January 24, 2008 8:59 PM
Avoid foreclosure
It's not easy to admit you've made mistakes where finance is concerned, but in order to share something I hope can help others I have to admit that Tripp and I have not been the greatest when it comes to handling money.
We were poor when we got married - renting a small house in Marin County and living month-to-month. But we built a business from nothing - a real local-boy-makes-good kinda story - and bought a house and moved up and up through real estate until we were really very well off financially. Then things changed - we adopted kids with special needs, California's unfriendly-to-business regulations and skyrocketing workers comp rates made it increasingly difficult to run a small company (25 employees), we moved cross country and had to buy our own health insurance, Tripp tried his hand at a different business and lost his golden touch.
Still, as long as real estate values climbed, we were protected by owning a house.
Two years ago, I talked about downsizing. I love our house (though it's not the friendliest neighborhood), but am at a point in my life where I don't want any more house than we need, and four kids have moved out since we've lived here. That still leaves six at home - including four with Down syndrome - plus two in college. But while others in my neighborhood nave 4 1/2 bath houses with two kids, that's not my idea of fun.
Shortly after that post, we put our house on the market, but didn't beat the slow down in real estate. As we kept lowering the price, everyone else was lowering theirs. Out of the 28 houses in our small development, our real estate agent told us seven are on the market. Nothing has sold in our area for over a year.
We had an adjustable rate mortgage which now with the falling equity we couldn't get out of. We'd been paying a mortgage for over 20 years and never been late on or missed a payment, but the fact was that in the last year we were borrowing on credit cards to make our mortgage payments. We were seriously thinking about just walking away from our house and renting.
Our agent - a kind and wonderful Christian man who has helped lots of people, I know - suggested we contact our mortgage company to see if they would be willing to work out something with us. He pointed out that lenders are in a position of being more amenable to creative solutions since they'll lose on a foreclosure too.
Since this worked for us, I want to share it with anyone who needs it:
Contact your mortgage company and ask if they have a Loss Mitigation department (this is what ours called it - maybe yours has a different name).
They will probably give you a financial statement to fill out and ask you to write a letter explaining your circumstances.
Do this promptly. Write the best, most sincere and real letter you can. Write as though you're explaining it to your best friend, not to a company. Be completely honest about your situation.
If they call and ask what you would like them to do, tell them that you would like to regroup by skipping a few payments to pay off credit card debt (if they agree, they will add those to your principal balance, but it may give you some breathing room) and that you would like them to fix your mortgage at a lower rate.
I did not know these things when I went through the process myself. I was surprised when they asked me what we wanted. But that's what came out of my mouth.
A few days later they called back and said we could skip four payments and they were going to convert our adjustable rate (which was currently 5.99% and scheduled to go higher in March) to a fixed rate of 5% for the life of the loan.
After I picked myself up off the floor - where I was wailing out thanks to God - I promised that no matter how humiliating it was, I would share this. Mostly because I've heard that many people are facing foreclosure but too ashamed to admit it. That people see moving vans show up and didn't even know that their neighbors were in trouble or moving.
So here it is, for all the world to see. We are just barely hanging on to our house - yes, we'd still like to sell it, but it looks like that won't be happening for a while - thanks to following the advice of a very kind real estate agent and taking a chance on actually obtaining a human response from a financial institution.
What will make it worth it is knowing that this helped someone else.
Posted in Current Affairs, Loudoun County | Permalink
Comments
Barbara - We had to do this while I was pregnant a few years back. Hubby wasn't able to maintain his second job (a part time business) because of me being so sick and we just got behind. It was a real blessing to us leaving us with enough wiggle room to get the car paid off so that we could live on what hubby makes at his main job. I am so glad you spoke up about this - undoubtedly their are other families out there who need to know about this, but money (especially the lack of it) is such a hush-hush topic. So many of us mommies look up to - knowing that you've struggled with this makes me feel much better about it!
Posted by: Shannon Miller | January 24, 2008 11:08 PM
Praise God for the much needed help and praise to you for sharing this with everyone else who has a computer :-) My palms almost sweated as I imagined how I would feel if I had bared myself and shared as you have.
I'm a firm believer that we should always use our testing, trials, hardships, etc., to help others in a similar situation (as God leads), and so, you have.
I am amazed that you, pretty much, got what you asked for. Don't you know God gave you the exact words for that request?!? Whew! It's wonderful the good things that come out of less than desirable situations when we simply and honestly communicate with others.
Good for you and good for your family!!!
Light a fire, snuggle up, and ENJOY your home...........
