Where Do We Go From Here?

Oy, has it been so long? My days have been an endless mash of arising, going to work, and packing. I’ve made time to do a few fun things, but time seems to slip away from me every day.

Gosh, life is funny sometimes. How different things can look when we just flip the telescope in the opposite direction. Wasn’t it just a few months ago that I was dreading having the sheriff ring my doorbell? Well, now I’m anxious to have my doorbell rung! After weeks of waiting, packing in preparation, and living with towers of boxes around my home and only a minimum of necessities, it is almost agonizing to be in such suspense, knowing it’s coming, but not knowing when.

*     *     *     *     *     *     *     *

A friend of mine has been facing difficulties maintaining payments on her home, and says that it will be going into foreclosure in 50 days. It is heartbreaking to hear and see her agony. I know what it’s like to face foreclosure, to drain your savings to save your home, to try to figure out where to can go if you have to leave – without having the funds for a rental. I know the anger, mortification and despair. I know the sleepless nights, listless days, and strained smiles.

Yet, her experience is slightly different from mine because she was not told by her mortgage company to stop making her payments. She simply had to stop making them because she ran out of money. I thought my mortgage company was working with me to keep me in my home. She has been luckier because she stopped making payments in October, so the bank has given her 11 months before initiating the foreclosure.

Learning of her situation made me realize that I had hoped to help people through this blog, but most of what I have written about has been my particular case, which I’m afraid may only help those being told by their lenders to strategically default.

Here’s the thing – if you’ve run out of money, or your payments have ballooned beyond your means, there are still avenues you can take. In my opinion, you should not just throw up your hands and walk away. There are many government programs out there. Yes, I know most of them have not shown to be worth the time to many, but as an eternal optimist, I can only hope that the rules may change as you are going through the process, or Obama might get some cojones and make it mandatory for all lenders – including Fannie May and Freddie Mac to do whatever it takes to make homes affordable. People just now going into foreclosure have the pioneers to thank for getting angry and getting at least some concessions and laws changed – it’s still not enough, but I feel encouraged by hearing more and people acknowledge that homeowner’s rights have not been adequately protected.

Another, last ditch effort would be to research your property’s records at your County Recorder’s office. (And, actually, this tip pretty much applies to every homeowner, regardless of whether you are in foreclosure, in danger of foreclosure, or sitting pretty.) These tips come from Foreclosure Fraud, and you can read how to research your records for evidence of forgery, fabrications, and fraud here.

This is why you should do this: if the lender collecting money from you cannot produce a valid note, you may not owe anything at all, and the lender cannot legally foreclose on you! It’s a scary fact – just because you’re receiving a mortgage statement or receiving default notices doesn’t mean that the particular bank named owns your loan. If you didn’t walk into a bank lobby and apply for a loan, most likely your loan was securitized. If you took out your initial loan 25 years ago, then refinanced without walking into a lobby, your refi may have been securitized too. The truth is that the plan to securitize pools of mortgages was not thought out very well. They were all thrown into the pool, to be shared. And no one can draw a solid line from the homeowner to the bank that owns the mortgage. Even the kiddie’s menu at Denny’s lets you draw a solid line from one end of the maze to the other!

A significant number of cases have been won solely on the basis that the lender cannot prove they own that particular mortgage. Another significant number of cases have been won on the basis that the signatures attached are forged. Make sure you review the note the lender holds – you may simply find a page attached to the end of the note with 4 to 6 lines for printed names and signatures that don’t even identify what the signatures are for. The signature page must identify what document the signatures are being affixed to. I have seen cases where the signatures have been obviously whited out and re-signed – including the home owner’s signature.

Now, just because you discover forgeries, fabrications, or fraud doesn’t mean you won’t have a battle ahead of you. If you discover this before the foreclosure sale, you can file a Lis Pendens with the courts, which prohibits your lender from selling the property. Or, you can file a suit against the mortgage company for taking your payments despite not owning the loan.

