam? They tell you how much it costs to rent the money, and they tell you how much the monthly payment is. Ask any of your older relatives or friends how they’d feel about 50% of their first payment going to principal, and most of them would tell you it’s wonderful. I can think of plenty of things in the real estate industry that I’d describe as a scam, but being able to rent four or five times your annual income at 3% for five years sure isn’t one of them. How old are you?

    • This is with rates at 3%. My parents, back in the late 80s, bought a house in Killarney area for 280K. (This house is worth about 1.1 million now on last assessment). Back then, when rates were 20%, they were paying something like 1100 a month, with only a few bucks (yes, less than 10 bucks) going to paying the principal (not sure exactly what their mortgage payment per month was but I just remember my parents telling me they were only paying a few bucks in principal for the first few years). Of course, the house is worth about 3.5 times what they paid for it, but if you average this out over 25 years, it’s still less than what they could’ve made had they invested this in an index fund. Of course, minus maintenance, property tax etc and it’s not that great an investment. But as a home, I think it’s fine. However, investing in RE is probably not wise, especially now when carrying costs are so expensive.

      Thus, I have to agree with Ralph Cramdown in that rates are ridiculously low right now and people are actually getting a good deal on borrowing. Even having half your money go to interest is not that bad considering how much money people are borrowing these days. I have about 750K left on my mortgage of 1 million and if you factor in my rental income, I only pay about 800 bucks in interest a month now (about 25% of my total mortgage). I can pay off even more of my mortgage but to do that I’d have to take out money from my corporation and pay 40% tax on that, minus the opportunity costs right now (investing in my corporation). Fact is, I don’t want to pay down the mortgage as long as rates are low. Ask Zuckerberg-this guy has a 20 million dollar mansion that he has not paid down even though he can afford to.

      • My method has always been to pay down debt as quickly as possible regardless of the interest rate. The simple plan has always been to try to pay for a home within 10 years, maybe 15 max. Cars paid off in one year or maybe two years max. Credit cards paid off every month, maybe two after a holiday. Works for me and sure cuts out the extras for a while, but then there is some freedom later and you can’t really become crazy with your spending after living this way for a few years. You just won’t let yourself. I think the secret is just to be aware of your finances, and plug along as you see fit paying stuff down. Not like the lady who thinks you can pay off a 40 year, no downpayment mortgage with no job, university expenses and two kids and no partner. That is quite the plan.. Anybody surprised that didn’t work out? Why didn’t she sell last year if it got difficult? How much can one person ignore their financial picture?

      • Dental specialist

        Brian: could you not withdraw the funds from your corporation as ineligible dividends? It would get much better tax treatment than straight salary.

  5. This situation will happen over and over and will drive prices down. Millions are over leveraged paying interest only on lines of credit. I have a friend that just bought a million dollar house entirely on a line of credit. It is going to get ugly even if rates stay low. All it takes is for the banks to tighten up lending. If rates go up it will be a massacre.

    • Probably the next year’s BC property assessment is going to trigger the bank’s calling the mortgages in – when people go to refinance and the new assessed value of their house is lower than the amount of the mortgage they own. 10-15% drop in the house value can do that with the people that bought with 0 or 5% down payment.

      • Real Estate Tsunami

        Well, they may not call the mortgages, but they certainly will have to increase their loan loss provisions and toughen up their lending practices which will lead to higher rates.

      • Ralph Cramdown

        The people who bought with 0 to 5% down will be just fine — CMHC insurance lasts the life of your original mortgage amortization, as long as you never do a cash out refi or extend the term, and banks aren’t going to call insured, performing loans. People who put down 20%+ though, who aren’t CMHC insured, will face a more rigorous scrutiny come renewal.

  6. http://theeconomicanalyst.com/content/canadian-housing-and-economic-trends-good-bad-and-ugly

    I love the last sentence of how realtors are going to spin.

    Vancouver is getting ugly:

    You can’t say you didn’t see this one coming. I laid it out as clearly as I could in this post last August when it was blatantly obvious the market was rolling over. Things have gone from bad to worse in Vancouver, where sales remain very weak (March sales were almost 20% below an already-weak 2012 level) and existing MLS inventory remains elevated. To add insult to injury, the backlog of unsold new homes is growing, units under construction remain high, and the strong population growth needed to absorb all this inventory is nowhere to be found. It’s going to be another rough year for Vancouver, but on the bright side, we can expect the y/y comparisons to get more favourable throughout the year. Vancouver sales fell off a cliff in late 2012. It’s quite unlikely we’ll be seeing 20-30% y/y declines come late summer given how depressed sales were last year. So you can bet the real estate board will be waiting anxiously to put their always-positive spin on that.

