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Hoping for the Best


Last week, we heard someone walking around in the back yard and the dog was going crazy. Then someone started pounding on the front door. We felt really nervous! Was this the sheriff?

When I had my landscaper dig up all of my rose bushes, he misunderstood me and stopped service. I figured we would be out at least within a month, so didn’t bother to correct him. We had gotten a letter from the HOA regarding the overgrowth of the front yard and called him to come back and simply mow the grass.

The person at the door had been sent by the HOA to maintain the lawn, as they thought we had moved out, due to letting the grass grow. He said that about 90% of the time they send him out to properties, the homes have been vacated. Often, he runs across people who are renting the home from the former homeowners, ignorant of the fact that it is a bank-owned property and they are living there illegally – through no fault of their own. Rarely, he said, does he run across people in our situation – fighting the banks and continuing to live in the home.

While I’m grateful it wasn’t the sheriff and that he was so nice, these numbers are a little disconcerting to me. They tell me that most people don’t fight.

With our lawn already taken care of, he left, and our heartrates returned to normal.

*     *     *     *     *     *     *     *

We found a place we loved after a month of searching, and applied, only to be turned down. Turned down because the courts didn’t do their job.

My roommate’s credit report came back saying that she had been evicted in 2009, which is when the first Unlawful Detainer was filed. The case was dismissed in 2011, and she was never evicted. Her name was added to the suit against me by my attorney, because the lender did not follow proper procedure in filing the UD. Federal law requires 90 days’ notice to be given to tenants and they only gave 30 days’ notice to me. Because we were applying to live in an individually-owned condo, the owners said they were uncomfortable with the fact that the eviction happened in the first place, regardless of whether it was standard procedure in a foreclosure, which does show up on my credit history. Apparently, the foreclosure was of less concern than an eviction.

I got a copy of the court files on the UD, and it plainly shows that, not only was the UD dismissed against both of us, but also that the records were sealed! California law dictates that records of any evictions arising from a foreclosure are to be sealed. This was enacted to protect people like us and ensure that we would not end up on the streets after losing our homes.

The eviction process is clearly being exploited, in my opinion, by lenders because people fear evictions and the blights they leave on your credit history. Being evicted, regardless of the reason for it, signals to property owners that you are a potential fiscal liability to them – whether that be damage to property or non-payment of rents. In California, you cannot start the eviction process until 3 months have passed, then it could potentially be another 3 to 6 months to get the tenant out, which substantially cuts into anyone’s profit margin.

But still, this is no fault of our own. Unfortunately, this is not an easy fix where I can go into the courthouse and say, “Um, excuse me, but the court records show that this case was sealed, but the information is still coming up on her credit report.” No, your attorney has to file for an ex parte hearing in front of the judge who initially ordered the case sealed and ask them to fix it by updating the credit agencies.

This is just another example of how jacked this system is. Usually, when there is an item on your credit report, you can file a dispute. In this case, however, the information didn’t show up on the free annual credit report everyone is entitled to. Only corporations requesting your full credit report, which pulls up some information you, as an individual – your own personal information – are not privy to. In my opinion, this is not how things should work!

So, in the meantime, we are continuing to search for a place to live. It really is surprising to me that, almost as soon as places come on the market, they are pulled off. Definitely an indicator of the fact that there has recently been another round of foreclosures – over 1 million since January 2012. In California alone, foreclosures in June actually jumped 18% over 2011, despite the new Homeowner’s Bill of Rights, which wasn’t signed into law until July 2, 2012. With that jump, it’s no wonder that so many people are looking for rental housing right now.

I feel very fortunate that, at least, we’re not being pushed out the door just yet, which brings me to the last piece of news – my loan has been transferred yet again. The lender that foreclosed on me was Aurora Loan Services, a servicer for Lehman Brothers Bank. Yes, of the always-infamous Lehman Brothers. Their banking division remained intact though their investment division failed in September 2008. (The same month I was downsized, and in which I requested a modification – coincidence?) Last year, the bank was renamed Aurora Bank, and my loan was transferred to them. Now, it is owned by NationStar.

A brief review of the search results for NationStar returned do not make me feel very good! There are thousands of complaints against them. Yet, this corporation is on a buying spree, purchasing mortgages from banks seeking to divest themselves of all mortgage loans. Hmmm…

All I can do is hope for the best!

