Thirty years as a carpenter took its toll on Tim Crispos back and ultimately his finances.
After several surgeries the end of his career became clear.
They said, You cant pick up anymore than 25 pounds, Crispo recalled doctors telling him. I said my nail bags weigh that much.
The money his wife, Lori, made as a nanny and the Social Security disability checks Tim Crispo started receiving werent enough to meet the mortgage on their home in northeast Fort Wayne, so they stopped paying it and sought foreclosure help in 2009.
What happened is we got so far behind we were trying to make up payments, Crispo said. After awhile we just couldnt do it.
Its little comfort to the Crispos that they arent alone.
Hundreds of thousands of Hoosiers are spending far more on their home mortgage or on rent than what is considered safe, leaving little money for other expenses or a safety net.
Whether a disability or a layoff reduced income, or a homebuyer paid more for a house than he or she could comfortably afford, those paying a large part of their incomes on housing rose dramatically as the housing crisis grew last decade.
Nearly 500,000 Indiana households – an increase of almost 200,000 since 2000 – are paying 35 percent or more of their incomes on housing, a rate beyond the 30 percent traditionally considered wise, according to census figures.
At the extreme, an estimated 273,000 Indiana households are paying half or more of their incomes on housing, 110,000 more than in 2000.
Thirty-five percent and above is in the red zone. Its getting dangerous, said Joe Schenkel, president of Consumer Credit Counseling Service of Northeastern Indiana, a nonprofit that helps people manage debt.
In about a third of Indianas counties, households fitting that description more than doubled last decade. Rising housing costs, which have outpaced income, compound the problem.
Statewide median household costs for mortgage holders and renters grew by nearly a third between 2000 and 2010, while income grew by only 15 percent, without adjusting for inflation.
Considered separately, renters are feeling more of a pinch, with incomes rising only 3 percent, according to census numbers.
For the Crispos, debt spiraled after Tim could no longer work. With their home on the line, the couple were told that Pathfinder Services in Huntington, offering foreclosure counseling, might help. Pathfinder worked to modify the couples loan, Tim Crispo said. On paper, their monthly payment would go from $625 to $540, something they believed they could afford.
So the Crispos waited for their mortgage company to sign off on the revamped loan, becoming a Pathfinder success story on the agencys website. The monthly bill that had consumed much of the couples income appeared under control.
For decades, the rule of thumb for lenders has been no more than 28 percent of income spent on housing, and 36 percent on all debt, said Joyce Wogan, a housing counselor with Consumer Credit Counseling Service.
Following those rules, anyone paying more than 35 percent on housing alone shouldnt have a car loan, student loan or other debt, she added.
According to a report published by the U.S. Census Bureau in 2008, a housing-to-income burden of 30 percent has become the standard. That rule grew out of rental guidelines for public housing. By 1981, the 30 percent rule became a rental standard and was adopted by lenders for home loans.
Prior to the mid-1990s the federal housing enterprises (Fannie Mae and Freddie Mac) would not purchase mortgages unless the principal, interest, tax, and insurance payment (PITI) did not exceed 28 percent of the borrowers income for a conventional loan and 29 percent for an FHA insured loan, wrote the reports authors, Mary Schwartz and Ellen Wilson.
The housing crisis disclosed far less stringent mortgage loan rules.
Before 2008, the government-run mortgage company Fannie Mae issued loan standards that limited all debt – not just housing costs – to 36 percent of income, but with lots of flexibility for lenders to go higher, said Fannie Mae spokesman Andrew Wilson.
So there really wasnt a solid cap, Wilson said. You could get north of there by a significant margin.
Today, the 36 percent debt cap can rise to 45 percent under limited exceptions that include strong cash reserves and good credit scores, he said. Automated underwriting has caps of 45 percent to 50 percent, he added.
Locally, the number of people seeking foreclosure counseling has declined, said Pam Gresham, foreclosure prevention counselor at Consumer Credit Counseling Service of Northeastern Indiana. While counseling requests were rampant in 2008 when she started with the agency, it hasnt stopped, she said.
I see that happening now: Mr. has lost his job or Mrs. lost her job. Now, all of the sudden, they cant make it, and of course theyve gone out there and gotten a lot of credit card debt and sometimes medical bills – which is unfortunate – and things like that happening to them where they just cant do it anymore, Gresham said. I see that day in and day out when people come in here.
While the Crispos story had initial signs of success, it didnt end that way.
Through no fault of Pathfinder Services, which worked to bring down the couples mortgage costs, the Crispos lost their home. Their mortgage company rolled unpaid amounts into their new loan, Tim Crispo said, increasing their monthly mortgage payment by more than $100, rather than decreasing it.
In 2010, the Crispos moved into a mobile home park on the citys northwest side. Their former home remains vacant.
We just moved in here a couple of years ago, and we like it here now, Tim Crispo said. This is home. Its not the nicest thing in the world, but its quiet and keeps a roof over our head, and we can afford it.