  7. yep, no sub-prime lending in Canada.

  8. Personal finance should be a requirement for high school graduation. How often do people need to use quadratic equation in real life, whereas people don’t blink an eye just paying the interest on their 20% APR credit card, which compound monthly, is equal to 21.84%. Where the hell can I invest and get a return of 21.84% compounded monthly?

    Not to mention if only the minimum is paid, the amount owned can double within 4 years. Jesus, people should write an exams before applying for a credit card.

    • Nah, grade 12 math should be a mandatory requirement for graduation.

    • Even people w/ a Math 12 have trouble understanding compound interest in application (like in real life).

      Like… “Oh that car can be financed for ONLY 2%/year for 4 years” and not actually knowing how much they’re paying extra on top of the sticker price. (Hint: it’s no where near 2%.)

  9. Lenders I think are unfair to women. My mother went to a dealer about 13 years ago they were advertising 0 % financing my mother walked out of the dealer with an 8% 5 year deal I was angry at dealer for basicley
    Praying on her. She should have said no but she needed a car.

    • Also a single mother of two at the time

    • The 0% is for those that QUALIFY. Thats how they get you, they tell everyone that its 0% and everyone thinks thats what they’re gonna get. But then the credit check comes out and most people dont qualify.

    • @Mt pleasant – shouldn’t you be angry at your dear mother for taking this 8% “deal” instead of walking away after she did not get what they advertised? She was not forced to take it, right? Was it a really the only solution for her?

  10. It’s too bad that the news story focused on the softer, more emotional side of the story without using it as a teaching moment. The world is the way it is, and isn’t changing anytime soon. Who among us would have recommended that this woman buy a house with $0 down and a 40 year amortization? It’s pretty safe to say that nobody on this blog would recommend that course of action.

    Who, on this blog, would have recommended keeping the house while out of work?

    Who would have recommended keeping the house while out of work and going back to school?

    It takes nothing away from a single mother’s exceptional work at facing up to the challenge of raising two kids to point out that she was unrealistic.

    The fact that she had unrealistic expectations does not diminish the pain she’s going through now.

    But, I have to wonder: can’t the old media find a way of becoming more relevant? Can’t a taxpayer funded national broadcaster actually point out that unrealistic expectations (referred to elsewhere in these comments as an entitlement mentality) tends to lead to tears? Regardless of the politics that posters on this blog have (and I’m sure they vary widely), she probably wouldn’t have put herself in the position she did if she was a regular here.

    • Well if we did that, do you think bitcoins would have any value?

    • +1

      I left one comment and one reply that were critical of the “victim”, and unsurprisingly they did not make it through the moderation. My Comrade at CBC seems to know better than I do which discussions the Canadian people need to engage in.

      • The CBC does not like conservatives or people who expect social responsibility. Now if you were a bleeding heart liberal on the other hand you might just get your own show……bring on the pity party. If you doubt the theory just go back and leave a comment critical of Flaherty for bringing in policies that ended up destroying this gals life. Guarantee it goes through without moderation. They love blame over at CBC…..even better than having a long line of victims to cry up a story.

  11. PS Here’s what Kyla has been up to while we have been paying off her debt:

    http://www.kylahanington.com/publications/

    Jesus. I wish I could sit and write poignant essays for the CBC about what a tragic victim I am, but I have to go down to my fucking job every day.

    Sorry for the acrimony folks. I think I’m done with this particular topic because it is stressing me right out.

    • I hear you Burnabonian…

      Strictly speaking, “we” haven’t been paying off her debts. Per Se.

      Albeit, in certain regards that hardly matters, does it? In the sense that Kyla’s misdeeds are simply emblematic of wider social pathologies…

      Of course, the obverse side of the immorality argument – or otherwise – as regards Kyla’s poor decisions and EndGame CopingMechanisms are a contrivance well known to larger and, presumably, better informed players…

      Try googling “Mortgage Bankers Association Strategic Default Washington HQ”… for an object lesson in, “Do what we say. Not what we do.”

      [NoteToEd: Seriously, do we really need any more anecdotal evidence to discredit the RationalActors premise of NeoClassical economic thought?]