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Posted by on September 18, 2012 in Foreclosure

 

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A Home for the Animals


I have been looking at places to live out of the area in preparation for being forced out of my home. It has been a somewhat dismaying search, as many properties will not accept pets. Those that do mainly seem to accept cats only. I have two cats and a Chihuahua. Of the properties that do accept dogs, most require that the dogs be small. We also have a Chow, who has been living with an ex who raised him. If we can, we would like to take him with us, as he is very sweet and docile. Out of 100 properties I have looked into, only 2 have posted they are willing to accept large dogs. Of those 100 properties, maybe 12 have stated they not only allow both cats and dogs, but multiple pets. Yet, some of those also require the dogs be small. This makes for slim pickings.

There’s the other matter of hopefully finding a place that has a small yard that the dog, Nina, can run around in. Though I know she will be happy to go without a yard as long as she can be with us, I feel conflicted about moving her from a place where she has a large yard to roam and investigate to a home where her yard consists of a small slab of concrete. Not to mention the two kitties, Maggie and Krishna, who have been raised being indoor/outdoor cats. I’m very familiar with the arguments for keeping cats indoors only, but I was raised with an indoor/outdoor cat, and it never seemed fair to me to keep the cats indoors only while allowing the dog to go to and fro.

In any event, I am refusing to entertain the notion of giving up any of the pets, though we realize that we may not be able to take the Chow, Teddy. And I’m not just talking about apartment buildings, but also houses for rent. It seems apartment complexes are more willing to work with renters. But this quandary about finding the best place for us and our pets leaves me frustrated. Some things I’ve witnessed over the years have added to my determination to find a place that is just right for all of us.

Last year, on a weekend trip to PetSmart, I visited with the pets up for adoption, as I’m always wont to do. On this trip, I noticed a group of five large dogs, all Akitas. As hard as I tried to engage them and show some kindness through offering pets and soft, encouraging words, they stayed well away from me and anyone else coming close, and remained lying down, chins to the floor. In my experience, most dogs are curious, and the skittish ones will back away. Not so with these, and I worried about them being depressed. In my conversation with the lady who runs the organization adopting these beautiful dogs out, she told me they were brothers and sisters, seven years old, and had been raised together. Their family had lost their home and had to give them up. I asked if she was having any luck finding anyone who could keep them all together, and her reply was no. My yard would have been just barely big enough for all five to romp around together, but I would have been willing to give them a loving home, just so that they wouldn’t have to be separated. At seven years old, they had already spent at least half of their lives together. And their loyalty was evidenced through the depression they seemed to be experiencing about no longer living with their humans.

After about six or seven months, the last dog was adopted out. He appeared more and more withdrawn every time I saw him, as his brothers and sisters and the life he knew were torn apart one by one. I am glad they all found homes, but to this day, I still get upset when I think about them.

I know that it is a story being repeated everywhere around the country. Some pets lose their homes when their couple splits up, and neither is willing to keep the pet(s). But seeing that group of dogs just broke my heart, for some reason. We create bonds with these creatures we share our homes with, and they are attached to us in return. Just as our lives become disrupted, theirs do, too.

I’ve even noticed anxiety in my own pets just when a few things have been moved around. It’s heightened so much more now that every spare area of floor space seems to be covered with boxes or pictures standing upright. This prompts me to take a few extra moments every day to pet them and sit with them and talk softly to them, to reassure them that everything’s going to be okay.

With the massive numbers of foreclosures, pet shelters and no-kill rescue groups have been overwhelmed by requests for assistance. Three years ago, we noticed a cat hanging around our house. We had seen him when we first moved in two years prior to that – occasionally, he would take a nap under the bushes in our front yard and we didn’t think anything of it. Then, one hot August, he took to hanging around the house all the time. One night, he was at the back door looking in. He obviously had health issues, and we didn’t want him getting our indoor/outdoor cats sick, so we opened the door to shoo him away. He looked up at us and gave the gravelliest, most heartbreaking “meow”. We said, “Oh my gosh! We have to feed him!” Judging from the amount of food he wolfed down, it had been a long time since he’d had food. He had obviously been someone’s pet at one point, and abandoned to fend for himself. He never let us touch him, and the few times we tried, he batted our hands away – without putting out his claws.

