It Makes No Sense

This morning my husband received a phone call from a woman who said a package had arrived at her home for him. The box was delivered to our previous address and the delivery information included his phone number, so she called to ask if he wanted to pick up the package.

The woman is the new owner of our previous home; the one we lost to foreclosure. She said she had only been living there for two weeks and had paid $120,000 for the home. We originally paid $212,900 and made several thousand dollars in upgrades to the home before the housing market in Phoenix collapsed. When my husband lost his job and had to settle for a much smaller salary in order to stay employed, we were no longer able to justify the expense of a mortgage that was so far upside down.

You may recall that I tried to negotiate a lower mortgage payment, a lower mortgage principle, or a short-sale; after several months of phone calls and paperwork, none of these options were approved by our lender.

Why was our lender content to sell the home to another party for current market value, but they wouldn’t offer us the same deal to stay in the home? What sense does it make to toss us out after two years of faithful payments simply because our situation had changed? The lender would have lost significantly less money had they negotiated a change in terms with us. That would have allowed us to continue owning the home at a rate that was more in line with the current economy and it would have saved time, effort and money on the part of the lender. Sounds reasonable to me.

I’m sure thousands of foreclosed-upon people are finding themselves in the same situation.

It’s Been a While

I didn’t realize I had been away from my blog for so long. Let’s get caught up, shall we.

Hubby and I refused the credit union’s kind offer to grant us a short sale if we agreed to pay them $15,000 in order to receive said approval. The credit union did not change their stance regarding the denial and we received our notice of trustee’s sale.

A few days ago, we moved out of our house and into a very nice rental home in our neighborhood. The house is bigger than the one we owned, more affordable and repairs don’t come out of our pocket. Sweet!

We are completely protected from any collection attempts on the debt we left behind. The proposed changes to the Arizona Anti-deficiency law (which I referenced in my previous post) were not passed.

We do need to rebuild our credit score, but in a few years it will be like none of this ever happened. We won’t drain our savings in order to hold onto a house that is sadly in need of repair and worth a fraction of the mortgage amount. No, it hasn’t been an easy process; but I see this as a positive resolution to our problem.

Your mileage may vary.

The End is Near

After two months of paperwork and phone calls, we finally heard from the credit union regarding our short sale request.

Yesterday the loss mitigation manager advised me that Fannie Mae (our mortgage lender) is requiring a $10,000 note at 0% interest for 60 months be carried by us in order to move forward with the short sale.

Today the loss mitigation manager called again to inform me that the private mortgage insurance company, Genworth Financial, requires a $5,000 note to be carried in order to approve the short sale. So between the two companies they want $15,000 in order to approve the short sale purchase or our house. I thought it was very convenient that we have that exact amount in a savings CD (our emergency fund).

I was also told that even though he stated yesterday that we had five days to decide what we were going to do, pre-foreclosure procedures had already begun. (Whatever that means.)

The loss mitigation manager went on to insist that we are not really a hardship case and that is the reason for the penalty. I was told that according to federal guidelines, my husband’s income is more than sufficient to continue paying the mortgage. I told him it may look that way on paper but in reality we are spending more money every month than we have coming in; thus the need to get out of our mortgage. We can rent an identical house in our neighborhood for 1/3 less than our mortgage; and renters have the added benefit of not spending money on repairs.

He also advised me that the state of Arizona is modifying the anti-deficiency law. (I was already aware of the change and have read the new statute; we are still protected.) He stated that the change places us at risk of being sued by the lender for the full loss amount. He stated that we may also find ourselves with a 1099 for the loss amount as well, meaning that we would be liable to pay federal taxes on the loss.

He continued, saying that if we foreclose it will ruin our credit for 7 years and there is an 8 year statute of limitations on law suits. Since we have no debt and adequate income (according to his guidelines) he urged us to do the moral thing and become current on our loan and continue paying the mortgage for at least 2 years, at which time the situation may look different. He stressed that this advice was coming from him “as a person” and that it was not legal advice. He talked about how foreclosure takes tax dollars away from every American since our lender is Fannie Mae.

