Save My House – Turning Around The Disaster

The mantra of our generation seems to be “Save My House”. How did we get in this situation and how do we get out?

A few short years ago things were great. I had a good job and was sure I would get promoted as I climbed the corporate ladder. Everyone I knew had a great attitude about the future. Today things don’t look so great.

I remember a lady in my office received a beautiful bouquet of flowers delivered to the office. Most people thought it was an anniversary present from her husband. It turned out to a congratulatory gift from her real estate agent. She had just bought a new home. It created a buzz in the office. How could a secretary afford a new home?

I found that real estate was on fire. Her property, a condo, had gone up in value. She sold it and bought a home. If she could do it, so could my family! The lenders were anxious to make loans and offered a loan where the payments would go up each year. This would work for us as I expected to get promotions and raises. The real estate agent explained that even if we ever got in trouble, we should always be able to sell my new home as it would be worth more in the future than it was when I bought it. Makes sense to me. We were able to buy the type of home we hoped we thought we would have to wait 10 years to afford. The difference was we were able to qualify now. We were also worried that the way homes were increasing in price, we would never be able to afford the house later if we didn’t buy now.

Fast forward to today. I didn’t get the promotions I expected due to the recession. That didn’t stop my loan from going up. At first it was doable. We just sacrificed some things we liked to do like going out to dinner. We had planned to take a family vacation but that got cancelled. Instead of buying a new car, we decided to keep our present vehicles which are now close to 10 years old.

When the loan increased again it caused a real dent in our budget. We had planned another baby but that had to be delayed too. We couldn’t afford the increased expenses and we couldn’t afford for my wife to take time off from her job. I took a part time job at a local convenience store to help make ends meet. I have a college education so that was kind of degrading but I had to do what I had to do to support my family.

Finally we decided to sell the house and start over. That’s when the real panic started. Our real estate agent said many people in the neighborhood had either sold their homes or had already defaulted on their loans. The value of our home had fallen about 20%. We owed more than the home was worth. The only way to sell it was to pay off the difference of $40,000. We didn’t have that much money in our bank accounts so we were stuck. The only option was to let the home go to foreclosure and ruin our credit for 10 years.

We looked into a loan modification. This was scary because the newspaper was full of articles about rip-off artists. I called the bank to ask them what to do but they never called back. That was until we became late on our payments. That was when I found that they had changed the qualification process. I didn’t qualify for a fixed rate mortgage, even though the rates were near 5%. They also said that since the value of our home had fallen, we would have to pay the same $40,000 to pay off the old loan and get a new loan that was inline with what our home is now worth. We were stuck.

We didn’t want to let the home go to foreclosure. We’ve had great credit until this thing happened. I’ve always believed it’s important to keep our credit pristine. My rating has already fallen because I’ve been late on a couple of payments but I surely didn’t want something on my record for 10 years.

The only answer was to try to modify the loan myself. I figured I needed to find out how everything I could to learn the loan modification process. I needed to learn the rules. This only makes sense. I wouldn’t try to fix my car if I didn’t know anything about cars. I was trying to fix my home loan so learning how lending works is essential.