Flophouses: Our Immigrant-driven Future

Via Trumwill, from Slate:

Bring Back Flophouses, Rooming Houses, and Microapartments

Dumb urban policies wiped out the best kinds of housing for the poor, young, and single. But they’re finally making a comeback in smart cities.

. . . .

In the following decade, California began regulating rooming houses and other hotels, setting standards for bathrooms (one per 10 bedrooms), window area per room, floor space per room, and more. Again, some of these rules may have had health benefits, and the rules’ proponents certainly thought they were helping. Yet they knocked the cheapest rooms off the market without providing substitutes.

Mmm . . . government policies that make illegal people’s inexpensive choices, all “for their own good”.  That sounds . . . really familiar!  I wonder what Slate had to say about it.

The rules were not accidents. Real-estate owners eager to minimize risk and maximize property values worked to keep housing for poor people away from their investments.

Without changing the underlying reality, that paragraph could be rewritten thusly:

The rules were not accidents.  Residents eager to minimize crime and maximize quality-of-life worked to keep violent and dysfunctional people away from where their children played.

Kind of puts a different spin on the same set of facts, doesn’t it?

The Real Purpose of Regulation

Matt Yglesias discovers bureaucracy.  The American Interest gloats:

As Yglesias’ experience shows, the move for government reform does not need to be an ideological or partisan issue: liberals should fight pointless, expensive, poor-exploiting and opportunity-killing regulation as hard as conservatives.

But it has, to some degree, become a partisan issue because upper middle class progressive intellectuals often know nothing about the real effect of the regulations they do so much to promote. The reason for this is simple: they are almost never in the position of running businesses.

It’s touchingly naive to assume upper middle class progressives, or the upper middle class in general, spends much time worrying about the effect of their regulatory policy on the poor.  I propose an alternative explanation:  local regulatory policy helps liberals avoid the consequences of their stated beliefs in immigration and Civil Rights.

Immigration swells the population and, with it, the demand for housing and government services.  Regulating the supply of housing and, more importantly, enforcing occupancy regulations slows the increase in population and increases the value of the existing housing stock, to the apparent benefit of existing residents.

Civil Rights laws with respect to housing makes it relatively difficult to defend against minority encroachment in a straightforward way.  It can be done – my own community does it through mechanism I only partially understand – but it helps to be upper middle class.  But working-class neighborhoods are in constant churn:  minorities move in, whites move out, the neighborhood declines and becomes a slum, then in some cases it gentrifies depending, presumably, on location.  But regulations written, not in the interest of development or “the poor”, but to raise the cost of movement, can arrest this process.

On the other hand, DC is in the process of gentrifying, an eventuality that upper middle class progressives would want to encourage to the extent they have political power.  I don’t actually know whether the particular regulations Yglesias finds so odious help or hinder it.

Geoffrey Miller on Assortative Living

Spent concerns the ways in which conspicuous consumption serves as modern America's primary method of trait signaling. Geoffrey Miller credibly argues that this method is inefficient, decreases our happiness, and generates negative externalities. Near the end of the book, he looks at ways in which government policy encourages conspicuous consumption, and examines alternatives. The following section deals with themes familiar to the readers of Half Sigma, Steve Sailer, and the old Bobvis blog, but Miller weaves them together in a way that shows genuine insight.

Multiculturalism Versus Local Social Norms

There is a major legal problem with creating and enforcing new social norms in developed nations, and the problem concerns housing law. Humans are still embodied beings who interact mostly with other humans who liver nearby. The social norms and trait-display tactics most favored by the local community heavily influence our behavior. However, through antidiscrimination laws regarding property rental and ownership, many countries unwittingly prohibit the development and diversification of cohesive local norms. For example, the U. S. Department of Housing and Urban Development prohibits “housing discrimination based on your race color, national origin, religion, sex, family status, or disability.” The laws were passed with the best of intentions, but they have toxic side effects on the ability of voluntarily organized communities to create the physical, social, and moral environments that their members want.

There is increasing evidence that communities with a chaotic diversity of social norms do not function very well. Some of this evidence comes from studies of ethnically diverse communities. I mention this evidence not because I think ethnic diversity is bad, but because it is one of the only proxies for social-norm diversity that has been studied so far.