If we still want the short sale, he said the only way to avoid being sued and taxed was to carry $15K worth of debt to the lender and private mortgage insurer.

My realtor and her broker, who have been processing short sales for the past year, have never heard of this situation from any lender. They have never before had a client faced with the prospect of carrying a note with their lender in order to be approved for the short sale. She said they are probably trying to scare me and that they were successful in scaring her. (She owns several rental properties and may find herself in a similar situation if the economy continues to slide.)

Like I said, I’ve read the changes to the foreclosure law and we are still protected. I am meeting with our real estate attorney later this week to confirm that I am interpreting the new law correctly.

With every phone call, the loss mitigation manager is sounding less and less like a banking professional and more and more like a debt collector. Foreclosure is something I had hoped to avoid but it is a legally available remedy to our situation. I am not going to let this guy scare me.

Short Sale Blues

We put our house up for sale last week in the hopes of selling it as a short sale and avoiding foreclosure. My husband took a new job with a much smaller salary because his former employer laid him off; due to this decrease in salary, we can no longer afford our mortgage payments.

I met with a realtor and a real estate attorney, put the house on the market, cleaned like crazy and had several successful showings. So far so good. Then the first offer arrived. It was for a few thousand above the listed price, and we all felt that it was a good offer that our lender would approve for short sale. Then we were given the credit union’s short sale package.

The lender is asking for an insane amount of personal and financial information in order to determine whether or not we “deserve” to be granted a short sale. Deserve? Wait a minute. What part of this situation do we deserve? The part where my husband worked hard for twenty years in order to work his way up to an excellent salary only to have it snatched away when he was laid off? Maybe the part where we picked out a house and fixed it up in the hopes of living in it for the rest of our lives, only to find that the home value has declined 50% in two years? Or how about the part where we don’t want to spend every last dime of our savings trying to keep a house that may never be worth what we owe? I don’t feel we deserve any of this. We purchased a modest home, spend within our means, pay our bills and save for emergencies. We are not deadbeats.

Here is a summary of the information our lender feels we need to divulge in order to be considered for a short sale:

Tax returns from 2007 and 2008
Checking statements for the past two months
Savings statements for the past two months
401k savings account balance
Pay stubs from hubby’s current employer
Pay stubs from hubby’s previous employer
List of expenses for the past two months (including utilities, groceries, insurance, etc.)
Credit card statements for the past two months
Hardship letter explaining in detail the negative personal changes we have experienced in our lives since buying the house.

Basically they want to know exactly how we spend our money down to the penny. Keep in mind that after we give them this information, they can still say “no” and refuse to grant the short sale anyway (which our lawyer says is a frequent occurrence). Then where would we be? Some unscrupulous person in the lender’s employ could potentially steal our identities with this information and wipe out our life savings with the click of a few computer keys. No thank you. I am not so naïve that I blindly trust the banking institution to protect our information.
After discussing the situation with our attorney, she agreed that we should not hand over this information on a silver platter. The lender has no legal right to this information as they cannot take any of our money whether we wind up with a short sale or a foreclosure. The Anti-Deficiency Law protects us from that. The lender is on a fishing expedition to see how much more money we could potentially spend paying the mortgage before we would be completely broke and have to file for bankruptcy. Bankruptcy would ruin our credit even worse than a short sale or foreclosure, and we refuse to continue throwing good money after bad to try to keep up with our mortgage payments. We could spend every last cent of our savings, wind up broke and still have to foreclose on a house that is worth 50% less than the mortgage balance due.

So we sent the purchase offer to the lender without the rest of the short sale package just to see what would happen. Our realtor was notified that the purchase offer would not be considered because the remainder of the information was missing. When she explained our position, the credit union employee said that they have to follow industry standards and require the personal information before a short sale will even be considered, and it is very unlikely that a high level manager will make an exception for us. Our file basically goes to the bottom of the pile until they have time to rule on the exception, which could take months. Our realtor now has to go back to the potential buyer and explain to her that the process will take longer due to these circumstances and give the buyer a chance to back out of the deal and look elsewhere for a home. Depending on whether this buyer is patient or not, she can withdraw her offer and we will have to start showing the house again.

