Chapter 5

Like I said earlier, when foreclosure hits a family, it can’t be explained away by one event. In my case, there were many steps to the place in which we now stand. Catch up to this point in the story with Chapter 1, Chapter 2, Chapter 3, and Chapter 4.

Selling the Massachusetts house was a relief – doused immediately by our once hopeful spirits crashing and cascading down into the pit we found ourselves in.

1)       The Mass house finally sold for $217,000 in September 2008. It should have been a good thing. Only, I bought it in July 2004 for $275,000. And we couldn’t even afford to close the deal until Mark emptied the last 4 thousand out of his 401K and wired it over to the purchaser’s realtor in order to close the deal.

The only unspent money we had left was the remainder of my IRA, which had plummeted to $26K. I felt like I might as well take the rest out, before it was completely gone. But then I was contacted by my new Ameriprise broker, Luke, who has since then busted his butt for me and my 26 thousand. (Thanks, btw) Please please please use this man’s services. Anyway, somehow, between the bankruptcy attorney’s advice and Luke’s advice, I stopped robbing my retirement IRA.

There was no space left for decision-making, which sort of made it easier for us. No money left. It would take both of my paychecks each month to cover a mortgage payment. Up to that point we had never been late on a single payment for anything, much less defaulted. The 2008 elections were ensuring that families unable to make their mortgage payments were getting some public empathy. Public sentiment was in our favor at the moment, and it seemed to make sense that if we had to default on one bill, we should stop paying the mortgage. If we stopped paying just that one bill, it would enable us to pay all the rest. AND we could eat, too. Bonus!

2)       We made our last payment at the original amount in November 2008.

We actually had a great mortgage plan: 5¾% fixed 30-year loan for $210,000. We  had it down to $207,000 already. We were happy with the arrangement. In anticipation of Wells Fargo’s likelihood of offering us mortgage assistance, we made the mistake of using logic: this house is a fixer-upper. In this market, no one in the city of Portland would be willing to pay what we owe on it. Therefore, any halfway business-minded idiot could see that Wells Fargo’s best bet would be to keep us in here. We don’t dispute what we owe. We don’t dispute the interest rate. We aren’t trying to get out of our obligation. Just cut us a break till Mark gets a job? Knock a coupla hundred a month off for now? Make it a 35-year loan? Something?

3)        Right about then, the Bush Administration put a stop on foreclosure actions. (To be supported by the Obama Administration not too much later) We had a little room to take shallow breaths.

It was Christmas. Ugh. It would have been different if it was just us. This whole time we had been keeping the truth from our daughter. She doesn’t need to know all this. It’s her HOME we’re talking about. It was hard to hide it at Christmas. Mark and I skipped some meals in order to save up $140 for a new Toshiba adapter so we could give her a laptop, which she had been begging for. The Toshiba was Mark’s first, then mine, and now it’s hers. Other than that, we couldn’t really get her anything. We simply couldn’t afford it. Thank goodness her grandparents came through with some extra gifts. Mom and her husband brought us a truckload of firewood, and even brought us a tree from North Idaho. It was beautiful. We tried so hard to do what we could with what we had, but the disappointment on her face was obvious. I know the holidays aren’t about “things,” but it still broke my heart not to be able to make the magic she was hoping for.

Despite our ungraceful shift into a lower economic group, this is the part of the story where things started to change for the better, on a more important level. This is when I saw my own reality reflected in Stephanie’s blog title: Love in the Time of Foreclosure. Life had been so frightening for so long that we just couldn’t maintain the fear. We made some peace with our situation. Mark told me, “If we lose the house, we’ll just move. It doesn’t have to be the end of the world.” We had nothing but each other, and we liked each other. We had friends and family, of course, but still the potential of not being able to provide a home for one’s own family is agonizing for responsible people. Instead of destabilizing our relationship, we clung to each other, and we pulled our girl in to the embrace. The joy we discovered is somewhat reflected in my Christmas letter.

