"I went from living in a 4900-square-foot house to living in this 29-foot trailer," Michael Babins tells me as we're chatting in the living room slash kitchen slash dining area of the Prowler Regal he has called home for the past nine months. "And to tell you the truth, I am totally content right now."
Until their move to the Hi-Ho RV Park in Glenn Heights, Texas, Michael and his wife Lisa had lived in Las Vegas for eighteen years. The couple bought a house in the late 1990s for $155,000. With two incomes, two kids, five dogs, and a beautiful home, the Babins led an ostensibly idyllic life.
One day almost five years ago, Michael started chatting with his next door neighbor--a man planning a host of home improvements with money he had just received by refinancing his mortgage. The Babins could scarcely believe that their neighbor's nearly identical property had been assessed at more than $350,000, until they got their own comparable estimate.
Suddenly, dozens of refinancing invitations arriving in the mail every week no longer looked like junk. Each one could hold a passport to financial freedom. The Babins could not see the financial enslavement lurking just behind the glossy brochures and fast-talking mortgage brokers. It was as if the noxious gases inflating the housing bubble had seeped into the couple's rational mind, infecting them with a Panglossian outlook.
"We never thought the price of our house would come down," Michael admits sheepishly. "We just didn't see an end to the market."
One finance company offered them a 110% return on their equity with a three-year fixed interest rate that was 4% lower than that on their original loan. The broker insisted they could always come back to refinance again if interest rates spiked after the arrangement shifted to its adjustable phase. So they signed the papers, increasing the burden of their debt to $300,000.
Michael just shakes his head in resignation while recounting those fevered days in Vegas, when it seemed like mortgage brokers handed out six-figure loans as flippantly as casinos did free cocktails. "When you dangle a carrot in front of a donkey's nose, he's gonna follow it. That's what happened to us," he explains.
He freely admits they should have proceeded more cautiously in refinancing, but still can't shake the feeling that lax regulations permitted unscrupulous brokers to lure them into a kind of legal scam. "We never should have qualified for a loan that high with how much we made. We shouldn't have been offered it. But also, we shouldn't have taken it."
Michael and Lisa devoted most of the money to home improvements, never imagining they would end up simply walking away from the investment within a few years. Fortunately, the extra money also financed the purchase of a 29-foot Prowler Regal they now call home.
In late 2007, an oppressive shroud of recession began to settle over their lives, tightening the noose they had walked into so blindly. With the refinancing funds already depleted, the Babins felt the full burden of their monthly mortgage payment just as rising energy prices had utilities and gasoline consuming a larger portion of their budget. Interest rates were going up; property values were going down. There were no refinancing options available as their mortgage approached the shift to an adjustable rate.
The home refinanced at its peak market value had dropped back down to its purchase price from the late 1990s. As the mirage vanished, they could finally see that the luxurious $350,000+ house they had reveled in was actually little more than a cosmetically-adorned version of the $155,000 place they bought a decade ago. And they still owed more than a quarter million dollars on it. The choking crush of reality grew almost unbearable.
By this point their kids had grown and moved out to start their own lives, so Michael and Lisa had been considering relocation closer to their native Oklahoma. Forty-seven homes displayed foreclosure signs within a three-block radius, so they clearly couldn't sell their house and make a calculated move. But when Michael received an offer for a managerial position at a Dave and Buster's in Dallas, Texas, they didn't have to consider so much as they had to start planning.
The Babins had resigned themselves to becoming renters instead of homeowners, until Michael happened across an online forum of people discussing the benefits of RV living. "I didn't actually know that people lived in RVs and traveled around," he admits. Further research sparked a revelation that they already had a second home sitting parked in the driveway.
So they both resigned from their Vegas jobs: Michael as manager for a gaming company and Lisa as manager of a floral and hospitality service. They sold whatever people would buy in a yard sale, packed everything they could into the RV and a U-Haul--abandoning anything that wouldn't fit. They locked the door of their home for the last time and simply drove away. They left behind furniture, appliances, tools, a house, a quarter million dollar mortgage, and the only life they'd known for nearly twenty years.