An Open Letter to my Two Mortgage Companies

I kept paying because I expected the economy to turn around and therefore to be able to keep paying and living there. I didn’t want relief for myself; I wanted it for the entire economy so that I had a fair chance of fending for myself:-) When no one can afford to hire me I can’t afford to keep paying, and so…

My husband, a process engineer in the electronics manufacturing field, was laid off twice in the last five years. In one instance, his department was outsourced to Singapore. In the other, his company closed the branch in our state offering no employment at other branches.

During the first layoff, ’03/’04, he worked as a handyman and I cleaned houses in order to be home when my two children returned from school. We ended up having to sell our house and move into the cheapest house in our city at 900 square feet, with (we later discovered) no insulation. We put 10% down and put a lot of sweat equity into the house thereafter. Despite everything, we remained grateful for the roof over our heads and the heads of our children.

Then came layoff #2. By this time, our 401k was gone, our savings was gone and one uninsured hospital visit (my husband was having chest pains) cost us over $7,000. At this point, in order to hold onto the house, we refinanced from a conventional loan (which we’d always had throughout our 17-year marriage) to an interest only loan to get us through the layoff period. That was three years ago. Although my husband has since regained employment in his field, our home value has plummeted from $350,000 to only $200,000. People have left our neighborhood and abandoned their properties in the middle of the night. There are currently five empty bank-owned properties on our street, four of which have been empty for over a year.

Our mortgage company will not allow us to refinance based on our current value, and our payment has increased because of the switch away from the interest only loan (after the three-year period.)

We are an intelligent, hard-working middle class family (California is so expensive that an engineer’s salary coupled with that of a part-time teacher equals middle-to-lower-middle class in our city) trying to hold onto a very small home which we have spent five years frugally fixing up. We do not use or even own a single credit card. We have one car. No big screen TV’s, X-boxes, vacations — just very simple lives.

My husband is aghast as he watches corporate bailout after bailout and the frivolous indulgences that have come in the wake. Nobody bailed him out except his own sweat and muscle. It’s simply appalling to watch fat cats grow fatter on our tax dollars, while the little guy busts his hump to no avail.

I have crossposted it to Huffpo!

Lucky for us we weren’t roped into a subprime mortgage when we bought the home we currently live in today…I told my wife that I suspected a lot of people who did were told by their mortgage broker when questioned that they would be able to refinance which later turned out to be a lie…Sure enough I heard on the news back in January where the person who was losing their home related that was exactly what they were told…

This recession began in the housing sector and has now spread throughout the entire economy which is why I can’t understand why the Govt. absolutely refuses to help the homeowners who are in trouble instead of the fat cats who caused this with their seemingly infinite greed…

I’m not sure I disagree with you about turning in the keys, but I’m not sure your reasoning is correct about this leading to the end of the private real estate market. One thing is sure; it is complicated.In my own circumstance, if my business had not declined, I’d be just happily paying no matter what the home was worth.

you lost my sympathy as soon as you said “interest only mortgage”.

how were you planning to pay off this (large) loan if you weren’t paying any principal? refinance after you paid off the HELOC? or hoping that house prices would continue to rise?

given your age, did you expect to pay off the house before you died?

You’re karma is fine, Francine, and sometimes people sound like they’re feeling smug when they are desparately trying to keep a postive attitude while ignoring the fact that their lives are really in shambles and getting worse.

Sometimes a positive attitude is hard to keep, and sometimes even harder to show, but it’s the only thing I can think of that will get us all through this until things finally do turn around …and things WILL turn around!

If these kinds of threats (by people who previously were not deadbeats) continue, you are going to make the property market worse. Traditionally, respectable people would struggle through to pay off the debt they incurred. If people like you not only walk away from the debts, but advertise it, then the number of foreclosures will increase, lenders will make lending-conditions tighter and the property market may never recover.

You made a bad business decision, which since you are a businesswoman makes your fault in this even greater. It was lunacy to buy a house in the past 5 years. Presumably you made a large profit on your Arizona home? Are you going to offer to pay that money back to the lender who facilitated that profit accumulation?

How is it that after being a businesswoman for 40 years you didn’t have enough capital accrued to simply buy the house outright? Is it that you did have the capital, and decided to invest it elsewhere? And now you are trying to strong-arm your lenders to re-negotiate a contract?