While all of this was happening during the past week, we had another offer come in from an investor who is willing to pay cash for the home as soon as the short sale gets approved. This may be a more appealing scenario for our credit union, so we plan to present that offer to them as well.

Hubby and I have decided that it doesn’t matter to us whether we wind up with a short sale or a foreclosure because the end result is the same—-we have to leave the home in which we planned to spend the rest of our lives.

House for Sale!

We’ve decided to put our house up for sale and try to get a short-sale approved by our lender. Our house is worth approximately half of what we paid for it just two short years ago. There are two ways for us to get out from under the crushing debt of our mortgage: (1) lender approved short-sale OR (2) foreclosure.

We are trying to avoid a foreclosure (if possible), so we’ve put our house up for sale. The hope is that someone one will make and offer and the lender will approve the short-sale. The lender will lose money but we won’t.

Arizona has an Anti-Deficiency law that protects purchase price mortgage borrowers from having to pay the difference between what they owe on their mortgage and the price their house can actually sell for on the market.

In Arizona (and other states) purchase money first mortgages are non-recourse. That means if we default they can take the house and temporarily ruin our credit - but it ends there. They cannot pursue us beyond foreclosure and reclamation of the house.

They can’t raid our savings account or our 401k, and they can’t garnish our wages. I spoke with a real estate attorney a few days ago and she put all my fears to rest. Our credit score will be affected for the next two or three years, but that’s the worst thing that will happen.

If the realtor markets our house for the next six months and the lender forecloses on the property before she can sell it, she gets nothing for her time and trouble. Many real estate agents will not list short-sales for this reason, but I found an experienced professional who is willing to take the risk now in order to gain us as a client and maybe make money later.

We’ve had four showings so far. Whether we wind up with a short-sale or a foreclosure, we will be out from under this upside-down mortgage in a few months. That will be a weight lifted from my shoulders.

Mortgage Woes

As you know, my husband received a lay-off notice from DHL. He was able to find a new job; which, in this economy is no small feat. However, he now earns 20% less than he did just a few short months ago. I used to work part-time for the Disney store, but during the months leading up the holiday shopping season the store experienced a severe decrease in sales and my hours were cut from 12 hours per week to zero. I have been unsuccessful in finding new employment.

All of our bills are going up due to the current economic crisis—groceries, utilities, health insurance, etc. My father passed away in April and we bore travel expenses related to his funeral.

The housing market in the Phoenix area has been hit hard in recent months, and our home is now worth 40% less than what we paid for it just two years ago. We knew when we bought the home that its value would decrease some; however, we did not predict that its value would fall so far. The phrases “money pit” and “throwing good money after bad” have been mentioned a lot lately.

With the recent change in our financial situation, we find that we can only afford our mortgage payments if we take money out of our savings. We do not believe that using our savings to pay the mortgage is a good investment. My husband has decided that we should stop paying our mortgage. He figures it will be several months until the credit union has us evicted by the sheriff, and before that happens we can save some money toward a rental house to live in after we get the boot.

This will ruin our credit. Hubby is aware of that fact, but thinks that is a temporary situation compared to the permanent situation we would be in if we drain our savings and still can’t afford the mortgage payments. I’m not sure his logic is wrong.

I understand why he doesn’t want to lose every penny he’s worked so hard for to keep a house that may never be worth what we owe.

So why do I feel so sick inside?

I feel sick because we are not the type of people to shun our responsibilities. We pay our bills. The only debt we have is our home and one vehicle. Credit cards are used for convenience, not as a loan to be paid later. Their balances are paid as soon as the bill arrives. We have savings, but that money is supposed to be for emergencies and our retirement. We are unprepared for a long-term decrease in earnings and the severe value loss in our home. Having to deal with a lay-off during the worst economic crisis in our lifetime is not something we ever thought to plan for.

