bs_bs_banner

Narratives of Moral Order in Michigans Foreclosure Crisis

ANNA JEFFERSON Michigan State University and Abt Associates, Inc.

Abstract
In the United States foreclosure crisis since 2007, millions of homeowners have strived but failed to hold onto homeownership. This crisis threatens to unsettle the myth of the American dream and deep-seated cultural beliefs about the self as a moral, political, and nancial subject. On the whole, mainstream narratives blame homeowners for their predicaments or at least hold them responsible for the consequences of the housing bust. This article examines how homeowners, housing professionals, and activists in Michigan confront narratives of blame and awed foreclosure prevention programs. Michigan has been pivotal in the formation of beliefs about the American dream, evidenced in the blue-collar middle class, as well as being emblematic of deindustrialization and the foreclosure crisis. Confronting a multi-layered crisis, homeowners, housing professionals, and activists in Michigan produce narratives of suicide, walking away, or strategically defaulting on the mortgage. These narratives present moral critiques of lenders, enact and challenge tropes of blame, and imagine ways to recapture (albeit constrained) agency. [narrative, morality, foreclosure, American dream, Michigan]

long the main avenue in Michigans capital, Lansing, a pale blue billboard hung over a sprawling, weedy lot where two auto plants were demolished in 2008. In simple block font it stated, Foreclosure is hard on the whole family and directed viewers to the federal governments foreclosure prevention website and hotline. Similar signs hung throughout the city at major intersections and encircled it along the interstate during my 12 months of eldwork in 2009 and 2010, physically marking it as one of the areas hardest-hit by the national foreclosure crisis. Hanging over the ruins of two auto factories, the billboard also marked the stratigraphy of economic change in the community: the once-prosperous auto industry; deindustrialization starting in the 1970s and accelerating through the shutdown of Oldsmobile, headquartered in Lansing, in 2004; the decade-long recession; and then, one of the highest foreclosure rates in the nation. These processes have chipped away at the American dream, understood as nancial stability and upward mobility symbolized by stable, decent work and homeownership. Whereas deindustrialization stripped away the possibility of a dignied work life as it was understood in the post-war period, foreclosure threatens the vision of decent family life symbolized by homeownership. Indeed, the foreclosure prevention campaign run through the Michigan State Housing Development Authority (MSHDA) was dubbed Save the Dream.
City & Society, Vol. 25, Issue 1, pp. 92112, ISSN 0893-0465, eISSN 1548-744X. 2013 by the American Anthropological Association. All rights reserved. DOI:10.1111/ciso.12006.

Although sympathetic to distressed homeowners, its branding placed a heavy discursive burden on owners facing foreclosure, suggesting their actions threatened the stability not only of their families but also the whole political, economic, and moral order of the American dream. The housing authority relied on non-prot housing counseling agencies to offer foreclosure prevention services. Housing counseling agencies were also key actors helping promote low- and moderate-income homeownership in the early 2000s. But by 2010, foreclosure prevention outpaced pre-purchase work in Michigan at a rate of ten to one. I met C.J.1 through one of two primary agencies where I conducted research. C.J. is an African American woman who had retired from her job in corrections and subsequently became disabled. Though she led for non-duty disability benets, her claim was deniedwhich was immensely painful to her after feeling that she put her life at risk for the state throughout her career. She had struggled consistently for the past three years to pay her mortgage, medical bills, and utilities. Her house had been in foreclosure before, in 2004, but she bought it back during the redemption period (after the public auction) by draining her retirement accounts. Already feeling betrayed by the many banks that had owned her loan, her union, and the state, the feeling intensied while working on a loan modication. When she did not qualify for the Obama administrations Home Affordable Modication Program (HAMP), she said:
to me, it was a lie. Its not meant for people struggling, trying to survive and have good health. Thats why people walk away. You nd out youre not qualied. You hear an ad and go to the agency but there its a whole other ballgame.

Narratives of Moral Order in Michigans Foreclosure Crisis

C.J. conded to me that she felt so depressed by her circumstances she had tried to overdose on pain medication. Despite the suicide attempt, she also felt a desire to live. She said, I have to look after me now. So . . . if it takes me having to give up this housethen thats okay now. C.J.s story demonstrates the complex layering of homeowner as a self and political subject, one struggling to reconcile the tidy American dream narrative with a much more complex reality. Ochs and Capps (1996:33) argue that threats to master narratives undermine the stability those stories provide to society, even if those stories do not actually describe most peoples realityas has certainly been the case with the American dream. Times of upheaval, like foreclosures and deindustrialization before them, expose a gap in the explanatory power of a master narrative, into which erupts an excess of stories with hypersignicance (Stewart 1996:107). Such stories not only explain the present but their hypersignicance lies in the possibility for certain narrative communities to establish new commonsense. Major transitions, like the foreclosure crisis and deindustrialization before it, bring on heightened reexivity, during which the spectrum of social (and business) rules and norms can be reconsideredand, perhaps, ultimately can be recongured (May and Morrison 2003:269). In the foreclosure crisis, these changes could be about, for example, the
93

City & Society

appropriate limits of government intervention in the market, the morality of consumption, and appropriate class-based aspirations. I argue that although people affected by the crisis in their daily lives are engaging in these thought processes, policy responses to them have not signicantly altered banks practices. The rst half of this article describes the policy context and mainstream narratives about the foreclosure crisis. The second half examines alternative moral stories hinted at in C.J.s story: disillusionment, suicide, and moving on. Organizationally, the article mirrors the cultural competition for authority within the foreclosure crisis and how these alternatives begin to make sense to the narratorsthat is, after a long steeping in the frustration and instability of trying to retain their homes. Although the narratives of walking away, suicide, and redemption each deserve their own treatment, I bring them together in this article because each one represents a way of giving up homeownership through homeowners agency, albeit under constrained circumstances. They are alternatives that speakers use to imagine (and sometimes act on) ways out of homeownership when lenders are not cooperating. All together, they are moral stories that relate personal experience with mortgage default to critiques of corporations, government, and consumption. This article is based on data collected using participant-observation at two housing counseling agencies, trainings for housing counselors, public hearings and political rallies, and semi-structured interviews with 29 homeowners, and 32 housing professionals. In addition to this, I conducted informal interviews with dozens of clients while answering their phone calls and helping with their intake paperwork. Homeowners were in various stages regarding foreclosure: from those severely underwater but not yet behind on a payment, to those negotiating with their servicer for a loan modication, to those whose houses had been foreclosed. Just over half were clients of housing counseling agencies. I met others through research contacts, personal networks, and social media. Demographically, the homeowners I interviewed were similar to those who have sought help under the NeighborWorks America National Foreclosure Mitigation Counseling (NFMC) program and other housing counseling approved by the U.S. Department of Housing and Urban Development (HUD) (Table 1).