      • Nemesis Quote “Strictly speaking, “we” haven’t been paying off her debts. Per Se.”

        That was conjecture on my part.

        A 0 down mortgage *probably* had (and has) CMHC insurance.

        The article states that she had not repaid any principal after 5 years. It’s likely that the house appreciated during those 5 years, and she took that equity out via LOC or other vehicle.

        Her refusal to pay back money that she borrowed (defined as theft in many places, since it is) led her lender to call the mortgage. She responded by declaring bankruptcy; a legal “get out of jail free” card that you can use when you steal from a bank in this country.

        My conjecture is that the house was then sold at a court-ordered sale for much less than the amount of the mortgage, and the lender recouped the difference from the mortgage insurer — aka you and me.

        It’s possible that the house was sold for the value of the mortgage or more, of course. But if that had been possible then our friend would not have needed to pull the bankruptcy pin the first place.

      • Well said, Burnabonian. Smart bank robbers don’t need six-shooters and a hip-holster full of lead in the modern world. All they need is for strangers to trust them with credit, a desire to spend others money with abandon, an entitled childish attitude and a helpful bankruptcy trustee on whose shoulder they can cry when it all comes undone.

        Smart bank robbers only need paper, pens, conviction and a sympathetic audience on the CBC these days. And you don’t get prison time cause, hey….you know….she didn’t understand what she was signing.

        (except for the part about not understanding she got to keep the money for nuthin and enjoy it scott free.)

      • Indeed @Farmer. The pen is mightier than the .. gun.

      • Real Estate Tsunami

        Farmer,
        Talking about bank robbers and guns.
        Remember Woody Allan as bank robber handing over a note: Hand over all your money, I have a gum.
        In Take the money and run!

      • “Her refusal to pay back money that she borrowed (defined as theft in many places, since it is) led her lender to call the mortgage. ”

        I wouldn’t call it theft at all. She signed a contract to pay back the loan, or to turn over the house if she didn’t. It’s not even clear that she stopped paying before the loan was called. Contract fulfilled.

        As far as the moral implications, there were a lot of highly paid people designing these contracts and she wasn’t one of them. If she stopped paying to exercise her right within the contract, then so be it. I’d be more inclined to be angry with her if she was breaking a hand-shake deal with a local business.

      • Ralph Cramdown

        Mortgages are not options, ‘Howdy There.’ She did NOT contract to pay or give the house back, she contracted to pay. Losing the house was the explicit consequence of not paying; the implicit ones were further trashing her credit score and the risk of possible lawsuits. In a non-recourse jurisdiction she would have been spared the risk of lawsuits. A contract with a provision to put back the house at the borrower’s option would have been more expensive.

        Sadly, I have to admit that my nom de plume can be found arguing the opposite position in an earlier time and different circumstances.

    • “Running 100 miles an hour on delusional optimism.”

    • The fundamental issue here, at least as I see it, is the legal term “mens rea”. If she knew what she was doing then she is a system gaming sociopath. But if she did not know than she is just another dysfunctional individual, at least with respect to finances. And the latter is distinctly possible – people seem to at best be literate but rarely numerate and even less frequently rational and logical. Without a great deal more information than is presented here it is impossible to decide, at least with any degree of confidence.

    • Agree Burbonian, (except for the part about poignancy). This gals little essay on her trials and tribulations leading to bankruptcy just hit me like a pile of rationalizations from someone who really does not own her shit. I loved the part where she went to the bank and asked for a discount (pleading for more time so she could extend her happy debt holiday just a little bit longer). Made me think of those poor Irish lasses who got thrown off the land during the potato famine when she related how those nasty bankers turned her down. Poor lass had children to burden her the whole time. Don’t babies qualify you with a “get out of debt” free pass anymore?

  12. Rock and Roll, Kyla!!!!!

    Ride the crazy train!!!

  13. I suspect the bank called the mortgage because they can sell it more now than they can later. They are front loading foreclosures basically, trying to clear the pipeline ahead of schedule. At least, that’s my take on this.

    • Probably the loan didn’t align well with their risk profile. Lots of other lenders can take up this borrower’s cause…for a premium.

    • Carioca Canuck

      Having been a banker during the early 80′s RE crash here in Calgary I agree with your assesment 100%………she probably had a slow payment history and may even have been behind at the time the loan was called.

      I have zero synmpathy for her personally…..or the folks who got her into this mess.