Many thousands of homeowners across the country are in a similar situation. Foreclosure rates have skyrocketed in the past year and are expected to continue to rise. We got caught in a situation we never considered was possible. How do you plan for the unthinkable?

One of my friends suggested taking in a boarder to bring in extra income. Another friend asked me why my husband doesn’t continue to look for a higher paying job. Well, how about because it took six months of stressful job hunting to find this job and now he has the stress of learning the new company’s computer system, working with new people, travelling, and updating his technical certifications to satisfy the new employer’s educational requirements. I think he’s under enough stress already; adding a continued job search might just be too much for his system to handle.

Then she asked why I don’t have a full-time job? One reason is because I lost the ability to force a happy smiley demeanor at will after my son died. So sue me. My work experience is in customer service and retail; and with my back problem, I cannot physically handle a full time retail position. That leaves customer service, which would drive me crazy. I’m already on anti-depressants just to get through the day and I don’t think a little pill can handle the additional stress. I’ve been looking for a part-time position, but the low wages I could earn would not be enough to bridge the gap between what hubby used to earn and what he earns now.

I paid the mortgage on June 1st, but hubby doesn’t think we should pay it next month. So, I’m back to feeling sick and wondering how the hell we’re going to get out of this situation.

Community Activist

Hubby and I bought our house in May 2007, and I have been attending monthly HOA board meetings since November 2007. For those of you who are unfamiliar with the concept of a home owners association (HOA), our subdivision has, in addition to local and state laws, an additional layer of bureaucracy. The HOA is in charge of landscaping common areas and other useful things; however, they can dictate the color of the homes in the community, they can restrict parking on public streets, they can restrict the type of trees you plant, and dozens of other irritating controls. Unfortunately, if you want a newer home in my town, the only affordable way to do it is to buy in an HOA controlled subdivision.

I remember the good old days when you could buy a house and paint it any color you wanted. You were free to leave your Christmas lights up all year round and leave your trash cans out after they were emptied, and all your neighbors could do was give you dirty looks and bitch behind your back. Nowadays, a person can be fined for any of these actions and if you don’t pay the fine, your home can be foreclosed on. Yikes!

But I knew what I was getting into before I bought this place. I also decided to take a proactive approach to any problems I might have with the board by attending meetings and volunteering on a committee. This way, I know the people in charge and can smooth over any small issues before they become big problems.

There are 1400 homes in my community and there have never been more than 10 people in attendance at a monthly board meeting, and that figure includes the 5 board members! But as long as the annual meeting has 10% attendance (by mail or in person…gee, which one do you think people do?) the board is free to vote how they want to vote without interference. I have disagreed with some of their decisions, as have the few others in attendance, but with such a small number of community members around to complain, the board continues as they always have. The one new member who was elected in May has only attended one out of the three meetings held since he took his seat. The woman who lost to him has not attended a meeting since getting the boot.

I am on the Social Committee, which exists because I suggested a community event. The two other women on the committee were talked into participating by their board-member neighbors. We held a community party in the park in May, and it was a pretty nice event (if I do say so myself!). We had at least 300 attendees, but only two people volunteered to help our committee of three run the event. Since the party, I have been trying to schedule a wrap-up meeting to discuss what we did right and what we can improve upon for next year, but so far no one has been available to meet with me. Nuts!

So I have decided to take community apathy into my own hands and write a newsletter! The community has a quarterly newsletter written by the board and their advisor, but I don’t think it does enough to keep people informed. My newsletter will focus on one parcel of our ten parcel subdivision-—this parcel encompasses the 115 homes that are on the three streets immediately adjacent to mine. I will attempt to keep my neighbors informed about what goes on “behind the scenes” and encourage them to participate in our community. With property values plunging (due to the local housing bubble finally bursting) and the number of bankruptcies skyrocketing, something needs to be done to get people to care a little more about their neighbors and their community. So I will publish a printed newsletter, and I will also post it online. I have set up an email account to (hopefully) accept reader input and content suggestions. I spent a whopping $3 at the copy shop today to prepare the first wave of my newsletter. Now I just have to deliver them.