Believe me – if you can be proactive, it is better than trying to fight off an Unlawful Detainer (eviction) action, because the majority of judges go with the standard argument that the holder of the note has the right to the property, regardless of how they obtained the note. And eviction cases move very, very quickly.

This is imperative to do, especially now, with experts predicting that foreclosures are due to begin ramping up again. On my local news station the other night, a guy who helps people find homes for purchase or rent was decrying the lack of homes available because there aren’t many foreclosed properties left out there. Really?!?

It is amazing to me, but only 10% of people contest their foreclosures. Can you just imagine, out of the millions and millions of foreclosures happening around the country, just a small fraction of people have put up a fight? It’s true that many people just don’t have the resources to fight. But it is possible to represent yourself successfully, if you are willing to put in the time and effort to learn the laws and how to prepare filings. As one author I recently read questioned (my words) – if you knew you could get away with it, wouldn’t you file millions of foreclosures knowing only a few people would object through the court systems? If you knew you would win 90% of the time, would you do something heinously illegal? If you knew no one, including the President of the United States was going to lift a hand to stop your behavior, what would you, a greedy bankster, do?

Much of the latest news still shows many fraudulent and unethical actions being taken by banks, but with the small uptick in the number of laws dealing with Citizens United and student loan debt being decided in favor of the little people, I am finding a glimmer of hope. It is my fervent hope that some massive changes will roll up out of these smaller, individual ones within the next year. As Alexander Pope wrote a few hundred years ago, “Hope springs eternal…”

*     *     *     *     *     *     *     *

Have you spent all your money to save your home then had to move out? If so, what did you do?

 

The Latest Plan to Save Our Homes

There has been very little activity regarding my case, with the exception of my first civil suit against my lender being dismissed due to “non-payment of filing fees”. It took me and my attorney a few days to figure out what happened. You try going to court multiple times for many months and see if you remember what happened there on a particular day. Note to self: start writing this stuff down on a calendar or a notepad!

Through my life, I have not had much interaction with attorneys. In my experience so far, I find that I have had to constantly remind my attorneys about conversations we’ve had, the facts of my case, and so forth. They don’t whip out my drawer full of files (true fact – my current attorney has a whole drawer in a filing cabinet dedicated solely to me) and review the latest information while talking to me on the phone. Of course, these attorneys don’t have legal secretaries or assistants, or they might be a little better organized. On the other hand, those attorneys with legal secretaries or assistants cost a whole heck of a lot more!

So, it turns out that, while I sent him a check to cover the filing fees, he charged the filing fees to his credit card and the courts only charged him $100.00 of the total $755.00 fee. (Yes, filing fees are that high. I once paid $1,600 to file an appeal.) The receipt he received back via fax did not specify what was charged to him, so until he received his credit card statement, had no idea what occurred. He filed an appeal, and the courts should certainly grant us a reinstatement.

And I’m still anxiously awaiting the ringing of the sheriff…

I just found out on Sunday that the mortgage company has filed a request for an order for eviction. It just makes the sheriff’s visit more imminent. At least I’m prepared.

*    *     *    *    *    *     *     *

The government has announced some good news for homeowners. HAMP2 has been put in place – right on schedule – as of June 1, 2012. It is an expansion on the first version of HAMP, and expands the number of people who may be eligible to qualify, and also covers small rental properties.

I don’t want to enumerate all of the details here, as to who qualifies, but will highlight certain points of interest.

• “If you are not unemployed, but you’re still struggling to make your mortgage payments, you may be eligible…”

The fact is that many people struggling to make their mortgage payments are unemployed, or at least one person in the household has lost their job. Many others received ARM (adjustable-rate mortgage) loans, sold by scheming loan companies as a way to get more people qualified for mortgages to feed the monster securitized loan pool. When you have an ARM loan, you have low payments initially, but those payments balloon at some point, typically 5 to 10 years into the loan. So, if you got your loan during the height of the housing craze (2004-2006), your payments may be ballooning now. At the time you inked your name on the document, the plan was that you would refinance before the payments went up, because you would have established your good credit by then. With the tanking of the economy, credit terms have become very restrictive and it has become difficult for many people to refinance, virtually ensuring higher rates of default.