  14. Realtor behavior

    The only reason she is whining and playing the victim right now is because she’s underwater, and there’s no equity left in her house. And she want bailout! She could definitely sell and rent at any point during the past few years, when she knew she couldn’t afford to pay back her debt, when she lost her job, before she go back to school….. She could also get rent subsidies from the local government for low-income families as a single mom with children, and live cheap. However, she chose not to, I believe, because she thought the house price was going up! She wanted to live in a “big house”, even it is small as she quoted in the article. She has been taking debts all these years to cover her investment in the RE market! Apparently, she’s no doll-eyed angel even she might have been convincing herself otherwise.

    • Ralph Cramdown

      Given her situation, it’s quite possible she could NEVER have sold. The combined equity in her house and bank accounts may never have been enough to cover selling costs, including realtor fees and the mortgage break fee. Was Nanaimo ever up that much from 2008 levels?

  15. Whoa, tough crowd! The lack of compassion is pretty disturbing for a blog that routinely discusses how corrupt and manipulative the whole banking/ government/ real estate/ media schlock has been over the past decade or more. I can’t help but feel the anger is misplaced. People get their noses out of joint over poor folks “gaming” the system to get an education and feed their kids but not bank presidents or politicians who rake in a hundered times that for themselves and their friends and their big fancy houses and vactaions. Crimes of scale folks! I’ve worked for welfare and with politicians and generally the former recipients work much harder than the latter everyday of the week. Also if you hate your job/ life make different choices – don’t begrudge others when they do.

    Flame away.

      • “Whoa, tough crowd! ”

        Agreed completely, I find that rather disturbing (but not surprising I’m used to poor jugement and downright ignorance in internet blogs…)

        Cheap credit is a political policy in this country. It’s also a very bad policy and one that will make many thousands of victims. She’s just one of them and part of the statistics.

    • I think readers were put off with how Kayla framed her article and the heavy sympathy slant she was working at. Over the top drama. It did not strike me as honest, TCG.

      • Huh, I didn’t read it that way Farmer. I found her story honest and I think the situation felt pretty over the top for her and that is reflected in her writing about it. That’s all. Pretty courageous actually to publicize your failures as she has. Maybe her sharing her story will help other folks make healthier decisions around their finances and futures… I dunno. My thoughts anyway…

    • I get the sense we’re not hearing much from the unemployed single parent readers of this blog in the comment section.

      I’m sure it’s pretty easy to end up in her situation by making reactive decisions “that made sense at the time”, including minimizing any further upheaval for her kids and with some vague sense that things would be better once she had her education.

      It sounds like some of you think that bankruptcy should be denied in cases like this.

      • MM quote “I’m sure it’s pretty easy to end up in her situation by making reactive decisions “that made sense at the time””

        Bankruptcy, like welfare, are net positives for society and taxpayers. Nobody’s saying that we should not allow bankruptcy or social assistance.

        We taxpayers willingly pay for the food and shelter of those who refuse to work, and those who think that it’s a good idea to make absurd financial gambles with their families’ futures, because it represents a net benefit to everyone.

        (We tell ourselves that these programs are for the unfortunate, but we know that the actual deserving tragedies are outnumbered 100:1 by abusers.)

        The reason that it is worth doing is that if we do not pay the noncontributing members of our society a few hundred thousand per year per person (including the cost of administering the programs), we will be on the hook for millions per year in policing, prisons, and medical care. Offering socialism to the undeserving therefore offers a net savings to the taxpayer, and is a necessary part of running a stable and productive society.

        This does not in any way, however, absolve the abusers of socialism of their moral responsibility to stop leeching off their fellow citizens. Just because there is a safety net (aka free ride) available, it does not mean that it is ethical to take it when you had other options.

        Unless there is something that Kyla failed to mention in her article, she had other options. She just chose to leverage the legislative and social safety net so that she could have a few years off of work to read books and live in a house. (Sign me up!)

        She wanted to live someone else’s life –middle class with disposable income– rather than acknowledge what she was: working poor.

        This is galling to those of us who acknowlege and accept our circumstances, and choose to do the labour necessary to modify them.

    • UBCghettodweller

      >Also if you hate your job/ life make different choices – don’t begrudge others when they do.

      Stop being so reasonable, this is the internet.

    • Well said TCG…and you didn’t even mention the fact one of her children is autistic…but I suppose many in this crowd feel that was likely her fault too.

      • Ralph Cramdown

        If the autism surfaced after she bought the house, I guess we can’t really blame her for that.