The American Dream: Homeownership promotion and narratives in crisis

omeownership is a practice that closely ties personal aspirations to ambitions of the nation-state. This is achieved practically through policies favoring homeownership over renting, and culturally through the master narrative of the American dream. Although property ownership has always been a cornerstone of the American political project, specic precursors to contemporary housing policy began to take shape in the 1920s, and continued to rapidly form during
94

Table 1: Household characteristics of homeowners facing foreclosure

Homeowners Interviewed for this Project Gender Female Male Raceb White African American Asian Other minorities Multiracial Other race, missing, or refused Ethnicityb Hispanic or Latino Household Type Married Single Adult Female single parent Male single parent Two or more unrelated adults Other 54% 46% 71% 21% Michigan Housing Counseling Clientsa 52% 32% 0% <1% 4% 11% 7% NFMC Counselees (U.S.) 52% 48% 43% 26% 3% 1% 1% 6% 21% 54% 19% 13% 4% 3% 7%

Narratives of Moral Order in Michigans Foreclosure Crisis

4% 4% 50% 33% 5% 11%

Sources: Demographic proles lled out by participants. MSHDA 9902 data for scal year 2010; last column adapted from Jefferson et al. (2012). a All types of counseling (e.g., pre-purchase, homelessness prevention, foreclosure prevention). b For HUD counselees, Hispanic or Latino may be of any race. NFMC used Hispanic or Latino as a race category. Participants in this project self-reported race/ethnicity. Figures may not sum to 100 because of rounding.

the New Deal and post-World War II eras. Owning a single family, detached dwelling so thoroughly became the outward evidence of the American dream that by the 1950s, the American dream became equal to homeownership (Cullen 2003) and dened the post-war vision of afuence. The infamous corollary to this era was the redlining of African American neighborhoods by the Federal Housing Authority and private lenders, and the application of exclusionary racial covenants and blockbusting techniques (e.g., Sugrue 1996). In the wake of the Civil Rights movement and grassroots organizing, Congress enacted measures to promote equal credit opportunity for low income and minority borrowers, in an effort to extend citizenship to more potential homebuyers. With the global turn to neoliberal policies since the 1970s, governments have been keen to enhance private property rights and consolidate the advantages of ownership. In other countries, this has manifested as massive campaigns to normalize squats and informal settlements razing them for illegal occupation of public lands (Amouroux 2009) or parceling and issuing legal, individual titles to homesteaders (Holston 2008; Manseld 2007; see also De Soto 2000). The long history of aspirations for homeownership in the United States has meshed easily with neoliberal policies that promote homeownership as both a social good and a wealth-building strategy. This policy approach is mirrored in commonsense beliefs about the home.
95

City & Society

Gwen raised four sons on her own and felt that owning a home provided a stable environment for the boys as they grew up, that it was a place to feel prideful about, and a tax shelter . . . something that you can take your taxes off. What Gwen referred to as her tax shelter is the single biggest federal subsidy promoting homeownership over renting, the 1986 Tax Reform Act that eliminated the tax credit for credit card interest while preserving the deduction for mortgage interest (Williams 2004:58). The driving force of the housing bubble in the early 2000s was not dignity nor inclusion, but prot. There were many factors contributing to the perfect storm of the housing crisis, including the growth of increasingly complex mortgage-backed securities and the increasing role played by mortgage brokerage rms not subject to the same regulatory standards as depository institutions. Investors demands for more mortgage-backed securities to purchase drove down underwriting standards at brokerage rms, which aggressively marketed subprime and exotic loans (Immergluck 2009; HUD 2010; Saegert, Fields, and Libman 2009). For consumers, this bubble eased access to the American dream of homeownership and added the appealing promise of getting ahead quickly because of rising house values. Out of necessity and on the advice of lenders, many with adjustable rate mortgages (ARMs) renanced these loans just before they would reset at higher interest rates, adding yet more fuel to the investment re by generating a new loan to be sold. When prices stopped rising in 2006, homeowners were not able to continue this strategy and began defaulting. Since then, more holders of prime mortgages have defaulted due to the recession (HUD 2010). Real estate analysts estimate there have been approximately four million completed foreclosures since 2007 and there will be at least three million more delinquencies resolved through foreclosure, distressed sale, or workout plan through 2013. Arguably, foreclosures are perceived as a national crisis precisely because they are increasingly affecting middle-class and white Americans.2 Widespread foreclosures among these owners undermine personal and collective identication with upward mobility, the American dream, and its attendant moral, political, racial, and economic order (cf. Saegert, Fields, and Libman 2009). Michigan has had one of the highest foreclosure rates in the country for many years. This is largely due to Michigans decade-long recession. Predatory lending is certainly to blame for some foreclosures, especially in highly segregated cities such as Detroit, Flint, and Muskegon (Squires, Hyra, and Renner 2009). Where I conducted most of my eldwork, however, housing counselors and local ofcials cited that up to 90 percent of new delinquencies were due to unemployment or reduced income. Nationally, three-quarters of homeowners who sought housing counseling had lost income (Jefferson et al. 2012). Considering Michigans long recession and high unemployment, it seems plausible that unemployment or lost income were s as common triggers of mortgage delinquency as national economic crisis. By 2010, foreclosures in Michigan had increased almost two-and-a-half times over their 2005 level and were especially high along interstate corridors that support the automotive industry (Isley
96

