A Personal Primer in Real-World Microeconomics

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Jim Gabour recalls for us his own personal quest to become a home-owner and thus embody the 'American Dream'.

Jim Gabour
15 April 2012

There once was a high-budget promotional concept ostentatiously labeled by real estate advertising gangsters as “The American Dream”: every family should own a home.

Of course this “dream” is not unique to the United States of America. Fifty years ago it seemed easy and natural for families in any modern society to be able to move into home ownership after a few income-stabilizing years in a steady job. But for the last decade of the 21st century, with the money crunch and a housing market flooded with bankruptcies and bad loans, the “developed” countries of the world seem less than hospitable to the idea. Indeed, they seem to take great pride in making the process as inhospitable as possible.

It takes a great deal of trouble to own a home these days.

I have a personal story that I believe illustrates this conclusion.




I wanted to buy a house. A particular house. The property I had settled on was a fixer-upper, to be sure, in bad shape and needing much manual labor and cash-intensive restoration, but still I knew that the low-end purchase would save me from throwing further money down the black hole of rental payments and finally, finally put me in control of my own destiny. This was to be the home of my own human dreams. A nest, labelled “historic”, and yet I could own it. It had to be worth the trouble.

Hello, reality.

I was forced to immediately face the fact that, in spite of being well off in relation to my own past earnings, I had to get a loan. I had to take part in the time-honored ritual of begging rich people for cash so I could make them richer. I asked around, talked to friends who had gone through the process. I maintained a modest checking and savings balance, but I was told I needed more. Much more.

The process started. I endured six weeks of economic scrutiny by mortgage companies and banks, all of whom treated me like a street leper with a hand out for spare body parts. I was told face-to-face that just because a self employed person has some money doesn’t mean that the same person will continue getting money. And therefore be able to maintain a house note.

It was more than economic. Every mistake in my life was resurrected and examined by strangers.

I was forced to find a copy of a divorce decree from the pitiful two week marriage I had undertaken at age nineteen. The loan officer at the first mortgage company I approached was mortified by the fact that I could remember neither my ex-wife’s maiden name nor the exact year in which the divorce was ratified. It did no good to explain to him that a long-vanished ex-spouse would not be living in my new house. I was made to travel to a distant Clerk of Court’s archives, and literally search on my own through dusty pre-computer paper records until I found out who I had been married to, and when and why we had parted ways. We were incompatible, the document said. That part I remembered, thirty years later.

The financial operations involved in historic house purchase and renovation were rapidly getting too complex for my limited business skills. I was faced with the prospect of two closings, one for renovation, and the second for the long-term financing.

“It’s simple,” the mortgage company secretary said from her desk in the suburbs. She rhythmically jingled what sounded like a coin purse as she spoke.

“The final loan will be based on the higher appraisal of the renovated house. You buy it for x, make it habitable in eight weeks, and now it is worth x+y, y being the value of your improvements. That added worth, y, now equals your down payment. It’s a great deal that the Preservation Resource Loan gives you first-time homebuyers going into historic homes. Keep costs down. Do as much of the work as you can yourself, and you’ll probably have equity from the day you sign the papers. The bank will do the interim financing for the renovation, and we’ll do the long-term. Thus, two closings.”

I still did not quite have a handle on how all this was to be accomplished. I read all the papers I had been asked to sign at the outset of the process. There were obligations and assumptions and details of truth-in-lending and numbers, numbers, numbers. I read them again, only to discover that multiple readings do not of themselves guarantee comprehension.

The next day my mounting confusion became a great deal more general when I was called by the interim bank. In their intensive research of my own Life in Money - the only portion of my existence they found worthwhile - the bank had discovered that I had missed a final interest payment on a Federally-guaranteed school loan some twenty-five years earlier. The missing interest, probably a late fee that had never been listed in my payment book, was $14.39. I had thought the loan paid out when I sent in the final coupon. I told them no sweat, I had the cash in my pocket and would send it right along. Not so simple. I was told to call the university where I had acquired the loan.

I remembered the place. I received the loan from a cashier at one window, then moved to the next line in the same office to endorse the check and hand it back to a second cashier to pay for tuition.

I called the school loan office to ask how I could pay my $14.39. On the seventh ring, I was rewarded with a nasal voice that identified itself immediately: “This is Ms Sappho -- that’s two ps and an h,” she said without being asked, “I am an undergraduate student worker working off my student loan by providing general information on inquiries to the Student Aid Division, and how may I help you today?”

