By

Stu Silver / “Uncle Zally” Zalman Velvel

It’s 6 AM, mid February … and I’m NOT at the Kangaroo Convenience Store in Ocala, Florida. I’m in Fort Myers, Florida, and it’s a touch chilly here, around 58 degrees. The sun is coming up, I can hear traffic noise starting … and I have a choice of writing a chapter in my new book, or this blog. The new book is becoming more like work now, because it’s in the finishing stages, and this blog … it’s pure pleasure. Work, or pleasure? Guess which won out.

I miss my muse, the morning rush hour at the Kangaroo, with its everyday people coping with their every day. There is something reassuring about seeing working people who are determined to keep working and remain in their homes in Ocala.

Why do they stay there, and not move to Houston or Denver, where there are more jobs? I know why. It’s the same reason I like being there.

Because Ocala is so damn beautiful.

But Ocala also has one of the ugliest damn unemployment rates. It was 14% in December 2010, while the rest of Florida was 12%, and the USA, 9%. Why are the residents of Ocala having more difficulties? Because so many of those working people were involved in the flood of new construction for 5 years, and almost everyone was working for top dollar, with lots of overtime. And smiling.

Then construction slowed to a trickle the last 5 years, and the smiles stopped. What happened? Who was responsible?

That’s what I’m going to write about, what happened and who was responsible for the real estate slump we’re in, and the unemployment that resulted. I never know what I will write about until the drive back from the Kangaroo. Maybe that’s when the caffeine kicks in, from one of the seven kinds of coffee, or maybe it comes from the sugar rush of a Bon Appetit strawberry cheese muffin, one of the moistest cakes ever made.

Only I’m not at the Kangaroo drinking Peruvian coffee this morning. I’m in Ft Myers drinking Donut Shop Decaf from our Cuisinart Premium coffee maker, with a “Keurig Brewing System.” You pour in water, put in a little sealed cup of ground coffee, push a switch, and there you have it, a perfectly brewed cup of coffee.

Throw out the little sealed cup of coffee when the Cuisinart is finished brewing, turn off the switch, and you’re done. No cleaning, no mess.

Which brings me back to the subject of this discussion – the mess this country is in – and how we’ve been looking for the switch to turn it off, to make it also stop brewing. The first step in cleaning up any mess is to figure out where it came from. Let’s turn to one of the wisest men alive, Warren Buffett, who is also one of the richest men alive. (Sometimes there is a correlation.) This is what he said:

“Borrowers who shouldn’t have borrowed were financed by lenders who shouldn’t have lent. Both parties counted on ‘house-price appreciation’ to make this otherwise impossible arrangement work.”

Warren Buffett owns the largest mobile home manufacturing company in the world, Clayton Homes. If anyone knows what happened, he does. Many of his 50 or so companies, not just the mobile home company, are feeling pain from the same mess the people at the Kangaroo are feeling.

 Okay, so Warren identified what happened. Now it might be good to find out who was responsible, and keep them from repeating the mess, don’t you think? Warren has some answers here, too:

“Wall Street is reaping what they’ve sown. You only learn who has been swimming naked when the tide goes out – and what we are witnessing at some of our largest financial institutions is an ugly sight …” (Warren has a great sense of humor.) “but it will sort itself out over time with a fair amount of pain. We have an economy that can take it.”

Warren blames Wall Street for the easy lending and the easy money. And he is upbeat afterwards. We “can take it,” he said. I know we can take it. I see “the fair amount of pain” on the faces of the people at the Kangaroo. Along with that pain, I also see they are not giving up any time soon.

So how much longer will we have to take it? When will this unemployment and real estate slump end?

Warren Buffett thinks the U.S. residential real estate slump will end by about 2011, predicting that’s how long it will take demand for homes to catch up with the supply.

“Within a year or so, residential housing problems should largely be behind us. Prices will remain far below ‘bubble’ levels, of course, but for every seller or lender hurt by this, there will be a buyer who benefits.”

Which is what I have been saying all along – this is a great time to buy – and one of the richest men in the world agrees with me. How about that. 

Don’t think I’m looking at this mess like a reporter. I’m involved. I see the results of the mess we are in every day. We have people applying to buy mobile homes in our parks whose credit is ruined. Some are young, some are at retirement age, and most are in between. They have lost their present homes to a bank in a short sale, or been foreclosed on the courthouse steps. They are starting over by buying a home from us. A mobile home. They still want to own the home they live in, and not be a renter, and we’re the low cost alternative.

Why us? Because we give owner financing and banks won’t touch them.

They ask us when they apply, “How hard will you look at our credit?”

“Not very hard,” we answer back. “We’re easy.”

We just want to know if they have a criminal record from the last 8 years, have they been evicted in the last 5, and do they have enough money each month to pay our lot rent, the mortgage we are going to lend them, and still eat?

What about credit scores? We ignore them. Almost everyone we talk to now has a terrible credit score, in the low 500’s. Some even lower.

So if someone wants to start over, and own a home, a mobile home, we’re here for them … provided they aren’t a criminal, recently evicted, and have enough money to pay us back and still eat. They’ll have to put down some money, sometimes around $1,000, sometimes more, depending on the home, and we work out terms so they can pay us back the balance comfortably, over time.

If, however, someone thinks the days of paying bills, and being accountable for a mortgage, are over … well, they can find someone else to lend to them, or rent to them. Uncle Zally play that game.

I am proud of our record as a lender to everyday people who want to own affordable housing. We have been burned by a few, but through it all, we have kept our humanity.

Now we’re picking up the pieces. Together.

That’s why I like going to the Kangaroo … and I miss it this morning.

.

Filed under Articles · Tagged