Posted by: von | January 24, 2008 11:40 PM
Barbara, Once again I have to thank you for your openness and honesty. We are not homeowners, but hope to be someday soon (we live in the church parsonage). We have never dealt brilliantly with money but feel like we're learning. Thanks for sharing your story and the lessons you learned. I hope and pray God would pour down His blessings on you, you have been blessed to blessed!
Posted by: Barb | January 25, 2008 8:37 AM
Thank you for your honesty, Barbara. More often than not, when I read your blog (every day) I come away feeling encouraged...that there IS hope.
I think it's neat how the Lord can unite us and make us feel like friends...even though we have never met :)
Posted by: Bryanne | January 25, 2008 9:12 AM
Thank you for sharing this. It will help lots of families, I'm sure.
Posted by: suzanne | January 25, 2008 9:13 AM
Thank you, Barbara. I love you because you are you - authentic and real. I admire your humility for allowing God to use not just your strengths but also your weaknesses to help others. I copied this for 2 couples - one with an ARM & a crushing house payment and another with a second mortgage that they have borrowed tons on. I've also saved this for future reference.
Thanks too, for breaking what could be an intimidated and inscrutable process down into manageable steps...how like the good teacher you are!
Posted by: Judy | January 25, 2008 10:56 AM
I commend you for sharing something so personal and yet something that is so potentially helpful and life changing to your readers. May God continue to bless your family in 2008!
Posted by: Katie B. | January 25, 2008 11:52 AM
Barbara, thanks for sharing, I know that is hard to do in such a public forum. Money management is hard and is a discipline I struggle with as well. I used to loathe our cash budget, but now I love it since it provides such security for our family. We too bought a house at the height of the housing market and we'll be here for a long time as far as I can see. Though, since my husband works for a financial institution we avoided an ARM. Credit unions frown on ARMs and especially in our area where the median income is really low, housing prices are quite high. So, I will pray for you and your family as you learn and grow through this struggle and I thank God for his provision for your mortgage! God is for us!
Posted by: Imajackson | January 25, 2008 12:24 PM
Thanks for sharing something so private in order to help others. My friend is battling leukemia and has not been able to work. Keeping his home for his family is his priority and this information has been so very helpful.
Posted by: Lisa G. | January 25, 2008 12:55 PM
Bless you for being so open and honest. It's really hard sometimes to just admit these things to ourselves. Many credit card companies will also work a plan by not charging interest for a small period of time to help their customers get it back together also. Thank you for inspiring my life with your words. I am grateful for your insights, honesty and your ability to be REAL in a world that most times is not.
Posted by: Tracie | January 25, 2008 1:07 PM
We had to use our credit card for the mortgage this month too Barb. It happens. Thanks for being so open and willing to share.
Posted by: Elena | January 25, 2008 3:11 PM
Thank you so much for sharing this! Our interest rate is killing us (7%) and we are trying to sell our house (for 18 months now) because we need to move cross country. We are looking at having to carry the mortgage if we have to move before it sells. This information could be a huge help for us in making that work. Thanks again!
Posted by: Tiffany | January 25, 2008 4:42 PM
I so admire the authenticity in this. This is one way of loving and laying yourself down for your {sisters}.
Posted by: Marian | January 25, 2008 5:14 PM
Thank you so much for sharing this Barbara. Praise the Lord. This topic hits the newspaper almost every week-end, and it breaks my heart......I am so glad God has been so good to you, and you are willing to share with others. :)
Posted by: Lisa | January 26, 2008 5:34 PM
Barbara,
Thanks for the advice. We're in a similar situation over here in Arlington. We were idiots when we bought our little condo just minutes from D.C., and now with a baby due in just a few weeks, times are extremely tight. I started a small moving business on the side, and it brings in just enough to lose only a little bit of money each month. I'm keeping track of the whole drama at my blog.
This post inspired me to call the bank again and find out what, if anything, they're willing to do to help us. We've called once already, but so far we've gotten the silent treatment. What one bank can do, another can do...
Posted by: Christopher | January 28, 2008 3:30 PM
You get alot of traffic through here, have you thought about posting a link to the real estate listing? You just never know who might come along. Also, and this may not be pleasant, but I would encourage you to do all the research on thrifty living that you can. For those of us who grew up without much this is a really difficult thing, but it is never too late to learn. Doing without some things in the short run can really add up to a lot of money over a year or two. It's similar to a commitment to weight loss - you have to look at spending habits, hidden costs (credit cards, ouch!)etc. and resolve to trim the fat. Otherwise you'll get right back in the same spot. Please don't ask me how I know this.
Take care, Barbara, and God bless you and all your efforts.
Posted by: teresa | February 1, 2008 3:07 PM