and Rotondaro 2012). In my research in those same areas, a few of the homeowners I interviewed had lost jobs in the auto industry but more often had lost jobs or wages in retail, human services, or other service jobs. Culturally, the American dream narrative establishes a moral order that denes the terms of social obligation and material reward (Dudley 1994). Ortner summarizes it as belief in a kind of decent life of work and family, in the worth of the individual and the importance of freedom, and [to] strive for a moderate amount of material success (2006:71). The individual conjured up in this narrative not only works hard but also copes with adversity and accepts responsibility for her or his situation (McGinnis 2009). In return, individuals should expect to attain work that enables them to provide a stable and comfortable family life for their children, with a single family detached home symbolizing what is meant by decent family life. Michigan has played a key role in the cultural imaginary of upward mobility and urban racial politics: the upward mobility of Michigans blue-collar autoworkers attesting to its accessibility for anyone willing to work hard3 and the rise and fall of Detroit as one of the great African American cities. The recent struggles of Michigan cities have come to symbolize the decline of manufacturing and rise of the globalized economy. Like other master narratives, the American dream condenses layers of meaning into one archetypal story that represents a whole, if contradictory, worldview. Master narratives provide moral order to the world and the means to understand ourselves as coherent individuals acting in it through time. Through personal narratives, we link ourselves to the larger narratives and moral order of society and the nation-state (Cohen 2003; Frederick 2010). Houses and mortgages are over-signied in these dynamics. The house represents a commitment to be in social relations in a particular place; a mortgage, ones consent to participate in larger political-economic processes. Further, in times of economic and social crisis, Americans turn to the home as a safe, secluded, and moral space (May 2008; Coontz 1992) and more recently to gated communities to hold at bay a suite of perceived threats to a safe middle-class lifestyle (Low 2003). Homeownership conveys higher status than renting because the mortgage contract puts the homebuyer in the position of permanent debtor, in contrast to the renter who is free from any obligations at the end of the lease term (Perin 1977:72). Perin continues:
These ties of indebtedness are also political, for in allowing access to debt there is created a generalized gift not directly requited, compelling a loyalty to the banker and to the public institutions whose rules and norms frame his (most often his) actions. [1977:76]

Narratives of Moral Order in Michigans Foreclosure Crisis

The recent struggles of Michigan cities have come to symbolize the decline of manufacturing and rise of the globalized economy

The political gifts of ownership (Maskovsky 2010) compel homeowners loyalty to public and nancial institutionsthereby forming homeowners into model citizens. Losing a home to foreclosure disrupts a familys connections to place and also often follows the disruption of job loss. Foreclosure and eviction involve emotional, familial, social, and nancial losses (Greenbaum
97

City & Society

2008; Purser 2010; Perin 1977; Fields, Libman, and Saegert 2010). Foreclosure is, by design, punitive to homeowners. Punishments include the loss of higher status as a homeowner, tax breaks, the house itself, all the money invested in it, the threat that a lender may pursue a deciency judgment, and damaged credit for up to seven to ten years. Brent White (2010c) argues that government agencies, lenders, housing counselors, and others exaggerate the actual consequences of foreclosure in order to cultivate more shame. Homeowners shame is useful for preventing banks from incurring losses by encouraging homeowners to sacrice as much as possible to avoid foreclosure. Much of the pre-foreclosure process publicly marks those at risk of default. In Michigan, lenders publish notices in the newspaper for four weeks before a sheriff sale. These are supposed to notify homeowners and any other lien-holders of the immediacy of foreclosure; in effect, they also alert family members, neighbors, speculators, and scammers to a distressed owners situation. The sheriff also marks the house by putting a pre-sale notice on the houses window. Again, this is supposed to be a notice a homeowner cannot help but seein case they are not opening mail from their lender and have missed the other announcements about the auction. Participants in my research experienced the notice taped to the window as a moment of deep shame, being marked as though with a scarlet letter. A common motif in narratives about foreclosure is families pack up their belongings in the middle of the night, never to be heard from by their neighbors again, to avoid the shame of being identied with foreclosure. Housing professionals and public ofcials frequently brought up stories about neighbors or acquaintances leaving in such a way. Many homeowners I talked to experienced feelings of panic and shame about having their troubles made public; most who allowed me to interview them, though, spoke about the importance of sharing their stories to reduce foreclosures shaming power and in hopes of helping others facing default in the future.

Responding to the bust

ainstream media have largely characterized defaulting homeowners as either greedy individuals speculating on their homes as investments, as ignorant people who deserve to be foreclosed for agreeing to a mortgage they did not understand, or as freeloaders looking for a handout in the form of a loan modicationnone is a particularly appealing position with which to identify (Maskovsky 2010). Online media outlets have been sites for writers and readers to debate the morality of both borrowers and nancial institutions. A common theme in these sites is Where do these people get this sense of entitlement? (Lansing State Journal, 10 October 2010). A reader said this in reference to Tyson, a white man in his late-30s who had been unemployed since December 2008. I met Tyson and his wife Beth at a counseling agency and I knew them fairly well by the time this article was published. He had been laid off from General Motors after completing his bachelors degree.
98

Tyson and Beth disagreed about what kind of job he should pursue: Should he look for relevant jobs in his eld in order to stay marketable? Should he accept any job so that he may contribute income to the household when his long-term unemployment benets run out? He is one of the more than ve million Americans classied as long-term unemployed during this recession (Ilg 2010). The tone of disgust deployed against homeowners like Tyson seeking loan modications speaks to observers discomfort with the evident challenge they pose to the American moral order of homeownership, upward mobility, and middle class sensibilities. In her seminal analysis of American land use, Perin writes that there is a culturally accepted progression of tenure from renting to owning. Using Van Ganneps stages of ritual, she argues that renters are a transitional category and therefore dangerous because they have the power to redene those now safe back to an unsettled status, no longer one that can be taken for granted (1977:5455). More than renters in a majority owner-occupied neighborhood, owners facing foreclosure threaten the stability of the ownership category for all. They present a visible and real danger of slipping back against the culturally sanctioned progression from renting to owning. Foreclosure prevention programs aim to interrupt this regression from owning to renting but they have been plagued by a public discourse xated on moral hazard (White 2010a:4350; Fields, Libman, and Saegert 2010:674). In economics, moral hazard is the threat that people will take more risks than they otherwise would if they have insurance or, in the case of the housing bust, a government bailout. Homeowners like Tyson are the target of comments about recklessness and entitlement because they are taken to signify the moral hazard posed by loan modication programs. Moral hazard then becomes a way to enforce moral order. The effect of this economic commonsense is to leave intact the discourse of personal responsibility while narrowing the discourse of systemic responsibility and solutions. It is against this backdrop that homeowners, housing counselors, and activists frame their alternative foreclosure moralities, to which I now turn.