For example, the political scientist Robert Putnam has found that American communities with higher levels of ethnic diversity tend to have lower levels of “social capital” -- trust, altruism, cohesion, and sense of community. He and his colleagues analyzed data from thirty thousand people across forty-one U. S. communities, and found that people who live in communities with higher ethnic diversity (meaning, in the United States, more equal mixtures of black, Hispanic, white, and Asian citizens) tend to have lower

• trust across ethnic groups
• trust within their own ethnic group
• community solidarity and cohesion
• community cooperation
• sense of political empowerment
• confidence in local government and leaders
• voter registration rates
• charity and volunteering
• investment in common goods
• interest in maintaining community facilities
• rates of carpooling
• numbers of friends
• perceived quality of life
• general happiness

These effects remained substantial even after controlling for each individual’s age, sex, education, ethnicity, income, and language, and for each community’s poverty rate, income inequality, crime rate, population density, mobility, and average education. Putnam did not set out to look for these effects; a great advocate of both social capital and diversity, he seems to have been appalled at these results, and published them only reluctantly. Many other researchers have reported similar findings.

I suspect that these corrosive effects of “ethnic diversity” on social capital are not really an effect of ethnicity per se, but of each ethnicity’s having different social norms -- different dialects, values, political attitudes, religions, social assumptions, and systems of etiquette. As Robert Kurzban and his collaborators have shown, ethnicity fades into the background when people feel motivated to cooperate with one another for the common good, based on shared interests and norms. Communities without a coherent set of social norms just don’t feel much like communities at all, so people withdraw from community life into their own families and houses.

Sadly, it has become almost impossible now for like-minded people to arrange to live together in a small community with cohesive social norms. Real norms can be sustained effectively only be selecting who moves in, by praising or punishing those who uphold or violate norms as residents, and by expelling those who repeatedly violate the norms. These are the requirements to sustain the type of cooperation called network reciprocity, in which cooperators form local “network clusters” (communities) in which they help one another. Current laws in most developed countries make network reciprocity almost impossible. Black Muslim property developers cannot set up gated communities that exclude white oppressors. Lesbians who were traumatized by childhood sexual abuse or rape cannot set up male-free zones. Pentecostals cannot exclude Satanists and Wiccans from their neighborhoods. Medical-marijuana users with cancer or glaucoma cannot set up cannabis-friendly zones. Polyamorous swingers cannot exclude monogamous puritans, or vice versa.

So, while modern multicultural communities may be very free at the level of individual lifestyle choice, they are very un-free at the level of allowing people to create and sustain distinctive local community norms and values. This is actually a bad thing, liberal ideologies notwithstanding. It means that the only way to have any influence over who your neighbors are, and how they behave, is to rent or buy at a particular price point, to achieve economic stratification. Antidiscrimination laws apply, de facto, to everything except income, with the result that we have low-income ghettos, working-class tract houses, professional exurbs: a form of assortative living by income, which correlates only moderately with intelligence and conscientiousness.

Moreover, when economic stratification is the only basis for choosing where to lie, wealth becomes reified as the central form of status in every community  the lowest common denominator of human virtue, the only trait-display game in town. Since you end up living next to people who might well respect wildly different intellectual, political, social, and moral values, the only way to compete for status is through conspicuous consumption. Grow a greener lawn, buy a bigger car, add a media room. If a Pentecostal lives next to a polyamorist, the only way they can compete with each other is at the default economic level of wealth display. But if all the Pentecostals lived together, they could establish new social norms that renounce such wealth displays, and compete for status through Bible-quoting, speaking in tongues, and spreading the gospel. And if all the polyamorists lived together, they could compete for status through good conversation, great sex, minimal jealousy, maximal affection, and emotional authenticity. In both cases, their local social norms could rein in runaway consumption, and shift their time and energy to other activities that are more congruent with their most fundamental values.