Sixth grade had started. I was getting grief from my work supervisor, so I focused sharply on working. A lot. Mark became master of the house, and became involved with our girl’s life to a degree he had not yet come close to. He had previously held back because he was unsure of his place in this family as an adult figure in her world. He’s also burdened by painful memories of men in a stepfather role when he was a child. When our family needed him, Mark stepped up. I still smile to think that the BEST thing about foreclosure for us is that our family came together. Those two became so comfortable with each other that they would hug each other goodbye, share jokes, and ask me to stay home when they ran errands, so they could have more fun. Ha.

She went from a barely average student to over-achiever by the second month of school, then got a reputation for being a brainiac. Mark directed his angry frustration at the house, and did TONS of work that took a lot of brawn and almost no money. He cleared out all the walls and carpet from the basement and made it a giant, open, lighted space. He tore up the horrible carpet in the living room and sanded down the wood floor. He picked up some tools at yard sales and craigslist and began building stuff like amazing workbenches downstairs, and then a new buffet and bookcases in the dining room.

It snowed 22 inches the week before Christmas. I was feeling love, and gratitude, and then December provided the magic. Snows that cover the ground and stay there are rare in Portland, but in a 10 day span we received two feet of the stuff and it shut the city down, and even impressed New Englander Mark and Idahoan me. We wrapped ourselves in blankets in front of our roaring fireplace and prepared for New Year 2009.

 

 

Chapter 6 - a wrap up

In January we did our taxes and got another shock: Mark owed thousands. In 2007 he panicked, watching his stocks fall, so he gambled and took everything out of the previous investments, and put it all into banks. Hindsight will tell us all that it was an unfortunate move. Investors will know that when you pull stocks out of one place to buy something else, it’s counted as income. Though Mark never saw a penny of it, the IRS saw that he “earned” about $140 thousand in 2008 by selling stocks. In his despair at seeing banks fail and all his savings evaporate, Mark did not remember to hold anything aside for paying taxes.

Catch up to our story if you like, by reading Chapter 1, Chapter 2, Chapter 3, Chapter 4, and Chapter 5.

24)       We did manage to talk the IRS down from owing $46 thousand to owing $18 thousand, but what’s the difference when we have nothing to pay it with regardless?

25)       I was thankfully spared from owing taxes, because of my incredible loss on selling the Massachusetts home.

26)       Eventually the stay on foreclosures was released. We chewed our fingernails. In April 2009 we received our foreclosure notices.

The paperwork that went into our response was tedious, but we were willing to play their game for a chance at a new agreement. We began hearing stories about how people had their interest rates reduced to 3%, or had the amount financed reduced from $400 to $300 thousand – huge benefits offered to those who were willing to work with their lenders and to pay off their debt somehow. We had hope, and pressed on.

Part of our requirement was that we had to call a credit counseling agency. I called one of the numbers listed in the Wells Fargo paperwork. I talked with a wonderful woman who asked a million questions and gradually began to lose her assurance that she could help us. “There is no way my company could get you better rates than what you have,” she said. “You are managing your finances very well.” Hm. Small amount of good my smugness did for me at that point. But regardless, I had talked with the credit counselor. I had upheld my end. What would Wells Fargo do for us?

27)        We had been asked for budget spreadsheets and copies of taxes and pay stubs on three separate occasions. We had been asked for letters explaining why we wished for a mortgage modification. Finally they responded that we had been approved on a trial basis. Rejoice! They came up with a new, lower monthly rate, and said if we paid that new amount for three months in a row, they would consider installing it permanently. They had reduced our obligation from $1624 a month to $1185. We were thrilled. Now we could afford everything on my salary alone.

We paid $1185 in May, June, and July, and then called Wells Fargo. They had stopped the foreclosure process, and our house would not go up for auction. Whew! But that’s all they could tell us. “Keep paying that same amount,” they always said. “We will contact you as soon as we get to your case. We can’t guarantee it, of course, but the $1185 you have been paying will most likely be your payment from now on.”