Narratives of Moral Order in Michigans Foreclosure Crisis

Walking away
n 2009 and 2010, housing counselors might submit a homeowners application and supporting documents three, four, up to six times before the lender acknowledged it (also see White 2010b). As revealed in the national mortgage servicer settlement with attorneys general, these practices were part of an intentional strategy for servicers to make money through late fees, foreclosure, or by pressuring homeowners into less affordable in-house modications (Currier 2012). Lansing-area homeowners were mainly applying for loan modications under the Home Affordable Modication Program (HAMP) and were doing so during a 90-day pre-foreclosure grace period created by a 2009 Michigan law.4 Introduced in February 2009, HAMP aims to reduce a homeowners mortgage payment to no more than 31 percent of the households gross
99

City & Society

income, usually through interest rate reductions or, much less often, reducing the principal owed on the loan. To qualify, homeowners must persuade their banks of a specic hardship (e.g., job loss, reduced income, illness, divorce); proving fraud is even more difcult. A HAMP modication begins with a trial period that is supposed to last three months, after which it will be evaluated for conversion to permanent terms. Widely critiqued as anemic and Kafkaesque (SIGTARP 2010; White 2010a; also see Porter 2012; Gans 2011), the program does not legally require lenders to participate unless a loan is owned or guaranteed by Fannie Mae or Freddie Mac. Instead, modications are voluntary and the Treasury Department pays servicers an incentive for each HAMP application they process. As of May 2012, HAMP had offered just over one million permanent modications, far short of the three to four million projected by the Obama administration. While the program did set up a simple formula for modications that is premised on reducing paymentsinstead of adding arrearages onto the back end of the loanit may ultimately be another instance in the federal governments foreclosure prevention initiatives that Fields, Libman, and Saegert argue show a pattern of repeated inefcacy . . . [where] Wall Street has consistently trumped Main Street as the beneciary of government intervention (2010:668). The administration continues to tweak the program, expanding eligibility criteria and increasing the incentives paid to servicers to participate. At one point in my research, Tami, a counselor I worked with closely, shared a rumor with me that the fax number at one of the major national lenders literally went to one central fax machine and from there the print-outs were sorted and distributed. Whether or not the rumor was true, it is a useful image illustrating the ineptitude they encountered. Counselors were used to encountering delays and silences with some of the cases they negotiated, which frustrated them. They understood that banks had broad discretion in interpreting the eligibility guidelines of any program they participate in. This was especially true for those housing counselors who worked at lenders before coming to the other end of the transaction.5 Carolyn worked in wholesale lending for 18 years before losing her job in a buy-out in 2007. Her experience with the infrastructure of lending made her:
more tolerant [than other housing counselors] of . . . what servicers and lenders are going through to try to retool. This is a major, major process to go through internally as far as reporting, reorganizing. No wonder lenders are taking so long in agreeing to participate: the manpower alone, the monies to accomplish this process . . . Lenders arent built this way.

Lender departments are under-staffed and over-worked, which may be a result of the slow process of change Carolyn described or, as other research participants and recent investigations contend, the result of a purposeful strategy to stall negotiations with homeowners while continuing to collect payments and assign late fees. The result of this
100

stonewalling may be that owners exhaust all their resources or walk away from the house. Distressed homeowners described banks and loan servicers as black boxes they could not penetrate either through reason or endurance. As a regular presence at the housing counseling agency, I learned that their most persistent feelings were uncertainty and frustration. Homeowners in distress often called their lenders several times a week or even every day to ask for reduced payments, a repayment plan, or to check on the status of their request. They continued to receive letters and phone calls from their lender telling them they owed varying amounts of money to bring the loan current. Sometimes the amount due in closely dated letters varied by thousands of dollars, depending on which department mailed it. Homeowners complained that they could not talk to the same person twice, which was especially likely if they were dealing with customer service rather than a specialized loss mitigation department (Herbert and Turnham 2010; Fields, Libman, and Saegert 2010). For homeowners, this meant retelling their story over and over to anonymous operators who could promise them options that did not exist, could not be enforced, or that would not be followed through. From the perspective of homeowners, these interactions seemed exquisitely attuned to avoiding accountability. Or, as Saegert, Fields, and Libman put it, they feel anger at the lack of oversight and accountability for nancial institutions while the homeowner was constantly harassed to be accountable in multiple ways (2009:310). Indeed, one of the most frequent refrains I heard answering phone calls at the counseling agency and in interviews was that banks dont want to work with people. Further evidence of this stonewalling can be found in the $25 billion settlement of the ve largest mortgage servicers with state attorneys general in early 2012 for lost paperwork, long delays, and missed deadlines in the loan modication process. Homeowners facing foreclosure recounted the frustrations of dealing with their lenders as evidence of deep personal affront, the corruption and moral depravity of corporations, and the breakdown of the social order. When I began eldwork, Elaine, a white woman in her sixties, had already been working with a housing counselor for over a year. Having gotten to know the agencys staff quite well during this time, she began all her voicemails with a bubbly, hello, dearies! Once she called to tell a three-minute tale about her mortgage company sending her documents with a phone number that was not for the mortgage company but a dating hotline. Can you imagine? she hooted. And then they had to re-FedEx everyone the papers with the real number and an apology letter. How expensive was that?! Just thought youd want to know that! Months later, I answered her call after she was denied a loan modication. In tears, she said, I just dont understand how they can do this . . . now I understand how people can walk away. I never did before. In this kind of walking away, homeowners feel they have been acting in good faith while their lender has not. They become so frustrated by the uncertainty that they give upor at least consider giving upnegotiations. When homeowners, like C.J. and Elaine, feel they

Narratives of Moral Order in Michigans Foreclosure Crisis

101

City & Society

have tried every resource available to them, they feel bitter, disillusioned (also see Saegert, Fields and Libman 2009; White 2010a, 2010b), and no longer loyal to the public and nancial institutions that made them Homeowners who model homeowner-citizens. I suggest that homeowners who walk away under these circumstances do so because they feel lenders have broken walk away the social terms of debt relations. According to a recent review article (Peebles 2010), debts are relationships that, although unequal, are supunder these posed to be mutually benecial. Creditors give up some of their current circumstances do assets in exchange for future returns; debtors have the long-term obligation and must repay more than they borrowed, but they get access to so because they resources and opportunities they would not otherwise have. It is hierarchical but not one-sided. But when, as in the case of denied requests for feel lenders have assistance, creditors are seen as abusing their power, both the creditors broken the social and the debtors feel illegitimate. Homeowners are then able to consider breaking their promise to pay. This is different than strategic default, a terms of debt situation where homeowners who can afford their payments walk away because it is in their best nancial interest to do so. I return to this relations distinction in the section below.