        I have often leapt to the defence of our bankruptcy system against people who are more, shall we say, Dickensian in their views. Bad things happen to good people, and society is better served through second chances — even at the expense of moral hazard and fraud — than it is by the workhouse, debtors’ prisons and tight credit. But the people I envision it being designed to help are those beset by illness, accident, legal judgements, addiction, involuntary job separation in a time of high unemployment and so on. If it occasionally helps someone so addlepated that she thinks that the appropriate response to job loss as sole breadwinner in a mortgaged household of three is to attend university full time while blowing up her credit rating, that’s a mere side effect.

      • Not at all MSW. But I don’t care if she has autistic children.

        Because EVERYBODY has a sad story and a broken marriage or a bad hip that requires crutches or a fatal car accident in thier family history or a liver that quit or heart problems or retarded children and blah, blah, blah.

        Maybe she is special though. She should get half-off her mortgage and a free trip to Disneyland. While they are at it they can cut up her credit cards and give her a free pass to shiny new fresh ones.

        Because some people suffer more than others?

      • Agree. Being able to start over, and to do so expediently, is a fundamental ingredient to the success of our economy and society as a whole. It helps support risk-taking, without which we would have less innovation and wealth creation.

      • WTF does having an autistic child have to do with the story?
        Some people are really easy to manipulate…

        I agree with Farmer.

    • +1000!!! well very put terminalcitygirl. I too am shocked at the level of hostility and hate directed at this woman. I think all things considered, she did very well given the hands she was dealt. I doubt many of the haters would have done nearly half as well as her if they were in the situation – divorced, 2 kids, highschool education, and likely very little work experience.

      • She wasn’t “dealt the hands”. Things happened to her for a reason. Her wounds were mostly self inflicted.

  16. This is a touching and beautiful letter.

    Yet bankruptcy is the best thing that can happen to you, the only way out of this mess. It’s a good business decision.

    Feel no remorse, your main mistake was to follow the herd into the housing frenzy. The good news is you’re early, many will follow.

  17. Since I am a woman, I have to comment that I too felt like it was a victim essay. The reason is simple – where is her advice to others? where are the lessons learned the changes that come from learned experiences? There was NONE of that in her essay. She is basically saying that she did was she was “suppose” to do and the system was stacked against her. That no matter how hard she worked, the system was designed for her to fail. Instead of acknowledgement that she made some serious mistakes.

    I have 2 young children under the age of 5 and I am going to school FT. But I also work FT and I have no student debts. It can be done. And better yet, it can be done responsibly. No, I am not a single parent but my husband does not make much (career change as well). If I were a single parent, I would move in w/my mother or find some supports to make it happen. Or I would take less classes, put off school till the kids were in school, etc. I would do what I have to do.

  18. Happy_Camper Quote “I too felt like it was a victim essay. The reason is simple – where is her advice to others? where are the lessons learned the changes that come from learned experiences? There was NONE of that in her essay”

    +1000

    TCG, are you there?

    The difference is subtle but critical. Kyla did not take responsibility for any of her choices, actions, or inactions, and she did not offer advice or warning to others about not making the many reckless, irresponsible, child-endangering choices that she did.

    Through these omissions, she implies that she was just a reasonable and responsible person who was minding her own business, basically just walking down the sidewalk of life in a conservative and responsible manner, trying to care for her children while thinking about how to stop climate change, when she was suddenly sideswiped by an evil trap which she was not nimble enough to dodge.

    This is a lie of omission: How many credit card contracts did she sign and agree to? How many mortgages, remortgages, lines of credit, and payday loans? There was nobody holding a revolver to her head while she was signing each of these contracts, and it takes many years (at least half a decade by her admission) and a huge amount of conscious, deliberate effort to dig yourself into a pit of debt that deep.

    During that time she would have received *hundreds* of statement and letters saying YOU ARE IN DEBT, you owe more than you have, you promised to pay us and then broke your promise, this is getting worse every month, you have our money and are not giving it back when you said you would because you spent it all and didn’t replace it, etc. Hundreds.

    To me, that would be the signal to stop fucking around, modify my expectations a bit, choose to provide security to my children, and get a goddam job. Then work that job as hard as I can. Work two jobs. Liquidate all of my real estate “holdings” and apply any returns to debt, then live simply in the lowest-cost arrangement that I can find — and there are definitely some low-cost living arrangements available to single parents with disabled children.