I called rescue group after rescue group, but they either didn’t have room, or refused to take an arthritic, possibly diseased animal. Healthy kittens and puppies only. I understand this – if you are a non-profit, earning the funds to help animals through adoption fees, you’re going to take in the animals you’re sure you can adopt out. At the same time, trying to get help for this cat that I had absolutely no available funds to get healthcare for, it seemed very heartless. Older animals need help, too!

We settled into a sort of co-existence. Our cats became indoor only, and the back yard became the domain of this curmudgeon we named Hobbit. We put a box lined with towels and blankets out for him to protect him from the cold of winter, which he sometimes used, then moved out of when a black widow also took up residence in it. We noticed that he often lay on the rocks between the air conditioning unit and the house, so we lay pieces of carpet there to provide him some comfort. When the weather started heating up again, we talked about what to do, because we couldn’t leave him out  in the heat, and we still couldn’t afford to pay the vet’s bills, even if we could somehow capture him. Then he disappeared. A week later, he showed up again, missing half the fur on his body, glaringly red and angry claw marks crisscrossing his now bare skin, and one of his eyes seemed to be bothering  him.

Still, no one could help us, or offer any advice. As a last resort, we called our local animal control office. They are a no-kill shelter, and they promised that they would evaluate him for treatment. Of course, they did say that there might be a possibility that they might not be able to help him, but they would care for him as humanely as possible. I told them he was not very friendly, and they said they had seen some amazing transformations in animals once they were treated and cleaned up. Feeling we had no other alternative, we set up a trap. That cat was so wily, we caught several of the neighbor’s cats over the next week, even though we’d see him strolling around the yard. On the day the animal control officer came to pick up the trap, Hobbit was in the yard. We literally had to steer him into the trap using a cardboard box, as the smell of an open can of cat food was not tempting enough for him to venture in. We tearfully said goodbye, still torn, but feeling we had done the best thing we could do for him with our limited resources at the time. I still wonder if I could or should have done more.

So, I do understand the circumstances that may prompt some people to give up their pets. And the frustrations many people may be experiencing when trying to find an adoption group or shelter to give their pets over to. It’s no wonder that stories of animals – dogs, cats, horses, even birds – being abandoned are on the rise. I was completely surprised when I took a recent trip out of my home county and saw signs next to the freeway warning of fines of $1,500 for abandoning animals. That county has large stretches of empty land, and it would seem they have seen more than their fair share of abandoned animals.

When Americans have their homes again, these animals will also find homes again. I am looking forward to the day when we can claim no more homeless animals!

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Do you have pets? Have you had to give up your pets due to losing your home? If you are moving soon, are you considering giving up your pets? Do you have any suggestions for people struggling with what to do with their pets?

 
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Posted by on August 23, 2012 in Foreclosure

 

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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…”

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

 
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Posted by on July 26, 2012 in Foreclosure

 

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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.

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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.

 
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Posted by on June 29, 2012 in Foreclosure

 

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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).

 

 
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Posted by on June 14, 2012 in Foreclosure

 

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Riding the Hamster Wheel


I received some very supportive comments in response to my post last week. Thank you! Reading support from people who have been living with foreclosure like me lets me know that other people out there think as I do. While reading the comments, thoughts started swirling in my head – although I do not do financial modeling, I have heard of game theory, and I am wondering if there has been anything studied or written recently applying game theory to individual foreclosed homeowner’s decision processes. Sure, this is really, really analytical. But I can’t help but wonder if there was some sort of “map” people could look at to see what their best options are, the agony of making a decision could be lessened.

One of my readers brought up the term “hamster wheel”, and, certainly, this is an apt term for the situation many foreclosed and about-to-be foreclosed homeowners find themselves in. Trying to make the decision whether to stay or go is very much like running on a circular wheel and going nowhere, despite the illusion that if you just run fast enough, you might get somewhere else.

Even our own attorneys aren’t always the best resource for advice either, because their goal is usually to keep homeowners in their homes. Also, many of the lawsuits arising from the market collapse are still being decided. Laws have changed in the interim that have rendered some of the earliest charges entered against mortgage companies obsolete. So, no one knows what the best course of action is. This brings the first spin on the hamster wheel back around to – you as a foreclosed or almost-foreclosed homeowner must decide what is the best course of action for you.