Suicide stories
istressed homeowners and housing counselors recounted stories of foreclosure-motivated suicides to demonstrate the extent to which banks value money over peoples lives. There is some indication that the recession has caused a small increase in suicides but only one study has pointed to home loss as a specic motive (Stack and Wasserman 2007). However, for my argument, the point is not how common foreclosure-motivated suicides are, but the circulation of suicide talk and its use for framing home lossand retentionas a moral issue. Homeowners mentioned suicide in litanies about the effects of the foreclosure crisisalong with, for example, reduced municipal tax bases and rising crime in neighborhoods with vacant houses. It was also discussed as a poignant link between home and self, suggesting that the loss of the home is tantamount to the loss of life. In my eldnotes after an early conversation with Ruth, an elderly white widow, I recounted a story she told me about a friends niece who lost her home:
Four days before trying to commit suicide, she found out she had cancer. That same week, her husbandwho like her had lost his job before the foreclosure and bankruptcyled for divorce and took their little boy with him. Shed slashed her wrists and nearly bled to death.

For this woman, like C.J. whose story opened this article, foreclosure would come after a protracted series of losses (c.f. Stack and Wasserman 2007). More than this specic case, though, Ruth made oblique references to news stories about senior citizens killing themselves because of their fear of losing their house, and the belief that they had no other resources or no one to turn to for help. She and her son considered the
102

real estate bust a sham perpetuated on the American people by the banks and the mortgage companies. In suicide stories, it is often implied that the victims are middle class or of the stable working class, individuals who are not accustomed to asking for help. Stack and Wasserman (2007) suggest given the class sensibility, perhaps the fear of becoming homeless motivates some to take their lives. This is certainly the implication in a California news article about a man who torched his house, murdered his wife, and then killed himself. A local newspaper reports:
The devastating combination of unemployment and a ballooning adjustable-rate mortgage left the 60-year-old Cour and his 70-year-old wife in a very dark place. The ve-bedroom house was in foreclosure and the couple was facing eviction. The home that was supposed to provide shelter and security could provide neither. As far as Cour was concerned, he was out in the cold. [Sign-On San Diego, January 7, 2011; my emphasis]6

Narratives of Moral Order in Michigans Foreclosure Crisis

Within the discursive world about the homeless described by Lyon-Callo (2001), it might be unthinkable for a person to imagine their descent from middle-class status into the category of a homeless deviant in need of reform. According to housing counselors, a recurring theme in homeowners discourse is theyll nd me in the house. The rst client that Juanita, a loan ofcer turned housing counselor, discussed with me was a woman who threatens to just hang herself in the house. When I asked if this was isolated incident or if she had other clients threaten to kill themselves, she responded, Ive had three or four like that. She was not the only housing counselor who had heard this expression. Most of the counselors whom I interviewed had clients threaten to kill themselves, usually specically mentioning doing it in the house. But, for as troubling as this is, housing counselors have their own ways of interpreting suicide talk from clients. Juanita understood her clients in the following way:
Its not just because oh, my house is in foreclosure, now Im going to do thisits because of the lenders. They call them every day and harass them . . . They can do whatever they want, say whatever they want, harass as much as they want. By the end, [borrowers] cry a river. They throw up their hands. They can have me in the house if they want. Thats when you got to say, look theres better things out there besides this house. By the time you talk to them . . . I know Im supposed to be reporting this but I dont think theyre really going to do it. By the time you nish talking to them they just feel so much better. You can tell theyve got a big smile on their face. These lenders just play so many games, you know.

Juanita distinguished this kind of suicide talk from the type of talk that would indicate a more serious threat, which she would report. This talk was not perceived to produce any potential harm but was understood as a kind of habitual speech from homeowners who have no other tools
103

City & Society

to express their frustration. Like homeowners assertions that they understand why people would deface or gut their house before eviction, attempting suicide just before eviction is an act of vengeance against Suicide is imagined banks agents, and an assertion of embittered, desperate agency. It is agency in negative termsas the power to withhold consent, for as the ultimate example, or to perform their resistance, [or] to withdraw some part of their productive energy from what they see as the system (Greenhouse form of 2010:9). In these stories of despair, suicide is imagined as the ultimate commentary, a form of commentary, a nal protest. There were two opposing ways counselors and homeowners talked nal protest about agents of mortgage servicers. On one hand, the delays and conicting information they encountered led them to talk about banks as extremely disorganized. Banks were also attributed a nefarious agency since one can never reach the decision makers and the agents with whom they usually speak are pawns in this game-playing. In suicide stories, lenders are ambiguously positioned between these two positions. Talk about foreclosure-motivated suicides points out the moral gulf around lenders actions. Further, it inverts the moral hierarchy that portrays homeowners as reckless in order to frame them as victims of the nancial system.

Strategic default and other paths to redemption

hen a homeowner defaults on her mortgage, the county schedules a sheriff sale at which the house is usually bought back by the entity that owns the debtthe lender, mortgage servicer, or investor. In Michigan, homeowners have a six-month redemption period during which they can continue to live in the house without paying any mortgage or rent. They can also get the house out of foreclosureredeem itby repaying the full remaining balance of the loan plus nes, fees, and lawyers costs. The language for this process draws heavily from religious vocabulary to normalize a moral universe aligned with the priorities of private property, contract law, and nancial stability. To be on the verge of this loss is the place where one nds literally the last offer of redemption. Is the implication, by extension, that homeowners redeem themselves as actors in the social world? To reenter the mortgage contract by redemption, borrowers avert the moral hazard of the bailout and reenter well-worn circuits of consumer capital ows. To fail to maintain the mortgage debt is to fall outside normal creditor-debtor relations and there is nothing farther from that norm than strategic default, one of the most widely commented and, to most observers, morally unsettling phenomena of this housing crisis. Strategic default means that a borrower who could afford the monthly mortgage payments chooses to stop paying because the house is undervalued (underwater) relative to what she or he owes on the mortgage note. Using data from 2009, White (2010c) argues that even though one-third of homeowners were underwater on their mortgages, the