Months trickled by. My student loan forbearance with Direct Loan expired, and they requested that I begin paying another $210 a month in addition to the $223 I am already paying in student loans to Sallie Mae. And, in the time since I had last reviewed my account, I saw that the amount I owed in student loans had climbed to over $80 thousand. Why, again, did I go to school? What an idiotic thing it seemed to me. What a fool I was to buy that classist ideal that school is the path to a better life. Well, not from what I have seen. I put that portion of my loan back into forebearance.

28)       When my tax money came in, I paid off a credit card, and paid off Mark’s student loans.

29)        Mark got a job in July, after 13 months of unemployment and no unemployment compensation.

Finally we didn’t have such bitterness when hearing news about unemployment benefits extensions. We had applied for food stamps, medical care, housing assistance, heating assistance, and were turned down for everything because I make too much money.

Finally we didn’t have to listen to all the ignorant comments from people intending to help, saying, “If you haven’t found a job, it’s because you aren’t trying hard enough.” Or “Lower your sights and you’ll find work.”  And, “Apply to 10-20 jobs a day. Unemployment is a 40-hour-a-week-job.” And our favorite, “Have you tried looking outside your field?” Thank god there are people who have had an income through all this, and have had no reason to understand what it has been like for suffering families. But still, if you think you’re helping someone by saying those phrases to them, you aren’t, so shut up. 

       30)        With the new lowered mortgage payment, and second income, you’d think we’d finally be in a comfortable place, but it didn’t work out that way. Suddenly, we had the option to take care of more responsibilities, and all of them cost money.

 

We scheduled dentist appointments for everyone. We took both of our clunkers to the shop so that they would pass emissions tests and we could renew our tags and drive legally again. Both cats went to the vet. I paid off a loan from my 87-year-old grandmother (I HATE owing money, and especially hate owing people I love). I started getting the mental health therapy that was long overdue. Bought our kid new clothes that she desperately needed. Paid off another credit card. We continued our pared-down lifestyle of no cable, no home phone, very few dinners out, no splurging on little things that catch our eyes. We ate tons of food from our small but unexpectedly productive garden.

31)       The last week of September our final paperwork from Wells Fargo finally came through! But we were confused with what it said. Rather than the $1185 we had been paying, they had finalized our bill at $1536. And even though we had been making payments on time since May, the money had been held in a separate account, and not paid against our debt. Their records showed that we had not paid for months, so 1624 x 7 months = 11,368 + 207,000 still owing = a new financed amount of $218,000 at 4.75% = $1536 a month.

Ok, yes, I concede that 4.625% is a great rate. However, we previously had a great rate of 5.875% that was fixed. Now we had an adjustable rate and the amount financed had jumped drastically! Months of fear, anxiety, and paperwork all amounts to this? A savings of 88 dollars a month? Yes, we defaulted on our mortgage, but we were under the impression that this “Making Home Affordable” plan at Wells Fargo was going to, er, help make our home affordable.

With Mark’s new job we could possibly afford the new payment plan (if we made a few more cuts), but we were furious. We had been abused. I saw it as a breach of contract. Mark called to ask what happened, and was told that the people who first worked up our paperwork had made a mistake by using our net income rather than our gross income, and the $1536 was the absolute best they could do. I called someone else at Wells Fargo, and she said if we don’t like the new terms, don’t sign the new contract and send it back with a letter explaining why we won’t sign it. So we sent it all back.

32)        Then we wrote our congressmen, the CEO of Wells Fargo, President Obama. We’re hoping for a couple of form letters from someone, but so far haven’t received even that.

33)    The IRS called and said, “Enough dilly-dallying! You must pay!! $300 a month, and that is our final offer.” So, I guess we must pay.

And here it stands.

November 13, 2009, we have two reasonable incomes and are as broke as can be. How is that possible?

• Mortgage - 218,325.79
• Sallie Mae - $57,570.70
• (Direct Loan Student Loans - $19,487.35) – in forbearance till April 2010
• IRS - $18,461.60
• Discover Card - $14,125.37
• Chase Visa - $4,737.38

 

That leaves a monthly amount of $289 to take care of: utilities, school clothes, food, phones, home&auto insurance (we have no health insurance), internet access, etc.

