Mortgage-Burning Parties Almost Extinct
When's the last time you went to a mortgage-burning party? Do people even pay off their 30-year mortgages anymore? NPR's Planet Money team went on a mission to find out.
RENEE MONTAGNE, Host:
Around 20 years ago, Americans began shifting the way we think about our homes and the mortgages used to finance them. To take note of this change, we sent Planet Money's Chana Joffe-Walt on a mission.
CHANA JOFFE: This all started because my editor used to watch "All in the Family" as a kid.
STEVE DRUMMOND: Well, not just because of that.
WALT: And there he is - Steve Drummond, NPR's national editor. It was, right? Because you remember watching Archie Bunker burn his mortgage.
DRUMMOND: That certainly is part of it. But I was also - throughout this crisis, I've been thinking about the idea of a 30-year mortgage and how crazy that seems to me now. I'll be 76 or so when I pay mine off, and I don't even really think about it as a real possibility. But people do pay off their mortgages - like you used to hear about people burning the mortgage.
WALT: Like Archie Bunker.
DRUMMOND: Exactly.
(SOUNDBITE OF TV SHOW, "ALL IN THE FAMILY")
CARROLL O: (as Archie Bunker) Burning the mortgage over here.
JEAN STAPLETON: (as Edith Bunker) Archie, be careful. Don't set fire to the house. Remember Cousin Henry.
CONNOR: (As Archie Bunker) Yeah, I always hated him.
(SOUNDBITE OF LAUGHTER)
DRUMMOND: Anyway, so, yeah. I thought it would be cool to meet someone like that. We keep hearing about tens of thousands of people losing their homes, and I wanted to hear from somebody who had actually paid off a 30-year mortgage. And Chana, you said you were going to do a story.
WALT: I'm in search of people who are towards the end of paying off a 30-year mortgage.
(SOUNDBITE OF LAUGHTER)
JEFF TISDALE: Good luck.
WALT: Why do you say good luck?
TISDALE: Oh, well, there's been multiple times over last 15 years where interest rates have dipped down and people have refinanced. And typically what happened, for the most part, reset the clock.
DRUMMOND: So, what? This one guy didn't know anyone?
JOFFE: Yeah, I know what you're thinking. I called lots and lots of other people, mortgage brokers, banks, community lending people - the whole shebang, Steve.
JUDY HOLSER: One time in the last 28 years, I have seen a title report...
ERICA MALONE: Towards the end of this 30-year-mortgage, you might be looking for an endangered species.
ROBIN FINLEY: There's one couple that I know that may have done that, but I'm not sure that they paid it off. Yeah, actually they won the lotto.
(SOUNDBITE OF LAUGHTER)
JOFFE: No way, really?
FINLEY: Yeah.
(SOUNDBITE OF LAUGHTER)
JOFFE: Steve, that was Judy Holser, Erica Malone, and Robin Finley, all veteran mortgage business people laughing at me.
DRUMMOND: So, Chana, you did - this all just to tell me you didn't do this story?
JOFFE: No, Steve. Come on. I've got you.
(SOUNDBITE OF CLACKING SOUND)
CHRIS PIERSAL: Come in, come in.
JOFFE: Hello.
PIERSAL: (unintelligible) is not here yet.
JOFFE: Welcome to the home of Tamar and Chris Piersal in Seattle. These two bought a home in 1978, paid it off 28 years later.
PIERSAL: Hey, you found it.
JOFFE: Yeah, they were great. So Chris rides his motorcycle everywhere, and Tamar is in IT, and she's got this great laugh.
(SOUNDBITE OF LAUGHTER)
JOFFE: They're one of those couples that's been together so long, they talk in this way, like, their sentences are made up of parts from one of them and parts from the other.
TAMAR PIERSAL: It was just...
PIERSAL: ...a day to day thing...
PIERSAL: ...a payment that we made every month.
PIERSAL: Well, you know, I think there was a point when we started...
PIERSAL: ...we could see...
PIERSAL: ...it's not a never-never kind of thing so...
PIERSAL: We could see that - yeah, and that was exciting, the idea that we wouldn't have to make that payment every month. We suddenly were kind of electrified by the notion that we could own this free and clear.
JOFFE: So here's the thing about this assignment, Steve, why I think the Piersals were so hard to find: So first of all, there are just fewer people like them. Just in the last 10 years, there's been a seven percent decline in people who own their own homes free and clear of debt. But that still leaves us with a lot of people, something like 30 percent of home owners don't have any mortgage debt. But those people tend to be older, older than the Piersals, and just of a generation that was really uncomfortable with the idea of debt.
DRUMMOND: Yeah, but as interest rates went down, millions of people refinanced, and that wasn't necessarily bad. Lots of people saved, you know, a lot of money on their monthly payments.
JOFFE: True. It just didn't always used to be like that. Tamar basically says, look, we never refinanced. We just made the payments. And Chris says he thought about moving once or twice, but he'd look around at those houses for sale and the prices.
PIERSAL: You know, for us, when they started talking houses in sub increments of a million dollars, we're going, huh? That's a lot of money.
PIERSAL: Yeah, an ordinary house for half a million or $700,000, it sounded outlandish.
DRUMMOND: Uh-oh. I don't want to know.
JOFFE: Thirty-five thousand, Steve, the Piersal's house, 1976, cost $35,000.
DRUMMOND: Ouch. That hurts my brain. Okay. So the real question here: Was there a mortgage burning involved?
JOFFE: Sorry.
PIERSAL: Well, I remember when we made the last payment. I was at work, and I was on the phone with the mortgage company, and my co-workers were all going, oh, we've never known anyone who paid off their mortgage.
(SOUNDBITE OF LAUGHTER)
PIERSAL: They were all standing around.
(SOUNDBITE OF LAUGHTER)
PIERSAL: I'd always heard of people burning the mortgage.
PIERSAL: Yeah.
PIERSAL: But there was nothing to burn.
(SOUNDBITE OF LAUGHTER)
PIERSAL: I think we out to dinner.
PIERSAL: Yeah, we went out to dinner.
PIERSAL: Yeah.
PIERSAL: Yeah, that's what we did.
JOFFE: The Piersal's son actually just became a homeowner, too. He got a home that was in foreclosure. And he says he will be there 30 years, till he owns the place, at which point, Steve, he promises he will burn something. You happy?
DRUMMOND: Yes, very happy.
JOFFE: Okay. Chana Joffe-Walt, NPR News, Seattle.
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