My partner works part-time, and I don’t earn any income because of physical problems. 10 years ago we bought the only home we could afford. You spent almost as much renovating your house as we spent buying ours. We lived with the horrible 40-year-old kitchen for years, until we could afford to get the kitchen replaced.

We watched as the prices around us rocketed in the past 10 years, but never did we fool ourselves that our house was really worth 10 times what we paid for it.

I was predicting this crash since 2000, and I’m not a business man. In that year we looked at buying a separate property and walked away from it because the prices were rising so fast that they were obviously unsustainable.

You haven’t exhausted your money-making options. What’s stopping you from taking in lodgers? In order to make ends meet, that’s what my parents did when their kids left home, and it’s what lawyer friends of mine have done since they’ve over-reached themselves. Or if that’s too distasteful, move in with your daughter and rent your whole house. Or if that’s too distasteful, rent a 1 bed apartment and rent your whole house.

Or walk away from it, and accept you’re a bad businesswoman.

I’m sorry, but you have an incredible sense of entitlement that angers me to be honest.

How would you look someone in the eye (like myself) who bought conservatively 7 years ago and has paid down my loan which is fixed at 5.5% and say that you deserve your loan to be reset and fixed at 4.2%? That’s just ludicrous.

And I don’t want a handout down to that level because I know what it would cost the government. All money the government spends now has to be paid back at some point by taxpayers. But then again, those that are closer to retirement can just spend away knowing that they won’t bear the burden that future generations will bear.

There are no easy solutions to this, to be sure, but this would have far worse consequences than the level of foreclosures that we will see through this and next year.

I expected to re-fi after I paid off the HELOC, which was supposed to happen from an investment property that was in escrow in San Diego when the bottom dropped out of the market. I knew exactly which investments would pay off the house, and everyone of them has been put on hold by this real estate downturn.

You are a sweet person, and it makes me feel good to hear from you.

Thanks for writing about your mortgage dilemma. It certainly is another sad commentary on how the current financial crisis is upsetting capable, hardworking individuals and negatively impacting their families and communities.

Regards,
DAR

Sounds to me like you bought a house you couldn’t afford and want a handout. What about all of us to buy property we can definitely afford and live a bit more modestly? Should we get handouts too?

God Bless You!
I think that your letter should be published in every Newspaper and on all the tv stations. You are very articulate and are not asking for anything unreasonable! Maybe if these lending institutions could actually look past the charts they make to figure P & L they would realize that helping you and countless others would actually add to the positive end of the bottom line!

Hmm, so you can’t afford to make payments on a 3/4 of a million dollar house? How about this, sell it and move to cheaper house. I hate these crooked financial institutions more than anybody but I don’t feel sorry for somebody who is over leveraged and living in a mansion. Suck it up and move.

What makes me laugh is if your house had gone up 300,000 you wouldn’t be sharing that with the bank. How does it make sense that you want the bank to share the losses with you and where does it end. If they refinance you, then they need to refinance everyone. Give me a break.

There are 106,261,000 single family homes in the US. If they give you a break then they need to give everyone a break. Do the math! At 100,000 per home the number is 10,626,100,000,000. 10 Trillion, I don’t think Obama has that up his sleeve.

There is no guarantee of happiness in America, only the pursuit of happiness.

Oh and if you are going to rewrite everyone’s mortgage that is under water, how about all the people that paid for their houses but have lost money in the last few years? Should the government just write them a check for the decline in the value of their home.

If you customers of your business all called and said they have problems now are you refunding their money?

I don’t get it! For the record, I bought my house 2.5 years ago, owe 350k and it is worth 275. I own a small business, which is a restaurant and I’m tightening my belt. I’m not looking for the government to fix it!

“Suddenly, four deals I was in, all of them capable of making me financially secure, either fell out of escrow or went on ‘hold.’”

Just a brief question–were you selling these properties as the agent?

They are automatically moderated. Don’t worry, they are approved.

Schadenfreude is the act of taking pleasure at another’s misfortune. At its best, it’s laughing at the guy who slips on the banana peel. At its worst, it is sitting ignorantly in your home with its fixed mortgage and low interest rate and laughing at anyone who bought a home in the last five years and is “upside down” in their mortgage today. You don’t realize that misfortune COULD happen to you.

This post, a continuation of yesterday’s, is a series of questions aimed at those who told me I was a bad businesswoman, a fool, and unworthy of help because I bought an “expensive” vacation home in Half Moon Bay.