This idea -- the freedom to live near folks with shared values -- may sound radical to members of the educated Euro-American elite, who tend to take multiculturalism, diversity, and tolerance for granted as good things. But it would sound perfectly sensible to almost any of our ancestors from any well-functioning culture in any epoch of history. It’s called choosing your tribe: you have to be able to control who enters your community, and under what conditions they will be exiled. The efficiency and cohesiveness of local social life demands protection against outside threats and internal selfishness. Minimally, this requires that everyone local shares rules of etiquette for avoiding conflict, a common spoken language for resolving conflict, norms governing social, sexual, parental, kin, and economic-exchange relationships, and norms for coordinating group action, especially in emergencies. Strangely, many “communities” in developed nations lack these basic prerequisites for living together. These communities function like computers that have hardware (a physical location and infrastructure) and an operating system (a government, an economic system, and a set of metanorms concerning tolerance and diversity), but no software applications (no specific social norms governing trait display and status seeking in any domains other than wealth).

To a limited degree, people with shared values and lifestyles can sometimes coordinate their movements into particular locations. American gay men often move to San Francisco or New York. Mormons often congregate in Utah. But they are always mixed up with others hostile to their values; they must rub elbows with homophobes or atheists, and they cannot do anything about it. Under some special circumstances, people can create co-living communities with a limited set of shared rules that constrain runaway consumerism: college fraternities and sororities, communes, cooperative housing, condominium governing by internal rules and managerial boards, gated communities with restrictive covenants. However, the antidiscrimination laws still apply -- these co-living systems still cannot legally select or expel members on the basis of sexual orientation or religion, which doesn’t help gay men or Mormons create their own communities, and it still leaves wealth display as the default basis for social status.

So governments should give people the freedom to create local housing communities with the power to sustain their own social norms, as long as a few basic human rights are respected. Adults must be free to move away from a community they don’t like. The punishment for violating social norms must not exceed temporary ostracism or permanent exile. As John Stuart Mill argued, children must not be subject to abuse that is permanently physically or mentally disabling (such as, arguably, circumcision, clitoridectomy, religious indoctrination, or anorexia-inducing ballet lessons). Clearly, it is hard to draw the line between normal acculturation and disabling child abuse, but that has always been true, and I can’t offer a panacea. Civilization progresses in part through people arguing about these issues and reaching the most enlightened, provisional, pragmatic consensus that they can achieve within their culture. At any rate, the government still has a crucial role to play in protecting the oppressed or vulnerable from the tyranny of the majority, even within the most radical of the local communities. However, if the local majority cannot impose some distinctive social norms on our forms of trait signaling, conspicuous consumption will remain the only game in town.

I will make a couple of comments. First, Miller's "educated Euro-American elite" -- in which Miller himself is a member in good standing -- is well-served by our current assortative housing patterns. Beyond a certain price point, "diversity" costs nothing: the interaction of zoning and finance means that nobody able to afford a large house in "good school district" full of other large houses will rank low on the social traits that make for bad neighbors. These houses may strain the budgets of the middle and upper middle classes, but not of the elites. And at higher thresholds, our elite is remarkable in its social uniformity. Its members, regardless of race, came from the same social background, went to the same Ivy League schools, and hold the same values. They have no interest in polyamory and Mormonism. They are already surrounded by exactly the people with whom they would freely choose to associate. Extending assortative opportunity to the middle class gives them no benefit.

It would, however, carry a heavy psychic burden on their own moral vanity. Miller is naive, or pretends to be, about what assortative neighborhoods would look like down the income scale. Outside of, say, Idaho, the social taboo against overt racial discrimination would prevent race-exclusive neighborhoods -- at first. But the imposition of middle-class behavioral norms would have -- wait for it -- a disparate impact on non-Asian minorities. Kind of like how the young black male character on MTV's Real World always got chucked mid-season: it was never because of his race but because of his behavior . . . which correlated with his race.

For an idea of how intolerable this would be to our "educated Euro-American elite", consider poor Huntingdon Valley Swim Club. Their half-hearted effort to enforce behavioral norms at a private club -- in full compliance with the law -- has generated outraged commentary across the entire country for a couple of weeks. Miller's voice in defense of Huntingdon Valley has been conspicuously absent.

Sprawl, Reconsidered

As soon as it quoted Jane Jacobs as an expert on urban development, I knew that Richard Florida's "How the Crash Will Reshape America" was headed for trouble.

Although the specialization identified by Adam Smith creates powerful efficiency gains, Jacobs argued that the jostling of many different professions and different types of people, all in a dense environment, is an essential spur to innovation—to the creation of things that are truly new.