    Instead, she spent all these YEARS a) not having a job, b) keeping an expensive house rather than a frugal apartment, c) sashaying around campus with the magna cum laude, higher-learning, letter jacket set at a cost of tens of thousands per year, and d) bleating about how hard done by she was on Canada’s state-sponsored self-pity radio, the CBC.

    Victim indeed. More like irresponsible parent and entitled real estate speculator who is using her gender and young children as scapegoats rather than taking responsibility for her own actions.

    My empathy ends where her refusal to discuss responsibility begins.

    • What kind of jobs do you envision that she would get with just a highschool diploma that would feed her and two kids?

      • Any job would have been better than no job at all + going deeper in debt. Btw, there are part-time programs at schools too.
        Adjusting expectations and losing the entitlement attitude would have helped too.

      • Ralph Cramdown

        In-home child care for other working mothers? It isn’t my job to find her a job, merely to point out that taking out student loans and not paying her bills on time was guaranteed to get her no offer of renewal at the end of her mortgage term. She seemed somewhat surprised by that.

        It isn’t that we can guarantee that an alternate path would have worked for her and worked well, but we can say with some certainty that the path she chose was doomed to failure.

      • space889:
        She may get some sympathy if she didn’t buy that house. As long as there was a house in the formula. She ain’t get no sympathy here. Yesterday, I saw here a son bad mouthing his mom, nothing short of happy to his mom financially ruin since she didn’t listen to his advice on housing.

        Dalia Lama wouldn’t pass the test here if he brought a house Richmond.

      • 889…she would likely end up on long-term social assistance, and statistically so would her kids. She and her kids would also likely end up using a disporportionate amount of healthcare services and could also end up costing taxpayers a fair bit in our legal and corrections systems. Harsh assumptions, but the statistics bear this out.

      • Qustion. Why the anger? She lost her home, the bank resells, no cost to the taxpayer. Student loans remain, even after bankruptcy. Credit card debt charged to private companies, Visa etc. And she’s not asking for sympathy or a hand out. Why so much anger?

      • “What kind of jobs do you envision that she would get with just a highschool diploma”

        …and other myths.

        I know lots of people in the lower mainland who have their Grade 12 and make well over the median BC income. (Some make double.)

        All of them do clean work, indoors, many sitting at a desk and drinking earl gray tea for 8.0 hours per day.

        It’s about perseverance, work ethic, and humility. And it can be achieved in less time than it takes to get a University degree.

        If you’re willing to work extra hard or use your hands, you can make even more in even less time. It’s up to you.

      • “What kind of jobs do you envision that she would get with just a highschool diploma”

        Air traffic controller for one, there are hoops to jump through and you might have to move, but make it through and it’s a fine career.

      • Ralph Cramdown

        “Why the anger? She lost her home, the bank resells, no cost to the taxpayer. Student loans remain, even after bankruptcy. Credit card debt charged to private companies, Visa etc. And she’s not asking for sympathy or a hand out.”

        Actually, credit card debt is owed to the bank that issued the card; they just pay Visa fees to use the trademark and be part of the network. And the bank is owned by me, and people like me — people who save their money and invest it so they’ll one day be able to retire. Oh, and the Canada Pension Plan and many other pension plans own big chunks of the banks too, so people with pensions will have money for retirement. Deciding your best shot is going to school, racking up the cards and letting the bank deal with the fallout from reselling the house that you haven’t been maintaining for the past five years is stealing from me and millions of other Canadians just as sure as walking into a branch with a gun, as much as people want to think that it only slightly affects the bonus of a pinstriped VP in a tall tower in Toronto.

      • You’re right Ralph…and what about fat people, and smokers, diabetics, you really want to talk about a waste of taxpayer money! Most disease these days is entirely preventable, yet taxpayers are on the hook for all those cheeseburgers and pizza slices…no differrent than is they took a gun and…

      • Ralph Cramdown

        Well, as long as you’re going all non-sequitur on me, MSW, I’ll share that my favourite public health waste of money is the campaign for defibrillators everywhere. Take some guy who managed to have the good fortune to die quickly and painlessly, and zap him back to life so he can roll the dice again and see if it comes up bowel cancer.

      • Air traffic controllers require excellent math skills and has a 90% washout rate during training. Not for your average highschool grads who can’t even calculate cash register change properly without a calculator.

