An Open Letter to my Two Mortgage Companies

Dear Aurora Loan Services (a unit of Lehmann Brothers) and Citibank Mortgage (who took the TARP money):

Between the two of you, you hold my fate in your hands. In July 2005, approaching 65 years of age and having been an enrepreneur for forty years, I bought a home in Half Moon Bay, about three miles from one of my daughters. I put 10% down and got a 5-year interest-only mortgage for about $576,000 and a HELOC at prime +2 for the remainder, about $154,000.

I was really happy to live close to my daughter, and the two of us encouraged my other daughter to move home from the Netherlands to join us. For three years, everything seemed fine. I made friends, I continued to run my business in Arizona, invest in my startup companies, and assume I’d be in Half Moon Bay full time one day. Prescient about Arizona real estate, I sold my house there and rented.

And then two people on my block in Half Moon Bay had to use short sales to get themselves out of their obligations, and the value of my home suddenly dropped. All of a sudden, the home I paid $769,000 for, and then spent $45,000 modernizing, thinking I’d live in it for at least ten years, became worth $699,000.

I’m no dope; I’ve been in business all my life. I saw everybody starting to turn in their keys. I knew it was a bad financial decision to keep paying on the mortgage, but I was loving the house, spending quite a bit of time in Half Moon Bay as my daughter was now pregnant, and determined to make it through this momentary drop.

And then November came, and the value of my house dropped to about $659,000. More important, my business began to go away. And I mean go away. Suddenly, four deals I was in, all of them capable of making me financially secure, either fell out of escrow or went on “hold.”

However, Obama got elected, and I kept on paying. I did make a call to you at Aurora in December, asking if I could get some help, and you advised me that you couldn’t help me because I wasn’t behind. Of course I wasn’t: I was struggling to preserve my excellent credit.

Well now it’s February. I am scrambling for small projects. My deals recede in the background under the weight of our crumbling economy. Congress argues over the stimulus bill. And I have taken a deep breath and realized I am going to fall behind on this mortgage.

Like Rome, I am burning while Congress fiddles. And I’m not getting any younger. I’m an optimistic person, a healthy person, and a person willing and anxious to work. No, I don’t want to move in with my daughters. I want to ask you to re-finance my mortgage at the current value of my house at a 4.2% rate, like everyone in Congress is suggesting.

Otherwise, I have to let you foreclose. And this will not benefit you or me. Me, it will ruin my credit. You, it will give you yet another foreclosed property to sell at even less than if I could keep it for a few years and then sell it for you. And it will further erode the property values in my little subdivision, full of other families.

Do I want to bare my soul to you, or to the online world? Of course not. But my highest and best use right now is to offer myself as an example, a data point. I’m articulate. I’m not a person who should never have been given a mortgage. Not an uneducated victim of a greedy mortgage broker. And not a speculator. Just a person caught in something much bigger than all of us.

I’d like to take a moment to thank my parents and all my teachers, who gave me the gift of writing, so I can at least convey my feelings to the world. Namaste.

Update: I’d like to take a minute to answer you in a group, as many of you are saying the same thing:
1)As for asking for a handout: I’m not. I’m asking for something that will help both of us move forward. I fully believe my business will come back in a couple of years, as it always has. When the tech economy slows down, my business slows with it. When it comes back, it will come back. I had rainy day money. I tried to use it to start a new bank with some colleagues, but the FDIC has held up our charter because there’s so much to do bailing out the bad banks
2)As for buying a house out of greed and living beyond my means, I had the means to buy the house when I bought it, and the means to pay for it for four years. Hello, my business stopped in November. And what happened to everything else in November? Same thing.
3) Unless you have full access to someone’s financials, you can’t accuse them of greed for buying a house that costs $769,000. That happened to be a low end home in the Bay Area when I bought it
3) I’m alarmed at the schadenfreude shown here. Even if you live below your means and save for a rainy day, there are life events that can take you down for a while. When those events occur, what I was trying to demonstrate was an entrepreneurial way to create a win-win situation.

Clearly, many of you are in the win-lose zero sum mentality; if I win, somehow YOU lose, because you are paying taxes. Did it ever occur to you that a person who can afford the house I could afford in 2005 pays taxes, too? When you have paid taxes for fifty years (although I hate to say it), you can tell me I have no right to a mortgage modification because it will affect your taxes. It will also affect my children’s taxes, and their children’s. Yes. And I wish Bush hadn’t spent our tax money in Iraq for the last six years. That was MY money.
4) At the end of the day, thank for your comments, although some have disturbed me because they seem not to care that someone is losing her home. They have, indeed, taught me that the way I live is not the norm. I guess I don’t have to create jobs anymore for you guys, because you are safe with your 30-year fixed rate mortgages and don’t need me to take anymore risks on your behalf. But I do now have a better idea why the mortgage modifications haven’t been done earlier at the government’s stipulation.
5) If your comments do not appear, it’s because AKismet thought they were spam. I let every one through that I saw, and answered a substantial number of them in an effort to keep the conversation going, as the blogosphere demands. This is, after all, the country of free speech.
6) Look into your hearts. What is happening in our country isn’t about money. It is about closed off hearts. I have had a business setback. We all have them. We all fail. What is wrong with asking the bank to cooperate? If the bank can ask for $50 billion, I can ask for a lower mortgage rate. The bank can say no. And I can be foreclosed. And prices can fall further, and neighborhoods degrade.