I don’t know if my venture will be a success but even if it fails, I can hold my head up high and say I tried. That’s more than 1399 other homeowners can say.

Yard Update

Last fall, I had some landscaping done in my yard. Here are some updated photos.

September 2007



May 2008

The trees are filling in nicely and even bloomed for a few days. A few of the agaves died of transplant shock and were replaced with a different larger variety.

The ocotillo in the front yard bloomed for a few days, too, but my new camera arrived after they fell off. Oh, well. At least it still has leaves.



It's time to go pull some weeds. The joys of home ownership are many and varied!

All Moved In

Hubby and I are settling in to our new home quite nicely. The cardboard jungle has been cut down to size and all of the necessary and important things are in place. Hopefully that was the last move we will have for the foreseeable future. I’m far too tired to do this again any time soon.

Moving means living with clutter, which is not something I do well. I believe in the old adage “a place for everything and everything in its place”. I don’t function well when I can’t find things, so I unpack as quickly as possible every time I move. This irritates hubby, who takes a more leisurely approach to unpacking and organizing. He has only unpacked about half of his boxes, which only made up about 10% of the total number of boxes. (Slow poke!)

Although I have finished unpacking, there are still plenty of things to do, and now that we own a house again I imagine that the “to do” list will never truly end.

Sigh. I need a nap.

Moving Day

Moving day fast approaches. I have been cleaning the new place, packing the old place, and I ache just about every place! I have been to Home Depot or Lowes five times in the last week and my shopping list is still a mile long.

Whose idea was this? Oh, yeah…hubby’s.

I am exhausted, but eventually the chaos will settle and the dust will clear. But by then the first mortgage payment will be due. Ugh! (Take deep cleansing breaths.)

My computer is being packed up today, so I won’t be posting or visiting my usual forum haunts for at least a week. Take care.

So We’re Buying a House

After several weeks of stressful searching, hubby and I have found a house that we both like, in the town we want to live in, and for a price we are willing to pay. Hurray!

The house, while not being my dream house, is very nice. It is only seven years old, has a nice, open floor plan, and it is roomy enough for us, our cats, and our stuff. Hubby gets his den and garage work-shop, we will have a guest room (should we ever have guests), and there is a small yard that I can eventually landscape. The house needs a few minor repairs before we move in, but nothing we can’t handle.

Hubby was the one who initially suggested that we buy a house again, but with all my talk of plans to update, remodel and landscape, he is more than a little freaked out over the prospect of paying for all of this. I think I need to quietly dream-remodel for a while and let him get used to the idea of having a house again before I start talking about a budget.

I suggested that instead of buying a house, he could quit his job, sell all of our belonging, and we could bum around Europe for a year or so until we run out of money. Then we could come crawling back and beg our family to let us crash with them until we got haircuts and jobs again. It sounds good to me, but he said no.

I guess that makes him the mature one.

The Search Continues

I’ve been house hunting for several weeks in a soft housing market. There are a lot of homes for sale and they aren’t selling quickly, mainly because sellers are listing their homes for more than the market will currently bear. Phoenix real estate values have decreased over the past year while the previous three years saw record gains. Sellers are still holding on to the fantasy of making a huge profit at the expense of the buyer, but this mentality is costing them time and money. I’ve seen more than a few listings where sellers refuse to accept an offer below asking price on homes that have been on the market for six months.

I’ve made offers on three homes in the past three weeks. The first offer was verbally accepted but the seller did not return the contract. When my agent called to inquire what the delay was, we were told they had received a higher offer. I wasn’t willing to be involved in a bidding war so I declined. Two weeks later, that home is still an active listing, so I think I was told a little white lie.