Steve Sailer has made a compelling case that diversity follows economic growth, not the other way around. Remind me to find the link.

Reading on:

Suburbanization—and the sprawling growth it propelled—made sense for a time. The cities of the early and mid-20th century were dirty, sooty, smelly, and crowded, and commuting from the first, close-in suburbs was fast and easy. And as manufacturing became more technologically stable and product lines matured during the postwar boom, suburban growth dovetailed nicely with the pattern of industrial growth. Businesses began opening new plants in green-field locations that featured cheaper land and labor; management saw no reason to continue making now-standardized products in the expensive urban locations where they’d first been developed and sold. Work was outsourced to then-new suburbs and the emerging areas of the Sun Belt, whose connections to bigger cities by the highway system afforded rapid, low-cost distribution. This process brought the Sun Belt economies (which had lagged since the Civil War) into modern times, and sustained a long boom for the United States as a whole.

But that was then; the economy is different now. It no longer revolves around simply making and moving things. Instead, it depends on generating and transporting ideas. The places that thrive today are those with the highest velocity of ideas, the highest density of talented and creative people, the highest rate of metabolism. Velocity and density are not words that many people use when describing the suburbs. The economy is driven by key urban areas; a different geography is required.

I'm not an expert, but this sounds exactly backwards. Paul Johnson's The Offshore Islanders (I think) made the point that those European countries that industrialized later rather than earlier were more competitive precisely because they were spacially organized to minimize transportation costs. Germany, for instance, was able to locate their steel plants close to their coal mines. More recently, China has taken over the world's manufacturing because it has done things like build an entire city dedicated to sock production.

But ideas? In the age of the internet, the movement of ideas over long distances is virtually free and instantaneous. So why, exactly, does everyone have to huddle in the same building to produce creative synergy? This question is not necessarily rhetorical: clearly, the telecommuting revolution predicted ten years ago was strangled in its crib. I will defer to the experts on why that happened, but I'm not aware of anything inherently innovative about room-huddling; on the contrary, a running joke on the Dilbert strip is how much time is wasted in meetings.

The foreclosure crisis creates a real opportunity here.

Oh dear. Stand by for social engineering.

Instead of resisting foreclosures, the government should seek to facilitate them in ways that can minimize pain and disruption. Banks that take back homes, for instance, could be required to offer to rent each home to the previous homeowner, at market rates—which are typically lower than mortgage payments—for some number of years. (At the end of that period, the former homeowner could be given the option to repurchase the home at the prevailing market price.)

This isn't necessarily a bad idea; Steve Sailer proposed it a while back. But: if it's so good, then why would government have to require it? Why wouldn't banks offer it to homeowners voluntarily?

Next, we need to encourage growth in the regions and cities that are best positioned to compete in the coming decades: the great mega-regions that already power the economy, and the smaller, talent-attracting innovation centers inside them—places like Silicon Valley, Boulder, Austin, and the North Carolina Research Triangle.

Again, why does this need encouragement? Why not let the market do its work?

Whatever our government policies, the coming decades will likely see a further clustering of output, jobs, and innovation in a smaller number of bigger cities and city-regions. But properly shaping that growth will be one of the government’s biggest challenges. In part, we need to ensure that key cities and regions continue to circulate people, goods, and ideas quickly and efficiently. This in itself will be no small task; increasing congestion threatens to slowly sap some of these city-regions of their vitality.

As the article makes clear, much of suburban sprawl is driven by government: the 30-year mortgage, mortgage interest deductability, zoning laws, and highway subsidies are all government creations and have all permitted us purchase much more house and yard than we otherwise would. If this turns out to have been unsustainable, then it the government should stop encouraging it. Again: let the market do its work.

Just as important, though, we need to make elite cities and key mega-regions more attractive and affordable for all of America’s classes, not just the upper crust. High housing costs in these cities and in the more convenient suburbs around them, along with congested sprawl farther afield, have conspired to drive lower-income Americans away from these places over the past 30 years. This is profoundly unhealthy for our society.