You try spending only 289 on every expense for an entire month for a family of three. It is not POSSIBLE. When my forbearance expries, it will drop to $79 per month available to live on. I don't know what we will do. Wish us luck.

Here's a quote I caught this morning, and I'm going to take courage in it: “Despair is for people who know beyond any doubt what the future will be. Nobody’s in that position. So despair is not only a kind of sin, theologically, but it’s also a simple mistake.”

Mark wrote a letter to everyone he could think of, explaining our languishing home mortgage modification process. We were hoping for two or three form letters in response to the six he sent out. We finally received this one via email.

Of note is the fact that the Congressman highlights the Making Home Affordable program, and recommends that we contact our lender and ask about the plan. This confirms our assumption that our letters would not even be read, since the reason we are agonizing is because we ARE in the midst of trying to make the Making Home Affordable program work for us, and it's been a big cluster* from the beginning.

From: Congressman Earl Blumenauer <or03ima@mail.house.gov>
Date: Thu, Nov 19, 2009 at 11:56 AM
Subject: Reply from Congressman Earl Blumenauer

November 19, 2009

Dear Mark,

Thank you for contacting me about your mortgage situation and the state
of the economy. I am deeply concerned about for the thousands of
homeowners in my District who are in foreclosure, or on the verge of
becoming delinquent on their mortgage. I have heard horrendous stories
of people who have been in their homes for 10 or even 20 years and never
missed a payment, but due to unforeseen circumstances such as the loss
of a job or a medical crisis in the family, are now struggling to make
ends meet. Worse, they often find that their property is worth less than
their debt on the house, are as a result, they are on the brink of
losing their home.

I have been outspoken in Washington DC that in order to stop the
economic freefall, we must take immediate steps to shore up housing
values and provide families with some degree of financial stability.
That is one reason why I am adamantly supporting legislation that will
allow judges to modify mortgages for individuals who have declared
bankruptcy. It is outrageous that judicial modifications are allowed for
speculators and vacation homes, but not for regular homeowners.

Recently, the US Treasury announced details of the Homeowner
Affordability and Stability Plan (http://makinghomeaffordable.gov/
<http://makinghomeaffordable.gov/> ). This plan will allow expanded
refinancing options for homeowners who are currently in foreclosure, or
who are still current on their payments but concerned about becoming
delinquent. Lenders and homeowners will be offered direct financial
incentives to refinance their loans into lower interest rates. While
refinancing will not reduce the overall amount that is owed on the loan,
it will help borrowers secure safer, fixed rate loans with lower
interest rates, thereby reducing the amount of interest that would be
repaid over the life of the loan. Homeowners are encouraged to contact
their lenders and ask about the plan.

The following resource is also available to help Oregonians find
additional information about avoiding foreclosure, as well as contact
information for HUD-approved counseling agencies. These counseling
agencies can help with answering questions about the Making Home
Affordable Program, as well as contacting your lender and clarifying
information.

o   HUD Guide to Avoiding Foreclosure
<http://www.house.gov/htbin/leave_site?ln_url=http://www.hud.gov/foreclo
sure/index.cfm/&ln_desc=HUD+Guide+to+Avoiding+Foreclusure&tmpl=/wu&wait=
5>  ?" http://www.hud.gov/foreclosure/ <http://www.hud.gov/foreclosure/>

Through HUD's online guide, homeowners can find and contact local
housing agencies to determine what free services are available to help
avoid foreclosure.

It is also important to note that unfortunately, there are some
fraudulent foreclosure prevention services and hotlines are attempting
to portray their organizations as affiliated with honest efforts.  Be
sure that you are working with a HUD-approved counselor, such as those
available via the above website.

Our nation is committing unprecedented resources towards stabilizing the
economy. I am hopeful that these new programs will provide Americans
with some fiscal security, and help to stabilize the value of what in
many families is their greatest asset, their home. Thank you for
contacting me with your concerns.


Sincerely,
Earl Blumenauer
Member of Congress