Due to my experience, it is surprising to do a web search with the question “Why do banks prefer to foreclose?” and get back a bunch of articles in which the authors assert that banks prefer to do short sales than to foreclose. My perception may be skewed because my lender wrongfully foreclosed on me, I believe because at the time they foreclosed, my home was worth slightly more than what I owed on it, and they foreclosed without giving any notice.

I asked this question because I hear it from so many people. It is incredibly frustrating, is it not, to read the news, listen to the news, and watch all the “Bank Owned” signs dug into your neighbor’s yards, which all create the picture that banks are foreclosing in record numbers. In talking with your friends on the topic, I’m sure you’ll find that they know someone, or of someone who tried to modify their loan and weren’t able to, so went into foreclosure.

One of my closest friends saw the writing on the wall, and a year before she knew she wouldn’t be able to maintain her payments, put her place up for sale. When she couldn’t sell it after 6 months on the market and the value had dropped, she put it up for short sale. The bank refused offer after offer for a year. The last offer was the best offer – $26,000 over value, $20,000 less than the amount owed. She wound up walking away, the property went into foreclosure, and the bank wound up selling the property a year later for $90,000 less than the amount owed. When you hear stories like this, you have to wonder why banks are doing business the way they are.

Though the following is an excerpt from an article stating that banks prefer to do short sales, I found this section compelling:

“It matters little to service providers whether the home’s value falls or the home goes into foreclosure because the service provider gets paid regardless. Service providers make money a number of ways such as receiving a service fee, default fees, floated interest and/or from investment interests in the loans the provider services.” 1

My home was foreclosed on by a service provider. Since the deregulation of the banking industry, many banks have hired service providers to manage their loan portfolios. Often, the company you make your payments to is not the company that holds your loan.

Mortgage service providers are responsible for the day-to-day management of your loan, such as collecting payments and making property tax and home insurance payments from your impound accounts. These servicers have come under fire for how they have handled customers who are in default, and have been urged by Obama’s administration to permanently modify thousands of loans to help clients avoid default. It has been argued that, because of the lucrative fees they charge, they have prolonged loan modifications to maximize collecting these fees. They are the middleman between you and the holder of your loan.

So, this also makes me wonder why the owners of the loans are not stepping in and stopping the servicers from costing them money. There is a myriad maze of reasons, and I really don’t think that any one reason can be pinpointed as the overriding reason.

One author states that because 85% of the loans have been securitized into one giant pool of money, and the banks own portions of the pool of money, rather than directly owning a loan, it is difficult to tell who really owns the loan. If that’s true, then who do the loan servicers pay for the rights to collect the payments on behalf of the banks? In actuality, some of the servicers are actually the lenders, but the investors in the pool of money have first rights to receive the principal and interest payments.2

Another states that banks prefer foreclosures over short sales because it makes them appear more profitable to their shareholders. Due to accounting principles, in a short sale, the banks would have to write off the loss in value of the home, whereas if they sell the home to their Real Estate Owned (REO) pool, they can claim to still retain the full value of the asset.3 Now you also understand why the banks have had record profits over the past few years, despite the dismal economy!

There are so many more reasons, but I’ll have to explore those in another post. In the meantime, this paper is an interesting read if you are interested in understanding how the financial morass was created. It’s written by a couple of lawyers, but I found it to have simple enough language for those of us not legally-minded.

Now, I do realize that all this information doesn’t exactly get you off the hamster wheel, but I find it helpful to understand how I wound up on it in the first place.

1 http://homebuying.about.com/od/shortsale/f/Banks-Foreclosure-Short-Sale.htm

2 www.en.wikipedia.org/wiki/Mortgage_servicer

 
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Posted by on June 3, 2012 in Foreclosure

 

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Still Waiting

Still Waiting

I have news – big news – well, maybe not so big, since I already proclaimed this before. I am moving. I am packing in earnest now. Packing up the whole house. Preparing to relocate. Walking away.

Okay, not walking away from the lawsuits, but walking away from the house.

Why? Why would anyone fighting for their home choose to walk away from it?