My second offer was accepted and we moved on to the inspection phase. The house is 50 years old but it was completely remodeled so everything was shiny and new inside. The home inspector went over every inch of the place and discovered that all was not well beneath the shiny veneer. Apparently the remodel was not completed by a licensed contractor and there are major structural and electrical problems. Add to that a termite infestation which was improperly treated last fall and it was enough to turn my stomach. We got away from that property as quickly as possible.

I made an offer on a third home just yesterday and received a counter offer this morning. The seller was only willing to come down $1,000 in price, which to my mind isn’t much of a counter offer. The home has been on the market for 41 days and counting, so maybe they’ll get nervous enough to take my offer seriously in a few weeks.

I’m in no hurry.

House Hunting Blues

In the past week, I’ve been out with my real estate agent three times and have visited about a dozen homes. Add to that the home listings that I’ve waded through online to come up with just those twelve, and I’ve considered a shit load of houses this week.

There was one home that I could definitely see myself living in, so I decided to make an offer. My agent called the seller’s agent who said they had an offer on the property already. Her reply was to keep us in mind if the current offer didn’t work out. This is how civilized real estate negotiations are handled, but the seller’s agent wasn’t too keen on playing by the rules. He immediately said he would refuse the current offer if we could beat it by X amount. I said I could and my agent had a verbal acceptance of my offer within minutes. We began discussing the offer contract but the seller’s agent called back and said I needed to add another several thousand dollars to the price in order to get the house.

Wait a minute! He had just accepted my offer, and moments later wanted more money. Sorry, I’m not going to have my chain yanked. Either honor the offer you accepted a few minutes ago or go away. So, he went away.

First thing the next morning, the seller’s agent called and said the original offer I made was good enough, so I got together with my agent and put the offer in writing. We only gave the seller 24 hours to respond, thinking that the shorter the time-frame was the less time he and his agent had to try to find a higher bidder.

Twenty-four hours came and went and I still hadn’t heard from my agent. After 30 hours I broke down and called her. She had heard from the seller’s agent who said he needed until the next morning to finish his end of the paperwork, so we should expect an acceptance by morning. That turned out to be almost 48 hours, which was too long. This morning my agent called and said the seller had a higher offer on the table and it was almost 10 percent higher than my offer. Consider my chain yanked once again.

I know exactly how far I can stretch our budget to afford a home; my husband and I are not wealthy people but we live a nice, upper-middle class existence. To have some stranger tempt me with a home in my price range only to try to get me involved in a bidding war is infuriating! I steamed for a few minutes, brooded for an hour and then hit the MLS search again.

Better luck next week.

Here We Go Again

So the other night hubby says to me, “You know, I’d really like a bigger den…and maybe a garage.”

Crap.

Looks like it’s time to go house hunting.

Let me explain my reluctance in looking for a house. I’m quite content in my current apartment; the neighbors are quiet, the grounds are well kept, my rent didn’t increase when we renewed our lease, and the neighborhood has everything I need without being overly-commercial. I’ve lived in plenty of apartments, but this is the nicest one so far.

Our first home was lovely; however, after buying it, we had a string of bad luck. My husband lost his job while we were in the process of moving out of our apartment and into the house we had just closed on days before. Within a year of buying the house, both my mother-in-law and son had passed away.

Rationally I know the house didn’t kill my family members or cause my husband to be “down-sized”. I don’t believe in bad luck; it was simply a series of unfortunate events (sorry Lemony Snicket). Random chance, not karma or bad luck, is the reason for my past troubles.

My rational mind knows these things, and yet the thought of looking for a new house gives me the heebie-jeebies.

Sure, I’d like to have a bigger den, a guest room and maybe a small yard, but I’m fine where I am. Apartments have their beneficial qualities, such as not having to fix anything yourself, and the ability to move on short notice. Try doing that with a house.

But the local housing market has settled down and interest rates are still fairly low, so this is probably as good a time as any to buy a house. It doesn’t hurt to look, and since we’re happy in this apartment, we’ll be less likely to rush into a less-than-stellar home purchase.

Here’s hoping for a series of fortunate events.