        As for people with highschool diploma making good pay? Maybe they got lucky years ago with a government/union job, but most of people I know bust their ass to make a living. My current employers have tons of MBA/Masters people applying for entry level positions that a regular undergrad can do. So maybe there is special industry/job market for highschool diplomas making high income that 90% of the working population don’t know about?

        Going to school to improve oneself and not having to relying on social assistance is bad? Because you have to go into debt? Would you all suggest that we ban student loans so that government will never be on hook if someone graduates and can’t find a job to pay back the loan? Is that really good for society as a whole? That only the rich can afford higher education?

        Lastly, with 3 kids, it is extremely hard if not impossible to rent a place to live. A house maybe not be a need but shelter definitely is. If you think renting a place for a family with 3 kids as a single mom is easy, then obviously you haven’t tried. Buying with 0% down 40 year amortization maybe sound like a bad idea but it’s something that I would reject right out of hand.

        I can’t believe the anger here directed at this woman, it’s even worse than for all the criminal bankers that caused the great financial crisis and the mess we are in right now. maybe that’s the purpose all along, direct anger away from those who are most responsible onto the poor people who are just trying to make the best out of it.

  19. Sorry, sleeping. But I’m back Burnabonian.

    I understand how some of you expressing negative outrage are reading her essay and of course everyone will run it through their own socio-economic filter and life experiences and values and make their judgements accordingly. I choose to react with compassion. I choose to believe that the mere fact of her publishing her story is meant to serve as education/ warning to others and inspire people to take risks and follow their dreams for a better life without her needing to be expressly high-handed about it. I don’t think she is refusing to take personal responsibility for her decisions but not expressly saying as much is a weakness in the article. I seem to remember that she acknowledges (if not in this article, then in the one posted on the VIU site linked from VCI) that she is grateful for the help she has received and for having the chance to make a better life for her kids. I agree with El Ninja and Ralph on the big picture – society is better served by allowing folks to start over rather than condemned to life in debt prison.

    On a side note, I personally don’t think anyone should work full time, go to school full time and raise kids. That is a recipe for burnout and often comes back to bite the individual and society in the ass. And I agree with Farmer that everyone eventually has a sad story. Will you be brave enough to publish yours? Would you like to be treated with compassion or derision? Which response do you think will be more helpful to you and society in the long run?

    • 4SlicesofCheese

      “I choose to believe that the mere fact of her publishing her story is meant to serve as education/ warning to others and inspire people to take risks and follow their dreams for a better life without her needing to be expressly high-handed about it.”

      I don’t remember her saying I should have rented and never bought a house before I had a decent downpayment. She never really said what she would have done differently so what did she really teach anyone? It seems like a sob story.

      People can criticize her and feel compassion towards her as well. It does not have to be one or the other. I feel sorry for her, but she made some dumb decisions.
      Lets say she rented, but instead of buying a house she couldn’t afford, she goes on an expensive vacations every year or buys a luxury car because “her kids need it”. If she goes bankrupt would you still have the same compassion? You would feel sorry for her but you would still criticize her. A house is a want not a need.

    • TerminalCityGirl quote “everyone eventually has a sad story. Will you be brave enough to publish yours? Would you like to be treated with compassion or derision?”

      My story would contain anecdotes in the following format:

      1) Bad decision
      Decision: Quit University. Have my Grade 12.
      Responsible party: Me
      Recipient of negative consequences: Me. Lost millions in lifetime earning potential, rightly looked down on by family and friends, have to work twice as hard for half the pay.
      Helping hand: Me. Bust hump every day, live modestly, learned that happiness is not tied to income.
      Lesson learned: Don’t be like me.

      2) Good decision
      Decision: Worked my ass off to achieve relatively lucrative professional career anyway.
      Responsible party: Me.
      Recipient of positive consequences: Me. Make >2x the BC median income, liked and respected at work and in industry, have career prospects, like my job. Secure and stable financially and socially. Can reasonably expect to bring children into the world and give them a good start on life.
      Helping hand: Me.
      Lesson learned: Perseverance > Entitlement

      3) Shithouse luck
      Event: I am genetically and socially predisposed to pretty strong depression
      Responsible party: The stork who dropped me off, me when I fail to manage it.
      Recipient of negative consequences: Me. Relationships suffer, health suffers, time wasted, didn’t know how to manage this illness when I was University-aged.
      Helping hand: Me and a flexible and understanding family. I might also have depended on the medical or welfare system if I had needed to. Have never drawn EI in 19 years of employment but would do so without reservations if I had no alternative.
      Lesson learned: glad to live in a socialist country. I get by with a little help from my friends. Thank you everyone.