No it isn't. Whether they will admit it or not, for most people, the whole attraction of moving to the 'burbs has been the opportunity to put some distance between themselves and the rabble. Unfortunately, the Civil Rights era made moving away about the only means of avoiding the negative externalities generated by underclass minorities. Now, in many respects, this process is reversing: many urban cores are gentrifying, and as they do so, they become more attractive to yet more gentrifiers. Florida's suggestion that what cities is need to make themselves affordable to the rabble is exactly what will halt this process.

Racial Integration in Chicago

Steve Sailer reviews There Goes the Neighborhood, and in the process tells the heartbreaking story of the effect that first desegregation and then immigration has had on Chicago's community life. He links to a Time article from 1983 about how Chicago's wealthy lakefront area has always been relatively liberal:

Holding the electoral balance [in the racially-charged election of Chicago's first black Mayor] were the city's six affluent "Lakefront Liberal" wards. Undecided until the very end, they finally gave Washington 40% of their vote, enough to assure his 51.8% majority.

Sailer explains:

Home prices are so high near Chicago’s main asset, Lake Michigan, that only upper-middle class people can afford to live there. Thus, race doesn’t much matter. In lower rent districts, however, race trumps class. As many Chicagoans testify in There Goes the Neighborhood, among working class people the traits that make a good neighbor—such as having children who don’t commit crimes and who aren’t disruptive in school—are most often found among whites, followed by Latinos, followed by African-Americans.

This reinforces the point I have made before about how facile it is for people (myself included) who, by virtue of wealth, education, and geography, have de-facto segregated themselves from underclass minorities to then preach the virtue of racial integration to poor whites who are required to actually live it in the real world.

Downers

Down on Microsoft

When I purchased my first computer in the spring of 1996, it came with MS Money '95. I started using it a year later and found it to be fairly straightforward to use. This turned out to be pretty important: I got married that year, and one of our early "marital issues" turned out to be financial accountability. I took a few years for us to work this out, but the detailed and accessible records that Money made possible helped us to know what we needed to work on.

I purchased my second computer in the fall of 2000. It came with MS Money 2000. No more simplicity. No more crisp interface. The program had a bunch of stuff I would never use, and the stuff I did want to use was now buried in menus or required access to the Microsoft website. So I decided to stick with Money '95.

I purchased my third computer last month. But seeing as how we just moved, I couldn't find my installation disk for Money 95! So I pulled out Money '00 . . . and was reminded why I didn't like it. But what put me over into let's-bitch-on-the-blog territory was the file size. What had previously been a 1.7MB Money file had ballooned into a 22MB file! 13x larger!

Okay, so the speed, memory, and storage of my D620 are all much greater than 13x those of my original Gateway. But they are NOT 13x larger than my more recent HP. Doing something as simple as changing accounts in Money 95 was still plenty crisp on the HP. Changing accounts in Money 00, even on the D620 was . . . a wait! Not a long wait, but jeez, aren't these things supposed to be getting better and faster instead of slower and more complicated?

Down on Home Depot

I was in Home Depot to purchase the lambswool applicator necessary to finish putting polyurethane on our hardwood floors; we still have one hallway left to do. A Home Depot employee ("Thom", let's call him) said, "hey, you know, you can reuse your lambswool. All you have to do is seal it up and store it your refrigerator."

"In my refrigerator," I repeated, with barely controlled rage. "And these hazzardous chemicals go in the same refrigerator where I . . . keep my food?

"Um, yeah" he said, not liking where this was going. "But you have to seal it up real good . . ."

"Let me tell you what 'seal it up real good' meant to my wife, when you gave her this advice about a month ago: it meant putting the applicator in a plastic Home Depot shopping bag and tying the handles together. Let me tell you how much scrubbing it takes to purge a refrigerator of the smell of polyurethane: NO AMOUNT OF SCRUBBING WILL DO IT! Let me tell you what polyurethane tastes like when it permeates all the food you put in your refrigerator, even a month after the scrubbing: it tastes REALLY BAD!"

"So . . . I guess it wasn't a good idea."

Well said.

I now shop at Lowes

Down on Tower FCU

Once upon a time, I had an account at Tower Federal Credit Union. Actually, up until this morning, I thought I still had an account there, containing about $25 as of four years ago. But then I moved, and telling them my new address never made the to-do list, so . . . .