104

strategic default rate was three percent; mortgage default was more closely tied to the unemployment rate than the rate of price declines. In American society, much cultural work has been geared to spreading a neoliberal mindset, one where the individual is taught to evaluate her or his personal decisions with a degree of managerialism using costbenet analysis. Policymakers, welfare reformers, and others have long mobilized the discourse of personal responsibility in tandem with managerialism (cf. Immergluck 2009). It is the discourse of personal responsibility and morality that most often prevents homeowners from opting for strategic default, even when it might be in their best nancial interest (White 2010a, 2010c). Corporations use strategic default and bankruptcy as common nancial tools but homeowners strategic default seems unusual and shocking. It undermines the suite of moral and existential sanctions levied through foreclosure, especially when defaulters publicly claim their actions do not induce feelings of guilt or shame but that, to the contrary, the feeling is one of liberation. A vocal minority does just that in media outlets, social networks, and support resources (such as the website youwalkaway.com; White 2010b). Whereas media condemnations have framed defaulters as immoral, certain defaulters believe it to be the moral choice to continue providing well for ones family (White 2010b). One family I interviewed in beleaguered Flint was preparing to abandon their house not only because it was worth one-quarter of what they owed, but also because crime had risen in the neighborhood. Michael grew up in Flint and moved back to the area as an adult. He bought a house in a neighborhood he aspired to live in as a child, and opened a business downtown to contribute to the citys revitalization. Because of his and his wife, Jackies, commitment to the city they were plagued with guilt over walking away from the mortgage and from the city. However, Jackie explains that, with an infant son
Our get out of jail free card is we heard gunshots. So with friends when theyre like, oh, you know, youre leaving your housewe can say we heard gunshots, and theyre like, okay. . . . [T]he hardest part was admitting to people that thats what we were choosing to do.

Narratives of Moral Order in Michigans Foreclosure Crisis

Further, like other strategic defaulters, Jackie believes that walking away corrects the moral imbalance where corporations can write off losses (that is, default on loans) with no moral baggage whereas consumers are punished morally and nancially for the crisis while the institutions that caused it are not. Jackie continued, There is that point of the banks do strategic foreclosures all the time. Why should we be the ones who get the moral guilt trip to stay in this bad investment basically? If were gonna ruin our credit and have to rebuild it, lets start it now instead of in another ve years when weve sunk that much more money into it (cf. White 2010a, 2010c). Often, social scientists have assumed that neoliberal philosophy necessarily supports global capital ows, but strategic defaults show a personal neoliberal ethic that does not coincide with the larger needs of
105

City & Society

Strategic defaults show a personal neoliberal ethic that does not coincide with the larger needs of capital

capital. Chiketa, an African American lawyer who contests evictions and foreclosures, explained this position in a way that combined neoliberal and humanistic ethics. She argued that borrowers need to understand a mortgage as a business transaction, not through the emotional lens that consumers are trained to see it through. She stated:
I tell people to just treat it as a business because . . . I want to press people to do strategic default because I feel like we should all take the emotion out of it. Its a contract; this is a business decision that you made. But because people are so emotionally tied to their property and its not a good bargain.

She argues that homeowners should unravel the central link of the twentieth-century American dreamthat buying a house is the material representation of ones dreams:
[W]hen they sign on the dotted line, it almost becomes their grave . . . We dont have the ability to just, you know what, Im going to be free and Im going to pack up and Im gonna go. . . . So then you start accumulating all of these things, trinkets, stuff you dont need. And I think we become a parasitic consumer versus, say, how much do you really need? (emphasis added)

In her view, this liberates people to pursue passions and human relationships. Whereas the American dream in large part links fulllment to consumption, Chiketa inverted this relationship; for her, the monthly payments and inability to move at will hinder ones ability to dream of a different future. Rather than being about fulllment of desire, consumption mutates into a parasitic force. In transformation stories, narrators link their material loss with heightened social and moral commitment. About one-quarter of homeowners I interviewed expressed some kind of relief about giving up the house, whether through strategic default, foreclosure, selling it, or deeding it back to the bank; housing counselors echoed these sentiments when talking about their clients. These expressions ranged from C.J.s simple acknowledgment that she would be ne if she had to leave the house to professions that the economic strain was good for the family because it reminded them of whats really important. The narrators contrasted their own social and moral commitmentsto their families, to building society, to pursuing a good and non-materialistic lifeto the crass drive for prot on the part of banks and contested the moral double standard applied to consumers and businesses. Home loss-as-epiphany also gives an interesting mirror to Margaret Talbots treatment of debt porn described in Brett Williams work (2004:5152). Talbot criticizes the narrative arc about consumer debt: from temptation to a downward spiral of addiction, then through the language of recovery. This narrative, usually applied to lower income and people of color, gives middle- and upper class, often white, observers a smug sense of superiority (ibid). It implies that there is a small number of people, a they, that is addicted to debt and consumption while there is a we reader that is above those
106

attachments. Unlike debt porn, the transformed homeowners are not saying that there were a few people who are addicted to debt while most are not; instead, they argue that they are among the few to escape from the cultural addiction to debt and materialism. While they ultimately depend on nding enough resources to rebound, home-loss-as-epiphany allows middle and working class people to talk back to the usual hierarchies of debt and morality.