      Kyla’s narrative followed the CBC’s classical “everyone is inherently a victim, except corporations and taxpayers” formula:

      1) Literally one thousand consecutive reckless borrowing and purchasing decisions made by someone smart enough to graduate University
      Event: Kyla had babies, chose not to work, chose expensive way to spend time (getting degree midlife with vulnerable dependants and no income stream), chose expensive accomodations, chose consumer credit as a source of cash flow, gambled children’s security on real estate appreciation, tried to live this way for 5 years, did not dig self out.
      Responsible party: EVIL LENDERS, FULL STOP. (Second signatory to loan contracts not named. Person who bought all that stuff on fucking VISA during all those years not named.)
      Recipient of negative consequences: Think of the children!
      Helping hand: Kyla helped herself. Self-help plan: refused to pay the bank what she signed a contract to pay and then chose to trigger a legally-protected, taxpayer-funded bailout because she had spent the loan with no ability to repay it. She helped herself.
      Lesson learned: Life is cruel and bad things happen to good people without warning, but you can endure if you are strong — and have access to a good lawyer to get her out of legal obligations.

      See the difference?

      My frustration is that some of us see this as a self-reinforcing victim complex, used to justify sociopathic actions such as running up debt and then forcing taxpayers to pay it off.

      I know people who are real victims who have never used that word in their lives.

      • Sounds more like you are projecting your pre-conception onto her than anything else. What I read from her article with my own experiences is totally different from what you just wrote. So yes, I think a difference, some of us are more understanding of other people’s situation and less judgemental, and realize that life is more gray than black and white. While your view is that if someone makes a decision you don’t think it’s right, then they deserve whatever crap/bad luck they get because they made the wrong decision and shouldn’t deserve sympathy or 2nd chance.

      • Burnabonian

        Space889 quote “What I read from her article with my own experiences is totally different from what you just wrote.”

        She deserves sympathy. She deserves empathy. She deserves a second chance.

        What she does NOT deserve is a government-funded national soapbox from which to reinforce her own (and others’) victim complexes — because she is NOT a victim. She’s a real estate speculator who tried and failed to get something for nothing.

        Victims have Multiple Sclerosis. Victims get robbed at knifepoint. Victims are born blind.

        People who buy very expensive things and then choose not to work to pay for them are not fucking victims.

        It sucks for her that she tried and failed. It sucks for her kids. But if she’s going to write essays for the CBC, she has a responsibilty to frame the story accurately.

        I am not female and do not have disabled children. If I wrote a story about how I bought a house but chose not to get a job, was given 5 years’ leeway to sort my shit out by the lender, and then was told to take my business elsewhere, I would not get one grain of sympathy from anyone.
        I would be laughed out of the CBC headquarters and into the surrounding marijuana fields.

  20. I don’t think any of us disagree that she made a dumb decision buying a house – as we discuss here ad nauseum, a speculative bubble and helpful bank/ re agent/ media certainly helped set up the circumstances that made that decision seem not so dumb at the time. Most of us hanging out here know better and we make better decisions – good for us. It’s true that I would indeed feel less compassion for someone who became indebted because of expensive vacations and luxury cars versus a modest home, groceries, and an education.

    I think my initial point though was that I feel the anger is perhaps misplaced – there are far larger financial “crimes” happening that deserve our scorn than a single mom who bought a house during a speculative bubble, then decided to better life for her and her kids after losing her job by getting an education. I think we can all agree that its the system than encourages/ allows people to get redonkulously indebted buying a house and its puppeteers that are truly rotten, far more so than folks like Kyla, but she obviously is not without sin here either.

    • 4soc quote “People can criticize her and feel compassion towards her as well. It does not have to be one or the other. ”

      This.

  21. Burnabonian and farmer, you two really piss me off!

    You do not know this woman. You have ZERO concept of the struggles she has put in and the efforts she has made. She completed her degree in less time than the usual so she could get back into the workforce, did so well she was able to recieve scholarships, and never quit looking for work. Her home was a TINY co-op apartment, not a lavish house! She did not remove equity and she did not intentionally try to “rob” people. She readily admits she is working poor and has spoken to that often, hoping to be able to give lessons to others in her boat.

    I am glad some people have the means to sit in judgement before they call it a day and hit their feather beds lined with pompous golden dreams.

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