Now I've moved again, and thought that I might as well close the account. But guess what? It turns out that if Tower figures out that a mailing address is bad, they start charging "inactive member" fees, which of course drained my last $25 in short order. This is all buried in the fee schedule, which may or may not have been in effect when I opened the account, but it doesn't matter: the notification provision doesn't require them to actually, you know, "notify" me in the way that, say, the bank expected me to "notify" them of my address change.

Update: Yea! My wonderful wife found my MS Money 95 disk . . . oh, crap, it needs a product key to install the software, and of course we can't find those. I don't suppose any of my readers know a way, um . . . around this particular problem? Please comment.

Closing Woes

I had neglected, prior to writing a contract offer on a house, to get a pre-approval for a mortgage. Pre-approvals don’t seem to be worth a whole lot for a buyer. The reality is that no mortgage company will approve a mortgage without a signed contract. All a pre-approval does is say to a seller that, yes, the buyer’s credit report has passed somebody’s initial screening. Not a particularly high bar.

But that said, I needed one for my contract and I needed it fast. So I called my big financial services company (let’s call it USA) of whom I have been a customer for my entire working life. They promptly faxed me a pre-approval – but I also noted that theirs was an extremely expensive mortgage: $4K in lenders fees alone, and a $350 deposit to lock in the rate.

I went looking for something else on the internet, and found one: a company advertising an extraordinarily low rate and fees. Let’s call it Internet Lending Corporation (ILC). “Stay away from those internet lenders,” my realtor warned. “There’s no telling what you’ll actually get at closing.” But it seemed worth a call. I got a voicemail, and left a message.

It was, I think, two days later, in the middle of our formal house inspection, when I received a call back. A very nice young lady (“Christina,” let’s call her) from ILC began trying to sell me a VHA loan, which is for people who don’t have a 20% down payment. I had the down payment and said that I was interested in a conventional loan at a fixed rate. “But VHA loans are cheaper,” she told me. What? “Ma’am,” I said, “I hate to tell you your business, but this is my third house, and I have always found other-than-conventional loans to be more expensive in rate and fees than conventional ones.” I don’t remember exactly how we finished up the conversation, but I was not impressed with what I had seen so far.

Flash forward several days. We’re on our trip back home when I received a call from someone identifying himself as the president of ILC (“Tim,” let’s call him). Tim told me that, yes, a conventional loan would be better if I had the cash. Send me a GFE, I told him, still skeptical.

I received the good faith estimate that evening and held it side-by-side with the one from USA. I called Tim and asked him, basically, how can you make money this way. He said, well, we’re building a business, and we hope that if you are happy with our services, you’ll generate some word-of- mouth. That sounded plausible, so I said, okay, let’s lock the rate until the closing date. Interest rates had risen every day that week, but his rate was still better than the competition. Mindful of the risk, I decided to keep USA’s loan on hold until closing in the event something fell through.

And so the fun began.

Three weeks to closing

I received a panicky call from my realtor, a panicky old biddy: “The appraisal hasn’t been done!” she said. “Um, so?” I asked, innocently. “We were supposed to have final loan approval in three weeks from the contract! It’s been four and a half!” Okay, I said, the lender has my completed application, proof of income, leases, financial statements, etc. They’ve told me that I’m good for the money. Unless you think the house is overpriced, then the appraisal is just a formality. But I’ll call the lender and find out what’s going on. So I called Christina. And I received something of a long story about arrangements that had fallen through, and about the difficulty of finding someone. An appraisal! She had finally found an appraiser that could work on what was now short notice, but she was in another city and would have to drive. I personally called the appraiser, then called the seller’s realtor to set up the appointment to visit the house. These are, in fact, multiple phone calls, since NOBODY answers their phone the first time in this part of the country except my realtor (God bless her). But we had the appraisal within a week. And “final loan approval,” whatever than means.