•  “Homeowners who previously received a HAMP trial period plan, but defaulted in their trial payments”…OR… “Homeowners who previously received a HAMP permanent modification, but defaulted in their payments, therefore losing good standing”.

(Find all the details here.)

Unfortunately, more than half of homeowners who received a modification at the beginning of 2009 defaulted again after 9 months. Many believe that this is because the modification didn’t go far enough. Many people just got their original loan principal extended another 10 years to drop the payment. Then again, who could have predicted that this recession would have dragged on as long as it has? Almost six years, with no end in sight. It’s no wonder that, in these uncertain times, so many people would have difficulty maintaining their payments. Fortunately, if you were one of those lucky enough to receive a HAMP modification but unlucky enough not to be able to maintain your good standing, you get a second chance. That’s a rarity.

Martin Andelman wrote a very interesting post last week, and I believe what he is saying is right. He has spent a lot of time interviewing people, trying to make sense of things over the years, and while I’ll let you read the full text here, the point he’s trying to make is that part of the reason there has been such an epic fail on the part of the banks and the government is that none of these actions have ever needed to be taken before. Yes, people have missed payments and been foreclosed on since the beginning of time, but in recent years, there have been different rules for lending that require different rules to deal with the fallout. And those rules were never developed. So why hasn’t anything more substantial been developed by now?

Most effective businesses take some time to ponder the pros and cons, or put together a SWAT analysis before launching a new product. Those businesses know that this is essential to their longevity. After all, they didn’t go into business to make a bunch of money then go out of business as soon as they had made enough. No, they want to continue to bring in the profits. And they know that there is no one out there who will bail them out if they make a bad business decision.

That is the key difference. The financial powers that be knew the government would bail them out, to preserve our economy. They were reminded of it every time they opened a new branch and put up a plaque that said “FDIC Insured”. When the barriers between standard banking and investment firms were dissolved, they became TBTF – Too Big To Fail. With their hands in every financial pot, it became impossible to segregate their influence from the economy as a whole.

I have an extremely difficult time believing that no one involved with the setup of the mortgage loan securitization process never said, “What is the worst outcome that we could possibly create?” or even, “How long can we keep this artificial bubble from popping?” and, even better, “Could what happened to S&Ls and junk bonds in the 80s happen again?” Hindsight is 20/20, as they say. Unfortunately, with so much history to draw on, it’s starting to be more like 20/100. If people would just take the blinders off and recognize that whenever variability exists, provisions need to be made to encounter any situations in which variability becomes the norm, rather than the exception. After all, it’s no secret that this country (and all countries) goes through periods of ups and downs.

So, yay that HAMP 2 is available, and I sincerely hope it helps more homeowners than HAMP 1 did. And not just a band-aid, either – I hope this makes a huge impact. Now, if we could just get Ed DeMarco of Fannie Mae and Freddie Mac to see the light and save us taxpayers some money, we could get some serious help for underwater homeowners!

*     *     *     *     *     *     *     *

Anyone wondering what happened to their request for an Independent Foreclosure Review?

Probably not very many of you. Apparently, only 4.5% of people who were sent the form responded. You have until July 31st to respond. I don’t know how much good it will do, but it certainly can’t hurt to submit your information! You must call to request a form if you haven’t received one yet.

 

Leaving the Coccoon

Still waiting. There’s nothing quite like rushing to meet a deadline when you don’t know what the deadline is. It’s not the end of the world or anything, just that moving can be stressful. In fact, moving is considered one of the most stressful life events. More stressful than that is losing a home to foreclosure, on some scales.