I told my story to the youthful Ms Sappho. She paid attention to my name and social security number, then began using a vocalized “Uh-huh” every ten seconds to cover the fact that she was looking me up in her computer and not listening to a word I was saying. I could hear her quick fingers clacking on keys, then a few moments’ silence as she read information off her screen. She sized me up immediately - another loan dodger - and interrupted me in mid-sentence.

“Like, you should have been a responsible adult,” she said without prelude.

For me, this prefatory use of the word “like” has always been a statistically dependable sign that the speaker was not destined in his or her lifetime to win a Nobel Prize. “Like, it’s a quarter-century later,” she explained righteously. I knew that. “And so there are penalties, interest, and court costs attached to your case.” I didn’t know that, though I suspected.

I asked why the school hadn’t notified me of my debt earlier.

“Like, we probably didn’t know where you were. You most probably were hiding from your creditors, anyway,” she said.

“For godsake, Miss, I’m in the phonebook. Don’t you have phonebooks in your office?” I asked.

“Like, ye-eeesss-ssiirrr, this university has phonebooks and, ye-eeesss-ssiirrrr, the records do show we never contacted you. And ithaaaass-sss been twenty-five years,” she droned at me. She was obviously irritated that she had to put up with such aberrant behavior, and was simultaneously yearning for a safe chance to escape into the wild abandon of sophomoric passion.

Isn’t that the way we all were? I thought.

She is waiting for the moment she can run into the willing arms of her nineteen-year-old satyr of a boyfriend and madly press her lips to his! They will neck without restraint! Dementia! Lust! The two sybarites slobbering and moaning and staining the seat of his dented blue Hyundai with a smiley-face on the rear bumper. They care nothing about my predicament! These people care nothing about injustice! The animals!

What? I shook my head. Perhaps my memories of university life were a bit skewed. I was being wildly overdramatic. Possibly I had contracted a fever from electronic proximity to higher education. Where am I? I wondered.

“But the responsibility of coming forward to pay the money was always yours and yours alone,” a young voice was saying. Oh.

“But I didn’t know about owing any more money, Miss, and it was only fourteen dollars!” I screamed. A loud click as I was put on hold. There to be entertained by muzak. “Easy Street 102, the best in non-interruptive music,” the announcer said, interrupting. Kenny G wailed his torrid way into a lite-jazz instrumental version of 'Sweet Bird of Youth'. I knew I should have never raised my voice.

Just as the G hit the last chorus, a supervisor with obvious experience in handling violent debtors abruptly came on the line, this time halting the musical interlude with an authoritative ka-THUNK. Before I could say a word, he told me to be quiet and listen. He would speak on behalf of my creditors, and if I wanted this just debt resolved I needed to hear what he had to say. He would only give his instructions once.

I was ordered to appear in person, to drive 168 miles round trip to Baton Rouge, the state capitol of Louisiana, and pay $1,234.78 to a Divisional Assistant Attorney General. $1,234.78. “That includes the fee our office charges for handling the inquiry.” I was being charged for this phone call. I opened my mouth to speak, but was stopped immediately. He knew what I was going to say. “Pay up,” the supervisor reminded me, or “you will not be considered for any loan, and will not be considered positively as a potential house buyer, by either the federal or state government, in perpetuity.”

Nothing I could do.

I drove to Baton Rouge, another portion of my nest-egg in hand. Hard-earned money that would never be applied to renovating my house or reclaiming a neighborhood. I was to throw the cash down an administrative toilet, and not use it to buy one for my home.

The Default Loan Reclamation Division was on the third floor of a state office building. Its main entry was directly across the hall from the Louisiana State Narcotic Bureau, Repeat Offenders Section. The Assistant Attorney General’s secretary had bad teeth. She did not want to listen to a story about $14.39 and twenty-five years. No one did.

“I heard it all, honey,” she said. The tip of a ragged toothpick moved in regular loops as she spoke, protruding from the corner of what seemed to be red wax lips. They did not smile. She seemed a cartoon person to me, but she was real enough to take my check and examine my driver’s license, the latter action undertaken in case I might be a stranger trying to barge into her office and illegally force $1,234.78 into the hands of the morally-challenged political machine of the State of Louisiana.

By no means was the Inquisition over. There was more soul-twisting torture to come, even over long-past matters where I had obviously been in the right. Seven years earlier I had canceled a credit card, closed an account with a company that had proved to be not as widely accepted as advertised, totally unreliable in customer service, and loaded with hidden charges. I had paid off the entire balance when I canceled, but was now told by a loan officer that I had to go back to the company, beg their forgiveness and get a letter “from credit supervisor level or above” saying that I had indeed left the credit card company on good terms.

I was in hell, with no way out. I was stuffed with asbestos, rolled in flammable building materials, and the devil’s stoker was heavily into hazardous waste incineration.