1)Have you ever wanted to live near, but not with, your very close family? Mine lives in Half Moon Bay
2)Have you ever been optimistic enough to think that for the next five to ten years, you will have an income similar to the one you have had for the last thirty?
3)Have you ever taken a risk for a dream?
4)Have you ever saved and invested over a ten year period, only to see it all evaporate in 90 days?
5)Have you ever spent your days trying to help others succeed?
6)And do you know what a starter home costs in California?

Until you have had all those experiences, you have no right to pass judgment on me.

I love my family and want to live near my grandchild and my daughters, who have left Arizona and tell me they never want to return.

I could afford the house when I bought it, and with a long-standing business (the third I have created for myself) I thought I would be fine.

I took a risk to move to California after 40 years of living in a place I did not enjoy, but stayed in to raise my children and tend to business

I had enough money scheduled to come out of investments last fall to pay for the entire house outright.

I have created jobs, helped others create jobs, been a foster parent, and helped send a young man in Uganda through college. And now I can’t afford to go to his graduation.

The home I bought is known as a starter home, a big step down from what I lived in while in Arizona. The $70,000 I made on my Arizona home was the down payment for the house in California. That’s all gone now.

I’m not an idiot. I had a plan. It wasn’t foolish, and it wasn’t even risky. For almost four years I made all the payments easily.

What is wrong with you people? I hope nothing untoward ever befalls you; you will never be able to handle it.

The spirit of America is of entrepreneurship. Entrepreneurship means the ability to take risk. If I didn’t create jobs, you wouldn’t have one. Period.

If I am foreclosed, I am fine with it and ready to take the responsibility. I am strong and healthy. But if Citibank can run to the government with its hand out, and investment bankers who made more in a year than I made in my lifetime can fracture my mortgage into millions of pieces so I can’t even call a banker and have a conversation about it, then I can at least ask.

Thank you so much for writing this. I am going through a similar situation with two completely different mortgage lenders (Countrywide and Homecomings) and it just seems hopeless. I was proactive in the beginning when I knew troubles would soon come as my mortgage shop up an additional $400/a month and even as a rental home, the loss became unbearable after the first 6 months. As I held on to making on time payments and prayed the economy would get a bit better and the interest rate would drop, after over a year of waiting for that to happen put me in a financial bind that I haven’t ever experience. I was just sitting in the dark so upset that my great credit has been ruined after I tried so hard to seek help in advance and customer service is no longer customer service. It would be so much smarter for these mortgage companies to give better assistance to those people trying to not be another statistic in the rising foreclosure numbers. Now I am waiting to see if my house will short sale or if I will just have to let it foreclose (which I am still trying so hard not to have this on my record). The only consolation I have is reading about people in a similar situation and speaking to friends and colleagues that are in the same unfortunate situation. Hang in there, I am and hopefully soon we will see a brighter day in this torn economy. Please keep us informed of the outcome.

Hey there… Me again,

I just read through some of the responses on this posting. My God.

What I think some of these commenters fail to realize is, “there by the grace of God go I.”

People tend dislike people who appear to “have more” than they do, irregardless of how responsible you are/are not OR they are/are not.

Sounds like you’re a strong cookie by your sober responses to your critics. Hang in there. I’m pulling for you.

LR

“I’m not an idiot. I had a plan. It wasn’t foolish, and it wasn’t even risky. For almost four years I made all the payments easily.”

This defies logic – you made interest-only payments while everyone was getting drunk at the punchbowl. I am sorry, while I have no doubt that you are not an idiot, what you did was completely idiotic and therefore, since you are a grownup, you need to take responsibility for it.

Hold on a second, are you implying that TARP money, i.e. the cash I had earned and paid in taxes, should be used to rescue “unhappy and frustrated” credit-loving consumers like yourself, who just happen to love his $750K Arizona (!) house so-o-o-o much that I’m supposed to feel sympathetic for you?

Since apparently I am paying for this mess along with millions of other young working professionals, foreclosures is what we want. Yes, foreclosures and 3x reduction in real estate prices, because our economy doesn’t pay salaries that let us save up $750K for a house in the middle of nowhere.

Your “investment” should be up for sale for $350K and you should be rebuilding your credit while living in an apartment.

And please leave banks out of it. They only gave you what you asked them for.