Narratives of Moral Order in Michigans Foreclosure Crisis

Reections and conclusion

n this article, I have traced the complex circumstances in which Michigan homeowners and housing professionals confront and try to avoid foreclosure. Their responses are conditioned as much by the moral and cultural work of the American dream as by specic foreclosure prevention programs. The American dream is premised on the belief that a hardworking individuals efforts pay offand owning a home has been material proof of that cultural fact. Striving but failing to hold onto homeownership, therefore, challenges deep-seated cultural beliefs about the self as a moral, political, and nancial subject. Individual homeowners interactions when they tried to negotiate loan modications strained their loyalty to nancial institutions they believed served their interests and, as they negotiated under the auspices of state or federal programs, their loyalty to public institutions. At the same time, mainstream media narratives, especially before the robo-signing scandal broke in late 2010, portrayed homeowners as largely at fault for their situations. Foreclosure prevention programs, meanwhile, have been structured around banks voluntary participation, which has left homeowners and nonprot housing counselors shouldering the lions share of the foreclosure burden. Walking away, suicide stories, and the emotional freedom found in giving up a house are ways to search for the meaning and reduce the pain of the foreclosure crisis for homeowners. They simultaneously absorb blame and challenge dominant narratives that moralize against homeowners, by depicting the crisis as one manufactured and made worse by the actions of banks. In light of the evidence in this article and the recent nationwide judgments against banks for subverting loan modication programs, it is easy to understand homeowners feelings of despair when in spite of their best efforts (including in some cases an ability to afford the mortgage), they cannot affect the outcome. They feel betrayed and angered by banks and other nancial institutions they trusted to act in their best interestor at least to not purposefully harm them in bald pursuit of prot. Stories of walking away, suicide, and redemption are attempts to reclaim homeowners agency, a sense of meaning and of possibility; ultimately, though, they underscore distressed homeowners suffering and lenders intractability. This is not to say that housing professionals and homeowners do not recognize the complexity and constraints for banks to handle unprecedented numbers of mortgage delinquencies and foreclosures. However, revelations such as those in the
107

City & Society

2012 attorneys general settlement show that while some of banks difculties may be real, some may be feigned in the service of minimizing banks lossesshifting those losses onto American families, neighborhoods and communities. At the ground level, homeowners and housing professionals narratives experiment with the moral order in ways that become viable when banks lose credibility as social actors. Macro-level and policy responses have largely failed to meet the anxieties of home loss discussed in this article, widening a gap between lived experience of this crisis and the dominant institutions of nance and the state. Into this gap have surged highly visible mobilizationsthe Tea Party and Occupy Wall Street and a wide range of personal narratives jockeying with each other for explanatory power. Meanwhile, as individuals search to understand what is happening and how to cope with awed foreclosure prevention programs, nancial institutions have largely resumed dangerous speculative practices with impunity. Ways forward must address this legitimacy gulf for nancial and state institutions, though the failure to create meaningful reform in light of the nancial crisis and more recent scandals does not signal great hope. Analysts have suggested housing-specic solutions to reduce foreclosures and prevent a new housing bubblesuch as writing down mortgage principal and creating continually adjusting mortgages. The new Consumer Finance Protection Bureau issued stricter mortgage servicing guidelines in early 2013 to address problems discovered in the foreclosure crisis. More systemically, Karen Ho (2012) has been calling for people to hold Wall Street to count for its moral attachment to production. In the absence of meaningful shifts in institutional behavior, policies, or regulations, Michiganders are both reinterpreting and doubling down on aspects of the cultural logic of the American dream. Strategic default brings market-based analysis to bear on the pursuit of a morally good, non-materialistic life in ways that are surprising, innovative, controversialand rare. Stories of suicide and actual walking away conjure up the evocative notion of negative agency, where agency is dened by refusal and withdrawal (Greenhouse 2010). So although this crisis is bringing on heightened reexivity about the spectrum of social (and business) rules and norms (May and Morrison 2003:269), it has so far failed to recongure the practices, policies, and beliefs at the root of this crisis of economy and meaning.

Notes
Acknowledgments. An early version of this paper was presented in the panel, Anthropology of the Rust Belt: Circulation in the Heart of Production at the 2010 American Anthropological Association meetings. Im grateful to my fellow organizers and panelists and especially to Susan Greenbaum for her comments as discussant and in preparation of this article. I appreciate the intellectual support of three City & Society reviewers and my colleagues at Abt Associates. Any errors are mine.
108

Participants were offered the option to use a pseudonym or their real name. 2 Homeowners are rened into a credit score hierarchy that is also moralprime versus subprimenot dissimilar from the racial hierarchy of redlining. 3 Communities of color were decimated by a renancing boom in the mid-1990s that stripped the equity from long-time owners (Immergluck 2009). They have been hit again with this bust. 4 Myriad programs have proliferated in response to the mortgage crisis, from door-to-door outreach by community organizers; to lenders in-house modication programs; federal programs emerging from the FDIC, FHA, and Treasury Department; and partnerships between housing advocates and lenders in the HOPE Now Alliance. For a concise overview, see HUD (2010). 5 Some 42 percent of housing counselors have prior experience as loan ofcers, mortgage brokers, realtors or nancial planners, in no small part because of extensive job losses in those sectors in the bursting of the housing bubble (Jefferson et al. 2012). 6 It is also consonant with the evidence: Typically suicidal persons committed suicide a few hours before they would have been forced out of their home (Stack and Wasserman 2007:108).

Narratives of Moral Order in Michigans Foreclosure Crisis

References Cited
Amouroux, Christa 2009 Normalizing Christiania: Project Clean Sweep and the Normalization Plan in Copenhagen. City & Society 21(1):108132. Cohen, Shana 2003 Alienation and Globalization in Morocco: Addressing the Social and Political Impact of Market Integration. Comparative Studies in Society and History 45(01):168189. Coontz, Stephanie 1992 The Way We Never Were: American Families and the Nostalgia Trap. New York: Basic Books. Cullen, Jim 2003 The American Dream: A Short History of an Idea that Shaped a Nation. Oxford: Oxford University Press. Currier, Cora 2012 Four Whistleblowers Who Sounded the Alarm on Banks Mortgage Shenanigans. ProPublica. http://www.propublica.org/article/four-whistleblowerswho-sounded-the-alarm-on-banks-mortgage-shenanigans, accessed March 15, 2012. De Soto, Hernando 2000 The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else. New York: Basic Books. Dudley, Kathryn Marie 1994 The End of the Line: Lost Jobs, New Lives in Postindustrial America. Chicago: University of Chicago Press.
109

