A pillar of the American Dream is owning a home with a lawn and picket fence. But I question the conventional belief that we ever really own our homes under capitalism. With the commodification of housing also comes a precariousness that no one is immune to.
For most people, purchasing a house is made possible by securing a mortgage from a bank: a 15, 25, or 30-year financial obligation (for instance) to repay the debt with interest. After 3 months of non-payment, banks typically start foreclosure proceedings. As long as there is a mortgage, we do not own the house, the bank does. What homeowners really have are two things: 1). the temporary privilege of being a tenant, and 2). a prayer that the market remains relatively stable.
Even if there was never a mortgage on the house or the mortgage has been paid in full, you can still lose your property. Being “delinquent” on property taxes and/or other municipal fees can result in the City placing a lien on your property. As more and more cities are strapped for cash, many are auctioning these debts off to third-party investors to recover costs. These investors charge a ridiculous amount in interest (ranging between 18-50%), fees, and legal costs for homeowners to get the title to their homes back. The entire process is shrouded in mystery and confusion; which works to the advantage of investors who just want to make a quick buck. If you cannot pay the newly skyrocketed balance, you lose your house and all the equity. There have been cases where homeowners have lost property worth $200,000 because they owed just a few hundred dollars in taxes/fees.
Even if your mortgage and taxes are paid in full, you can still lose your property. Being “delinquent” on utility bills (i.e. water and/or sewer) can result in – once again – a lien being placed on your property. These liens are purchased by third-party investors who add interest, fees, and legal costs. If you can’t pay – tough luck – your house is gone. An egregious case happened in Rhode Island a few years ago: an 81-year old woman owed $400 on her water bill. An investor purchased this debt at an auction for $800, kicked her out, and then sold the house for $85,000.
Even if your mortgage, taxes, and utilities are all paid in full, you can still lose your property. The government has the authority to seize private property through the process of Eminent Domain. The Fifth Amendment to the U.S. Constitution declares that “private property [shall not] be taken for public use without just compensation.” In other words, the government can take your private property – as long as it is used for public good and you are paid fairly for it. But this law is violated all the time. In 2005, the Supreme Court [Kelo vs. City of New London] ruled that private property can be seized and sold to a private developer because “economic development” counts toward “public use.” This is particularly troubling for black and brown neighborhoods that are being gentrified across the country.