Ten days to closing

Let me back up. My realtor had at some point told me that we were going to use title company X (her agency’s in-house title company) for the closing, and I had duly sent this information to Tim when I made my application. If there were to be any surprises associated with this loan, I wanted to know them as soon as possible, so I called X to get what’s called a HUD, in this context the listing of all closing costs paid by both the buyer and seller. X had no idea who I was. This is bad, I thought. I called Christina, who didn’t answer, then called Tim, who went back to the loan processor (not Christina). He came back and told me that the underwriter would not normally send out the closing documents until three days before closing, and that in any case they were using title company Y, not company X. Now to me, title companies are commodities. I can’t see why I should care one way or another which company I use except for the fees, and those appeared comparable. So I emailed the new information to my realtor. She promptly called to let me know she was NOT happy about this change. She also let me know that the lender-picked appraiser was incompetent. The appraiser had had no idea how to operate the MLS system (for finding comps) in her city, and that SHE, the realtor, had had to do most of the work in this regard.

Three days to closing

I finally receive the HUD from the title company. I quickly see that the 1% discount point (about $1800) has been moved to the line that says “origination fee” and that there is an unanticipated $1600 on a line labeled “price change.” I call the title company. Price change? Information provided by the lender. I call Christina. That’s for lowering the interest rate to 5 7/8 from 6 1/8, she said. “Um, no,” I replied. “The consideration for the interest rate buy-down is the $1800, which should be on the line labeled ‘discount points’.” “The $1800 is compensation to us, your mortgage broker, for brokering the loan.”

“Christina, I went over this with Tim when I signed up with you guys. Tim very generously said that ILC’s compensation was limited to the $300 administrative fee, which appears on line X of the GFE and line Y on the HUD. There wasn’t an origination fee or a “price increase.”

“Well, what do you think is fair?”

Fair?

“Christina, “fair” is what we agreed to in the GFE, which was attached to the loan application and which I signed and sent back to you!”

Then I was told The Story. It seems that Christina’s relationship with ILC is something less than that of employee to employer. Christina is an independent contractor who receives referrals from the ILC website, but whose only compensation is from fees derived from the closing costs. In my case, there had been some initial confusion over at ILC as to who would actually serve as the mortgage broker. Tim was the one who had initially locked the rate, but had then passed the handling of the loan to Christina without telling her that there was no money in it! (Tim claimed the $300 administrative fee.)

I never did nail down when exactly Christina discovered that the terms of the loan that Tim had negotiated on her behalf did not include any income for her. These terms, after all, were in my loan file, and were among the application documents that Christina had handled, if not read. (There is an irony coming up here.) But I could see Christina’s point about fairness, and I also knew that I needed Christina’s cooperation to close the loan. So we eventually negotiated a fee of $687 (down from $1600) for her brokerage services.

Day of Closing

2:00 a.m. I can’t sleep. A fairly regular problem over the last few weeks. I took my laptop (my OLD laptop, a Thinkpad 380Z with a dead battery) to the lobby of our hotel (we had moved out of our house by this time) and went over the closing statement. I noticed a line on the HUD: “Consideration (i.e. money) paid by seller to buyer for unpaid property taxes - $2k.” This appeared to be the year’s prorated taxes, but I was interested in when and how these taxes would eventually be collected. I sent an email to my realtor asking this question, and went back to sleep around 5:00a.m.

7:30 a.m. I am awakened by the unpleasant sound of my cell phone. (My wife, who had slept well, had already left to supervise the carpet cleaners.)

“This is your title company.” (Terry, let’s call her.) “The seller’s want an additional $2k.”

“Why?” I asked, through the fog of my interrupted sleep.

“Property taxes for the first half of the year.”

Note to reader: there was beginning to be a cumulative effect to the aggravations. Because we were closing by mail, and because of delays between the lender and broker, plus the surprises in the HUD that needed to be adjusted, there was not time to mail a certified bank check to the title company covering the down payment and closing costs. I had made a wire transfer, which carries a $20 fee. I had also had to “overnight” the notarized closing documents via UPS to guarantee that they would be at the title company on time, which cost about $30.

“Let me get make sure I understand: does this concern the item in the HUD for the prorated taxes?”

Yes.

“Have the seller’s paid these taxes?”

No.

“Who is going to pay them?”

You are.

I thought to myself, how would my father handle this?

“In hell,” I said rather forcefully. “If the sellers are looking to break this deal, then they just broke it. I have put up with more aggravation over this clown act than I would have thought possible. This is the last straw. I’m not buying the house.”

“Okay,” said Terry, “let me see if I can get more details about what’s going on and give you a call back when you aren’t so upset.”

