If the concept of leverage is difficult for you to understand, this story should help clear things up.
NYT: Growing numbers of Americans who have lost houses to foreclosure are landing in homeless shelters, according to social service groups and a recent report by a coalition of housing advocates.
Only three years ago, foreclosure was rarely a factor in how people became homeless. But among the homeless people that social service agencies have helped over the last year, an average of 10 per cent lost homes to foreclosure, according to “Foreclosure to Homelessness 2009,” a survey produced by the National Coalition for the Homeless and six other advocacy groups.
The difference between living in an oversized, over-applianced home and a homeless shelter couldn’t be farther apart, and as noted above, in the past, individuals rarely went from the former to the latter. But in a massively leveraged society gone bust, going from one extreme to the other isn’t that ridiculous. It’s the ride that Lehman and Bear took, and it’s playing out elsewhere — a small rise in interest rates, an individual losing one of their three jobs, and bam, they’re finished.
Many start off camping out in cars, particularly in warmer places.
“We’ve seen a rise in people sleeping in their cars,” said Rick Cole, city manager in Ventura, Calif., which recently allowed car-camping in designated areas. “Some are foreclosed former homeowners, and some couldn’t afford their rent. People will give up their house before they give up their car.”
Those with means try to rent homes or apartments, though tainted credit often makes that impossible. Growing numbers are landing in motels that rent by the week, cramming whole families into single rooms and using hot plates as kitchens. But as unemployment expands, many are losing the wherewithal to remain.
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