Worse, I now realized that Beelzebub was a CPA with a law degree and a tenured civil service job with the state. Things were bad.

Then they were worse. I got what I asked for. In the second week of December the bank gave me the loan. I bought the house. The mortgage company gave me the eight weeks to complete initial renovation and move in.

“You just need to get your renovations approved by the Historic Landmarks Commission,” said the mortgage clerk. “Not a problem,” said I.

Problem. The HDLC requires the posting of two stamped and certified sheets of paper in a prominent window for any new visible construction in an historic property. Even though my house’s origins in 1890 place it as the newest house on the block, it is still considered “historic”. And even though I only wanted to remove a huge 1960’s six-foot-by-eight-foot plate glass “picture window” from the front of my house, and replace it with an exact replica of the other existing original nineteenth century windows – something I thought the Commission would actually reward – I had to go through an arduous and lengthy paper-making process before I could begin construction.

I had filed the application on December 10, the afternoon of my preliminary closing on a loan which required me to be moved into the house in the week before Mardi Gras, only eight weeks away. It was now December 23. The arithmetic was simple, the panic real.

I was faced with another episode of battling the universal bureaucracy, and the permit they alone could issue.

This was no small matter.

The Commission is as dominant as any Court in the land, and have the power to ruin a human life or confiscate the object of that life’s work. No construction is allowed in any of New Orleans’ fifteen federally designated historic districts without Commission approval. This was a group designed to prevent further deterioration of the character of the City’s outward facade, and secondarily, of course, to allay the depletion of its taxable revenues. In the French Quarter  -  New Orleans’ undisputed tourist money magnet  -  even exterior paint color and inner patio changes have to be approved by a vote of the politically appointed group of society denizens, a body that as a whole are unencumbered by such time consuming and unseemly activities as the need to work.

Houses in other areas of town, like the Faubourg Marigny which held my new house, were only liable for construction or repair that is visible from the right of way. These changes require approval, a “Certificate of Appropriateness”, though the certificate thankfully carries no chromatic restrictions in the Marigny. The HDLC had my application, a simple one involving only restoration of the front window to its original matching form, and had held it for two weeks with no activity or apparent attempt at contact. On the third Monday, in a phone call with me, a secretary said that the application was approved and only needed typing and signing. On a follow up call Wednesday, I caught the Commission’s Executive Director while the man was momentarily relieving his assistant at the phones. I asked for an update.

The Director was nonplussed at being personally accosted about official business, and said that although the application was indeed approved, it would have to wait its turn to be typed and signed, a process that would possibly take as long as six weeks. I explained again that by the terms of my FHA loan, I had eight weeks total to complete the project, two of which had already been wasted in awaiting HDLC action. My margin for success with any further delay was slim, and asked politely that the Commission consider moving the application forward. The public servant said that he couldn’t show favoritism, and that I would have to wait as everyone else did.

That, as one might suspect, was not acceptable to the home owner. Me.

So the next morning, Christmas Eve at 9am, The Applicant, manual typewriter and greasy toolbag in hand, waited glowering at the glass door pane of the Commission offices as the cloth shade went up. There stood a man immediately identifiable as The Executive Director. He warily opened the door, his tie still hanging loosely in two separate ribbons down either side of his shirt. The Executive Director had not expected an influx of early supplicants. He hurried to get his Windsor knotted so that he might more properly deal with the complexities of bedraggled architecture. I walked past him to sign the visitors’ log book, sat down in a chair, placed my typewriter on my lap and tools at my feet and announced loudly that I was there as a volunteer, ready to type all the certificates in front of mine. My logic was that since my application had already been reviewed and approved, and since the typing was supposedly the only holdup in allowing me to officially start work on the house, I would do the typing. I thought this reasonable enough.

The Director, Executive, looked down his exquisite pale nose at the Applicant, opened his pursed lips, and delivered an abbreviated and oft rehearsed lecture. Quite breathily, for effect. The best I could hope for, he said with the authority of his position, was to receive my typed form three to four weeks down the line. I protested as civilly as I could. I tried to make it clear that by the terms of my bank loan I had to be moved into the house in 42 days, and that The Executive Director undoubtedly knew that I could get no other city construction permits without being awarded the HDLC’s “appropriateness” certificate first.

“You should have it in the regular mail, sir, hopefully sometime before the end of January,” The Executive Director said, holding his palm papally above my head as if to quell an outbreak of some deadly and unsightly urban fever. His tie was in place and his patience wearing thin.