Because the appellate court refused to rule on establishing what a reasonable rental rate should be, I would have to pay $2,000 a month in rent. Again, this is $600 more than I was paying on my mortgage, which was $70,000 higher than what the house is currently worth. I just don’t see why I should have to pay more on a house that has a significantly lower value. (Yes, I am aware that I’m starting to sound like a broken record, but this is truly mind-boggling to me!)

“But you haven’t had to pay rent or a mortgage in 3 years.” Yes, this is true, but I have had to pay attorney’s fees, which are the equivalent of what I would have spent over that period of time anyways, if not more. Paying rent and attorney’s fees is like paying double rent. And I don’t get a tax write-off, unlike if I’d been paying on a mortgage.

I realize that the rental market has skipped along in the past few months, outpacing home sales, which is why rentals are becoming so expensive. People aren’t buying homes, are probably wearing out their welcome with the relatives they have been bunking with, and are unable to purchase a home either due to a previous foreclosure or increased difficulty in getting credit. The job market seems to finally be starting to stabilize (though this author remains without permanent work). So, as more and more people return to renting, the number of places available to rent are decreasing. It’s the basic economics of supply and demand – as demand increases and the supply decreases, prices must go up. It is part of why the mortgage company set their rate so high, despite the amounts they swore “under oath” on the eviction filings. They are claiming that I must pay the “going market rate” to rent my own home.

This kind of goes back to that “new” program Bank of America is rolling out in a few select states. (It’s not new, but a revival of a program implemented after the Great Depression.) To refresh your memory, they are offering homeowners in danger of foreclosure the opportunity to turn over their deeds, then rent back the house at “lower than market” rates. How nice, did you say? Well, what if “lower than market” rate is actually higher than their mortgage payment? If they couldn’t afford their mortgage payment, they certainly won’t be able to afford the rent, placing them in danger of eviction anyways. Don’t you just love it when things come full circle?

Before I received the news about the appellate court’s decision, I spent a lot of time thinking about what would happen if I had to pay rent higher than my previous mortgage payment. What would I do? What should I do?

You can rack your brain for hours, but I have to say, there are times you just have to listen to your gut. The thing screams louder and louder when you’re thinking about stuff that just doesn’t jive, will cause you stress in the long run, or just is the wrong decision. Eventually, you either listen to it, or wind up feeding it some pink goop to get it to shut up.

My gut told me not to pay rent.

Also, the question rankles around the corners of my mind “Why would I want to give more money to the company that screwed me over?” Now, in court-ordered rent situations, the funds do go into an escrow account and are held by the courts. But if you lose, all those monies get turned over to them. Given the partisan attitudes I’ve observed from my local judges, I don’t want to make that gamble.

So, I asked my attorney how moving would affect my cases. He said it wouldn’t affect them at all – I can even still pursue my fight on the eviction case. It may even be in my favor, because being forced to move and quit the property in the middle of the fight piles on more damages, perhaps prompting the mortgage company to move towards a settlement offer.

It changes the nature of the game. Rather than fighting for my home, I am now fighting to get justice for the illegal activities of my lender.

I won’t actually leave the house until the day the sheriff comes knocking at my door. Which could be any day now. I don’t know if the mortgage company has to wait x number of days past the due date to request the court to evict me. I’m sure I’ll find that out soon. Once the sheriff serves me with an eviction notice, I only have 5 days to get out, which is why I’m packing up everything now. How funny that things have come full circle from my first blog post “Waiting for the Sheriff”! I’m back to waiting again.

It feels really good to have made a decision and taken action on it. Knowing that I don’t have to spend much more time hunkered down in this little bunker, stuck in my energy, puts a big smile on my face.

I have no idea how much longer these court cases are going to drag out. I do know that I’ve had so much difficulty finding long-term work locally – not just these past few years, but in other times I’ve lived here – it’s like a big cosmic sign that I’m not supposed to be here. I live near where I grew up, and I moved back after college, then again after grad school. Now that my parents have passed on, my relatives are scattered across the country, and all of the friends I grew up with have moved away, there’s really not much for me here anymore.

With this freedom from my house, I can earnestly go after those jobs in other areas where I’m more likely to get hired into the kind of work I want to do. Whereas it’s scary to completely uproot myself from my hometown, it’s exciting, too, because I know that I can make a home anywhere I choose.

What do you think? Would you do things differently, or have you been faced with this dilemma yourself?

 
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Posted by on May 24, 2012 in Foreclosure

 

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