I received several calls from both Terry and the realtor that morning that I refused to take. Since their messages didn’t sound like good news, I was sufficiently pissed to let the whole thing fall apart. Like I said, this was my third house, and I was quite certain that a last minute demand that the buyer pay property taxes for time that he didn’t live in the house was unprecedented.

But the realtor eventually called my wife and pointed to a clause in the contract that, when read very closely, did leave these property taxes to me. But she also said that, to save me from having to come up with $2k, the agency would put up the $2k until I got to town, so the closing could proceed as planned.

So that’s the story of my closing woes.

I'm Back!

. . . temporarily at least. The fact is, my blogging days may be numbered. Real life – or at least its grad-school facsimile – intrudes: school starts in less than two weeks, and I believe I will find it impossible to juggle school, family, and home-ownership and still find time to write non-thesis oriented material.

I’ve been on no-kidding vacation for almost a week; unfortunately, my in-laws, who have a log cabin in the woods with a 40m x 25m pond for a front yard—an idyllic place for a summer vacation, actually, and I needed an opportunity to catch up on my swimming – they do NOT have high-speed internet. It’s been difficult at best to find the opportunity to tie up their one phone line (dialup: so very 20th century) with my new laptop (a Dell D620 core duo, $750 on ebay), and that’s not even taking into account that I just needed REST after a month of home-maintenance packing, moving, unpacking, and more home maintenance.

But the rest of the family is off at VBS, and I have so many stories to tell about moving from Out West (low taxes, low regulation, dry, thin air) to the Great Lakes (confiscatory taxes, overbearing regulation, humidity, surly clerks, cheap insurance and HSI). But let’s start with:

Refinishing floors:

There are, basically, three types of floor sanders: vibrating plate sanders (where the sandpaper is Velcro-ed to a vibrating plate), orbital sanders (where the sandpaper is Velcro-ed to one or more spinning disks), and belt sanders (where the sandpaper is a loop through the machine and only sands in one direction. The first two are fairly easy to use and also fairly gentle on the floors. The last is very difficult to use competently, but is much faster at taking up huge amounts of wood – which can be good or bad depending on your perspective.

I attacked the floor with an orbital sander, and in a few hours sanded down almost our entire ground floor (our “new” house, built in 1927, has the original wood floors throughout, with the exception of the kitchen and bathrooms, which have ceramic tile). I had hoped to not use that word “almost”, seeing as how I rented the sander from Home Depot by the hour, but I finally came to the last room. As I started sanding, I first realized that the old finish wasn't coming up with anything close to the ease of the other rooms. I then noticed that the sander was spitting globs of something as it spun ineffectually over the floor. I looked at the bottom of the sander and saw that the sandpaper (24 grain) was CLOGGED with hardened packs of that same something.

So I took the paper and sander back to Home Depot: your sander DOESN’T WORK! Well, no, our sander works fine, you just have a lot of some kind of finish that’s tougher to get up. Try chemicals.

So I returned to the floor with a bottle of finish remover. “Apply to floor with a sponge, let sit, and then wipe the finish off with paper towels,” the bottle said. Pardon me, but . . . BULLSHIT! I poured on the finish, let sit, and then SCRAPED up the finish with a floor scraper. Great glops of floor finish! I quickly exhausted the bottle and went back for more.

Eventually, I said, I’m tired of chemicals, but surely now the sander will work. I got a vibrating plate sander this time. And the sandpaper still clogged! Plus, I didn’t seem to be making much headway against the black stains in the floor itself.

More chemicals. Back to Home Depot for the daughter of all floor sanders: a hand-held belt sander. The advantage of the hand-held is that it can get right up against the wall, whereas the giant belt sander cannot.

I went to work with the hand-held. And STILL THE SANDPAPER CLOGGED! Plus, the belt sander sands very unevenly in inexperienced hands. But I did make some headway against the black stains, enough that I finally said, well, my floor looks like crap – but it is good enough for a room that few people will see. So I vacuumed it up, and opened the door to my wife, who put down two coats of oil-based, semi-gloss polyurethane. I was several hundred dollars into the project in tool rental and chemicals by now, but I do have the satisfaction of having saved $2k by doing it myself.