But, really, why does putting our stuff in boxes and turning our lives upside down for a few weeks create so much stress? For most people, they already know where they are moving to. I have no idea yet where I’ll wind up. However, every other time I’ve moved has been stressful, even when I’ve been excited about moving.

Moving out of a space you’ve created for yourself and your loved ones changes just about everything. You are not just changing locations.  You’re also changing an aspect of your identity – what neighborhood you identify with. You’re changing your routine. You’re changing your view. You’re creating a new home. You’re changing.

Unlike other stressful life events, such as marriage, the birth of a child, the loss of a loved one, there are no social ceremonies that mark the passage from one home to another.¹ In all these other events, your friends and community members rally around you, lending you support, celebrating your new identity, but this is not true of moving so much.

So, moving is a stressful life event. Combine that with the high stress event of foreclosure, then add in being sued (eviction), starting a lawsuit, or adding to your family unit (moving in with relatives). The more major stress events you have going on in your life, the more likely you are to sustain a stress-related illness. There is a laundry list of stress-related illness, but some of the most serious are the higher likelihoods of developing high blood pressure, heart disease, heart attack, and stroke. Anyone who has been through any of these events, I’m sure, can relate.

So many people, including myself, have a tendency to define themselves partly by their home. Some of the most common questions when getting to know someone are: 1) What do you do? and 2) Where do you live? Our society often appraises people based on these two questions, especially since it is socially unacceptable to ask what political party or religion one belongs to.

Yes, I’m proud of the house I once owned. I love the home I have created. I love having a pool to have summer pool parties in. I love having a fireplace to gather around in the wintertime. I love being within two miles of most of the shopping I need to do. But these things don’t and shouldn’t define me as a person. Or you.

Once you’ve created a home, it is cozy and comfortable. It becomes your cocoon. Whereas you may not have control over the décor at your work, you do at home. Whereas you may not be able to get other drivers to drive the way you think they should, you have more influence over whether or not the kids get to run in circles around the sofa in the family room. Whereas you can’t get rid of the garden gnomes in your neighbor’s yard, you can create your yard however you want. We create these spaces to be comforting, safe, and beautiful. And it is scary to leave them.

Here, I feel, is the essence of many people’s reluctance to move after foreclosure, the logic behind digging in and entrenching themselves until the last moment – the reason many foreclosed homeowners find themselves on the hamster wheel.

It’s a scary world out there.

Once you know that it is possible to lose your job and to lose your home, nothing in life seems very certain any longer. We’ve all been raised with the belief that if you work hard, you keep your job for a long time, and that you should follow the American dream of owning your own home.

When you’ve done all that, and you lose it all, it’s hard to know where to begin again. What is your new belief system? Do you keep repeating the cycle of the old belief system? What norms do we now choose to define ourselves as “successful”? You know the possibility exists that the same thing could happen again. Most of us don’t want to create the situation that allows for that possibility. It feels like it’s safer to stay where you are then to tempt fate by getting excited about starting all over, only to lose it all again.

As for me, I am going to take a leap of faith and move at least two hours away from where I live now. It’s not like moving to completely foreign territory, but it is someplace I’ve never lived before. How do I decide which city or town in all of Los Angeles and Orange counties to pick to live in? Will I still be close to shopping? Will I like my neighbors? Can I handle more traffic? Will it be easier to find a desirable job? Can I afford to rent a place the same size as where I’m used to living? Will I be able to afford a home there, eventually?

I don’t have the answers to any of those questions yet. What I have finally realized after having been entrenched in a home that doesn’t legally belong to me any longer, struggling to find even temporary work, is that this isn’t working for me. My safe place no longer feels cozy. The place that is supposed to nurture me has bound and gagged me. It has become a restrictive cocoon, and I’m ready to burst out of it and spread my wings.

Anything is possible.

 

¹ Making the Big Move: How to Transform Relocation into a Creative Life Transition, Cathy Goodwin, Ph.D. (New Harbinger Publications, 1999).