The funny thing about government efforts to stem the tide of foreclosures is that some people who need the help are having a hard time finding it.
Here's a classic example. A woman I know is at risk of losing her house. She doesn't want her name used because she fears publicity might force her out sooner rather than later. But it may not matter. She's thinking of just walking away.
It's a mess out there.
She bought the home with her husband in 2003, hoping to raise a family in it--two children followed. Eighteen months ago, they divorced. It happens sometimes.
She was the primary wage earner, so she decided to buy out her ex-husband's half of the equity they had in the home. This way the kids wouldn't have to be uprooted. It was, unfortunately, the peak of the market. "We had two appraisers come," she says, and they agreed the home was worth about $900,000. She refinanced with an adjustable rate mortgage to pay off her ex-husband. It would be tough to cover the loan on her one income, but she figured she could always refinance, or, worst case scenario, sell.
Five months later, prices were falling and her interest rate would soon be rising. "I knew I couldn't afford to keep the house. I tried to sell it. We only got one offer for $800,000." That was less than what she owed on the mortgage, if you included the 6% fee for the realtors. "So I decided to stay."
One year later, the house is worth even less, $700,000, but she's never missed a mortgage payment, and, as a result, "I have no savings left." She's working 60 hours a week to keep current on all her bills. She called her mortgage company twice to try to work out new terms. "The first time they told me I was lucky to have such an amazing loan. The second time they said my loan was no longer considered a jumbo loan in California, and that is all they do."
So she started searching for some of the "help" she kept hearing about. Could she get the terms of her mortgage changed? Would her payment history and reliable income convince anyone she was worth helping?
The lender--Thornberg--was not interested in a short sale yet. She contacted a mortgage "planner", who put her in touch with a group of attorneys, who have yet to get back to her with any answers. "I have given them the last of my savings, and they are looking through my loan documents," she says. Ironically, she's been told she probably would get more attention--more help--if she just stopped paying her mortgage. Frustrated, exhausted, and scared, she tells me, "I'm really thinking that walking away just might be the best answer." She typed "walk away from your home" into Google, and found severalsites like this.
Like I said, it's a mess out there. Up next...the Short Sale Samba.
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