Mine, too. The patience part. The Executive Director’s manual blessing sent my formerly-mild manners looping over the edge of appropriate behavior. I told the Director outright that I wasn’t leaving until I had my certificate. And, holding my typewriter up for viewing, confirmed that I had come prepared to type all the paperwork which stood in the way of my own being issued. That’s what I would do. I too would work as a free volunteer, since the Executive Director had said the Commission was so woefully understaffed.

The Director may have even briefly considered this proposal. However, as a volunteer I did not fit in with the decor. I was not attired as a member of The Historic Staff, in button down collars and school ties. I was dressed in work clothes, tar stains on knees from days of (illegal) roof work, scabs on elbows from the (also illegal) wrestling of rusting burglar bars in and out of windows. I had been forced into such unlawful action because as the house waited none too patiently for renovation, it was being invaded, vandalized, and with the winter season, water damaged.

Work clothes had been uniform of the day for my last fourteen. Standing in the spotless offices of the Commission, I had a laborer’s weathered grimace on my face.

The Executive Director was not happy with either my physical appearance or mental point of view. The Commission’s wealthy blue haired volunteers, all “retired housewives” from Old Money New Orleans were due to arrive in the office at any minute to begin passing judgment on which timeworn stoops in the Faubourg Marigny and Lower Ninth Ward were of “historical significance”, and should be preserved with rare and expensive building materials by their working class owners. The fact that none of these householders maintained an economic status comparable with that of the volunteers was a compromising factor entirely lost on Commission members in their search for chronologically correct door jambs.

There was to be an office Christmas party that afternoon, where all of this hubbub would be forgotten. I could see the Commission Christmas party invitation from where I stood. It was posted on the wall behind the counter, a large and glossy print of all the volunteers standing outside the building, each person’s name under his or her photo. The words “Thank You” were printed in florid script across the top of the invitation, surrounded by a red and green Christmas wreath.

I made a loud and liquid hawking noise, clearing my throat of the thick phlegm of bureaucratic injustice. The Executive Director was now staring at me with even greater apparent worry. What if an Historic Volunteer saw the dirty homebuilder? I looked likely to spit on the floor, or even soil myself, at any moment.

I saw the bureaucrat’s fear, raised my typewriter to a level with his eyes. Shook it slowly from side to side. I made a deep groaning noise.

The Director could see that here was an unstable character, an unwashed and unwanted typist who was determined to type. He asked for five minutes grace while he consulted the Commission computer.

In less time, he was back with completed and signed Certificate in hand.

“See, just a little patience will get you everything you need,” he said without irony.

“Merry Christmas,” said I. It was 9:16am. The printing of my permit had taken fifteen minutes rather than six weeks.

An hour later my general contractor listened as his new client related the story. He recognized in my actions a successful application of intimidation, and took the theme one step further. That same Christmas Eve afternoon, the Commission approval now in hand, Joseph sent his wife and screaming twin infants down to stand in the line for building permits. He instructed his wife that every time she hit a delay, she should gently pinch one of the three year old’s behind and send him wailing into sonic overload.

True to her husband’s predictions, she got prompt governmental attention and expedited service with the boy’s loud howls, and was quickly sent on her way. Mission accomplished, the mother was sure that putting food on the table and cash in the college fund would more than make up for her sons’ temporary buttock discomfort. Besides, if the young men followed in their father’s profession, they might well expect the same sort of indignity.

By that night the contractor had left a message on my phone saying that the project was back on schedule. His wife had acquired the required forms in record time. With “just a little patience”.

I was a legal renovator, bruises, dirty clothes and all. 

I now live in that house, historically restored and mostly functional. But even that comes at a literal price, as the new, much higher, assessment on the worth of my renovated home has jumped my annual property tax from $78 a year to over $2300. And, since Katrina, home insurance has more than doubled, even with an $11,000 “hurricane deductible” first taken out. What this adds up to is the blatant economic fact that monthly I now am billed a total of $500 in tax and insurance on a house that I already own.

This amount is exactly what I remember paying in rent every 30 days as a much younger man.

Plus here I am, all these years down the line, spending yet another complete weekend replacing bathroom faucet gaskets, repainting flaking porch decks, rewiring outdoor lighting and generally banging my knuckles against sharp hard objects.

Instead of finally exalting in the realization of the 'American Dream' of property ownership and maintenance, I find myself blissfully fantasizing about being able to call a landlord for assistance, and heading off to the communal pool to sunbathe while things are made right.

But meanwhile this place, and all that comes with it, belongs to me. I bought it and rebuilt it and now Occupy it.

Today the head of the Federal Reserve Bank has told Congress that the country’s economy depends on just such actions as mine.


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