The country is in the worst financial crisis of our lifetimes due lots of bad bets, bad decisions and bad actors on every side of the table. The people at fault range from the criminals (e.g. Bernie Madoff) all the way down to the families who simply failed to save during the boom times and found themselves out of a job when the recession hit. Somewhere along the spectrum are government regulators, investment banks, car companies, real estate speculators and everyone else.

But I have to invent a category all its own for Daverena White, the subject of a recent Washington Post article titled The $698,000 mistake.

To make a long article short, Ms. White, a single mother who had never paid more than $700 a month for rent and who depended on Section 8 housing vouchers over the years, took advantage of every questionable lending practice perfected in this decade to take ownership (albeit briefly) of a nearly $700k four-bedroom house. You can almost write the ending. Foreclosure, unpaid utility bills a stint in a homeless shelter and the hope of another subsidized apartment.

This financial fiasco was facilitated by Wendy Zhang, the seller, who happened to work as a mortgage loan officer and whose husband was a licensed Realtor. They had flipped multiple properties during the boom and made a $200,000 profit on the sale to White. For that kind of money, they were all too eager to grease the skids by connecting White to a subprime lender, inflating White’s bank accounts the day before closing and making her initial mortgage payments.

And why would they need to do that? Because White learned, only at settlement, what her outsized payments would be.  According to the article:

White signed papers while waiting for the one she cared most about: her monthly payment. She had not yet been told what it would be. ”Please let this be something I can afford,” she said to herself. She was pretty sure she could afford $2,000. She told herself that if her day-care business did well, perhaps she could afford $2,500. If it was $2,800, she would struggle. Here, now, came reality: $5,635 a month.

White knew she was in over her head, and even stepped out to call a friend in New York for advice. Their advice? Don’t sign. But after a brief chat with the Zhangs, Ms. White inked the deal. She wanted it too badly, and it was only going to be a matter of time before fate laid the smack down on her dream.

The pictures and language in this pity piece are clearly meant to elicit sympathy for Ms. White. This is much more a human interest story than a cautionary tale, if for no other reason than the fact that companies aren’t writing these kinds of loans anymore.  But the writer did have the honesty to say about her troubles:

It happened in White’s case even though the college-educated day-care provider knew deep down that she was not ready.

I readily admit to my own financial foibles and that’s why I launched Debtbeat as a place for kindred spirits to get right with their money. To put things in perspective, I actually bought a new house a year before the market’s peak. I drive a Jaguar, wear a Rolex, and keep the Joneses in my sites at all times. My debt still needs to cut and my savings need to grow. I should even revisit my life insurance and estate planning.

However, I still have a hard time understanding people like Ms. White. (The first thing I noticed was that  her house was a lot more expensive then mine is, and yet she wasn’t making a six figure income with no kids to support.)

Hindsight is 20/20 and we can all see that she was doomed to fail, knew it in her heart and yet still pressed on to the detriment of her children and financial future.

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