City & Society

Fields, Desiree, Kimberly Libman, and Susan Saegert 2010 Turning Everywhere, Getting Nowhere: Experiences of Seeking Help for Mortgage Delinquency and their Implications for Foreclosure Prevention. Housing Policy Debate 20(4):647686. Frederick, Marla A. 2010 Rags to Riches: Religion, Media, and the Performance of Wealth in a Neoliberal Age. In Ethnographies of Neoliberalism. C.J. Greenhouse, ed. Pp. 221237. Philadelphia: University of Pennsylvania Press. Gans, Marc 2011 Doomed from the Start: A Critique of the Home Affordable Mortgage Program http://ssrn.com/abstract=1909446 or http://dx.doi.org/10.2139/ ssrn.1909446, accessed April 14, 2011. Greenbaum, Susan 2008 Poverty and the Willful Destruction of Social Capital: Displacement and Dispossession in African American Communities. Rethinking Marxism 20(1):4254. Greenhouse, Carol J. 2010 Introduction. In Ethnographies of Neoliberalism. C.J. Greenhouse, ed. Pp. 110. Philadelphia: University of Pennsylvania Press. Herbert, Chris and Jennifer Turnham 2010 Approaches to Foreclosure Mitigation Counseling: Findings from a Study of Five Baltimore Agencies. Report prepared for Baltimore Homeownership Preservation Coalition. Cambridge, MA: Abt Associates Inc. Ho, Karen 2012 Occupy Finance and the Paradox/Possibilities of Productivity. Theorizing the ContemporaryFinance. Cultural Anthropology http://culanth.org/ ?q=node/573, accessed May 15, 2012. Holston, James 2008 Insurgent Citizenship: Disjunctions of Democracy and Modernity in Brazil. Princeton: Princeton University Press. Ilg, Randy 2010 Long-Term Unemployment Experience of the Jobless. Issues in Labor Statistics. Summary 1005. Washington, D.C.: Bureau of Labor Statistics. http:// www.bls.gov/opub/ils/summary_10_05/long_term_unemployment.htm, accessed August 8, 2012. Immergluck, Dan 2009 Foreclosed: High-Risk Lending, Deregulation, and the Undermining of Americas Mortgage Market. Ithaca: Cornell University Press. Isley, Paul, and Gustavo Rotandaro 2012 The Michigan Historical Residential Foreclosure Data Project. Grand Rapids, MI: Community Research Institute. Jefferson, Anna, Jonathan Spader, Jennifer Turnham, and Shawn Moulton 2012 Foreclosure Counseling Outcome Study: Final Report: Housing Counseling Outcome Evaluation. Washington, D.C.: U.S. Department of Housing and Urban Development. Ofce of Policy Development & Research. Low, Setha M. 2003 Behind the Gates: Life, Security, and the Pursuit of Happiness in Fortress America. New York: Routledge. Lyon-Callo, Vincent 2001 Making Sense of NIMBY: Poverty, Power and Community Opposition to Homeless Shelters. City & Society 13(2):183209. Manseld, Becky 2007 Privatization: Property and the Remaking of Nature-Society Relations: Introduction to the Special Issue. Antipode: 393405.
110

Maskovsky, Jeff 2010 Dead Ends: The Foreclosure Crisis and the Limits of the Ownership Society. Paper Presented at 109th Annual Meeting of the American Anthropological Association. New Orleans, Louisiana. November 1721, 2010. May, Elaine Tyler 2008 Homeward Bound: American Families in the Cold War Era. New York: Basic Books. May, Steve, and Laura Morrison 2003 Making Sense of Restructuring: Narratives of Accommodation among Downsized Workers. In Beyond the Ruins: The Meanings of Deindustrialization. J.R. Cowie and J. Heathcott, eds. Pp. 259283. Ithaca, NY: Cornell University Press. McGinnis, Theresa A. 2009 Seeing Possible Futures: Khmer Youth and the Discourse of the American Dream. Anthropology & Education Quarterly 40(1):6281. Ochs, Elinor and Lisa Capps 1996 Narrating the Self. Annual Review of Anthropology 25:1943. Ofce of the Special Inspector General for the Troubled Assets Relief Program (SIGTARP) 2010 Quarterly Report to Congress. July 21, 2010. Ofce of the Special Inspector General for the Troubled Assets Relief Program: Washington, D.C. Ortner, Sherry B. 2006 Anthropology and Social Theory. Durham: Duke University Press. Peebles, Gustav 2010 The Anthropology of Credit and Debt. Annual Review of Anthropology 39:225240. Perin, Constance 1977 Everything in Its Place: Social Order and Land Use in America. Princeton: Princeton University Press. Porter, Katherine 2012 Driven by Debt: Bankruptcy and Financial Failure in American Families. In Broke: How Debt Bankrupts the Middle Class. K. Porter, ed. Pp. 121. Stanford: Stanford University Press. Purser, Gretchen 2010 Evicted: Shelter Insecurity in Urban America. Unpublished Manuscript. Saegert, Susan, Desiree Fields, and Kimberly Libman 2009 Deating the Dream: Radical Risk and the Neoliberalization of Homeownership. Journal of Urban Affairs 31(3):297317. Squires, Gregory D., Derek S. Hyra, and Robert N. Renner 2009 Segregation and the Subprime Crisis. In Federal Reserve System Community Affairs Research Conference. Washington, D.C. Stack, Steven and Ira Wasserman 2007 Economic Strain and Suicide Risk: A Qualitative Analysis. Suicide & Life-Threatening Behavior 37(1):103112. Stewart, Kathleen 1996 A Space on the Side of the Road: Cultural Poetics in an Other America. Princeton: Princeton University Press. Sugrue, Thomas 1996 The Origins of the Urban Crisis: Race and Inequality in Postwar Detroit. Princeton: Princeton University Press. U.S. Department of Housing and Urban Development (HUD) 2010 Report to Congress on the Root Causes of the Foreclosure Crisis. Washington, D.C.: Housing and Urban Development.

Narratives of Moral Order in Michigans Foreclosure Crisis

111

City & Society

White, Brent T. 2010a Take This House and Shove It: The Emotional Drivers of Strategic Default (May 14, 2010). Arizona Legal Studies Discussion Paper No. 1017. http:// ssrn.com/abstract=1603605, June 1, 2011. 2010b The Morality of Strategic Default (May 22, 2010). UCLA Law Review Discourses, Forthcoming; Arizona Legal Studies Discussion Paper No. 1015. http://ssrn.com/abstract=1597835, accessed June 1, 2011. 2010c Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis (October 27, 2010). Wake Forest Law Review, Vol. 45, p. 971, 2010; Arizona Legal Studies Discussion Paper No 0935 http://ssrn.com/abstract=1494467, accessed June 1, 2011. Williams, Brett 2004 Debt for Sale: A Social History of the Credit Trap. Philadelphia: University of Pennsylvania Press.

112