A procession of homeowners and farmers, all facing loss of their property through foreclosure, trudged to Capitol Hill this week to urge Congress to help them hang on until the economy improves.
"It's just our home--that's all we want," said Susan Ostek, a housewife from Teaneck, N.J., whose family was forced into bankruptcy after her husband was laid off from his job as a mechanic.
She was among a dozen steelworkers, truck drivers, farmers and others who described for the House Banking subcommittee on financial institutions their struggles to stay afloat in a sea of debt and unemployment. Their stories, though different in detail, struck similar notes: established families, apparently secure, find their principal breadwinner laid off and their mortgage payments suddenly gobbling up savings, unemployment benefits, even grocery money.
John Warnic of Aliquippa, Pa., laid off by Jones & Laughlin Steel last February, had to try to make monthly mortgage payments of $470 on weekly benefits of $190. "It was mathematically impossible," he said. "I had to give up the home."
John Sullivan, a truck driver from Brookpark, Ohio, had worked his way up to number five on his employer's roster of about 50 drivers when trucking deregulation hit. Now "they've only got two drivers left . . . and they're talking about folding the company up altogether," he said.
Sullivan said he has been trying to sell his house but has had no takers. In fact, only two people even came to look until foreclosure proceedings became public. "Then about 50 came. They don't come on the property but they do ride around looking at it real funny."
But despite their current problems, most of the witnesses remained hopeful that they will get new jobs or be recalled to their old ones and work their way out of their troubles.
Consequently, they endorsed the half-dozen or so assistance measures now being offered on Capitol Hill. Some would encourage lenders to forbear and assist them in dealing with regulators who might regard excessive compassion as a poor management practice. Others would put the government in the lending business, making direct loans to troubled homeowners to tide them over short periods of involuntary unemployment.
Members of the committee, too, seemed enthusiastic about some type of assistance, but were unsure about what final form it should take.
"Prudence requires that actions we take are not overreaction that would place the mortgage market under a cloud," observed Rep. Chalmers P. Wylie (R-Ohio), the panel's ranking minority member.
"All of us have the same objective--to prevent the foreclosure and loss of homes of American families who are faced with economic conditions beyond their control," said Chairman Fernand J. St Germain (D-R.I.). "And all of us are in agreement that we need to provide the remedies quickly and in the least disruptive manner possible. I am willing to explore any possibility that looks promising."
Least optimistic were the farmers, who face a combination of rising interest and production costs and falling commodity prices.
Lester Joens, a farmer from Manning, Iowa, said that since 1979, his last profitable year, increased interest costs alone have drained $80,000 from his farming operation, finally ruining him. "The stress of foreclosure is tremendous," he said, "and bankers should consider this when dealing with people who have these problems.
"Would you load the furniture up the day a man's wife died? The stress of foreclosure isn't any different."
Joens added, "I think, that if I were a banker, your best risk are the people who have been through the mill" because they know the pain it causes.
Neither he nor Charles Hardin, another farmer from Wilmington, Ohio, was optimistic about the future of American agriculture as long as prices are below production costs. " . . . I'm losing my 269-acre farm," said Hardin, "and the reason for it, mainly, is because the price of farming, the price farmers are receiving, just isn't there. It hasn't been there."
"I've lost everything," he said.
The outlook for workers in depressed industrial areas of the country was hardly better. Steelworkers from Baltimore, Pittsburgh and Birmingham described being laid off and its consequences.
Katherine Garrison of Baltimore, a steelworker since age 18, told how both she and her steelworker husband had been laid off. She said they then split up over the ensuing money problems and she is now losing her house.
The steelworkers union made her house payments for November and December, but "since then I haven't made a house payment. There's no way I can do it. . . . Unless I get called back to work there's nothing that I can do."
Local sheriffs also testified, both noting that they have intervened in the foreclosure sale process in their areas to try to help troubled homeowners.
Sheriff Eugene L. Coon of Allegheny County, Pa., went so far as to remove 42 owner-occupied houses from the January sheriff's sale, in which they were to have been sold at auction. A local judge later suspended sheriff's sales of owner-occupied homes to give people time to work out agreements with lenders.
Coon estimated that of 245,000 mortgages in the Pittsburgh area, 15,000 are delinquent, 2,000 are in foreclosure and 45,000 are close to becoming delinquent.
Sheriff James A. Mertz of Lorrain County, Ohio, said, "I have been called 'realtor of the year.' I'm the only person selling real estate" in the county.
Mertz said he became concerned over the foreclosures and began investigating properties he was being called upon to sell. He said he worked out a list of criteria under which he would be willing to hold off a sale. So far he has saved one man's house, and is preparing to try to save others. "We are merely seeing the tip of the iceberg in our area," he said.
His experience has been that there is a 12- to 18-month lag between unemployment surges and foreclosure sales, and unemployment there peaked last year at 23 percent. Based on that, Mertz said he expects that if nothing is done, he will auction off more than 1,100 houses next year.