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Born Again Homeowner
Every time I consume a piece of media that speaks of the foreclosure rate, my heart sinks. Images of people packing up their belongings and leaving a house they've called home because they have fallen on bad times, gotten into a bad mortgage, or have had sudden death or illness in their family just doesn't seem fair. In the best of times, foreclosure, like major illness, seems distant possibility, not for us. There is a story about a man who passed away suddenly, and his wife wasn't able to keep the house she called home for almost 30 years. Reduced to just one income what was she going to do? Fortunately, she had some equity and sales in California were brisk, at the time. She was advised to find a good real estate broker who could help strategize the sale. The woman already had agents nipping at her toes after her husband's obituary was published in the local paper, and wasn't very trusting of the lot. She was advised not to jump into anything abruptly, but rather take time to grieve, get a clear head and then plan for the future.
A couple months passed and the woman decided she just couldn't make the mortgage payments alone and decided to sell. The woman's youngest daughter was heartbroken over the loss of her father and now the family home. The daughter and her husband weren't certain they could afford the house, but a friend of friend who specialized in creative mortgages said they could most certainly afford the house and improvement. Overjoyed, the family moved forward with the internal sale and transfer. It seemed like a win-win situation for everyone.
The daughter had big dreams for her new house. She wanted to make it just the way she saw houses redone on television, but was out of reach for her mother and father. She ripped out and remodeled almost every inch of the 1700sqft 1970s ranch. The roof and windows were replaced, the landscaping was overhauled, and just about everything she and her husband could possibly change they did. Well until they ran out of money. Houses were appreciating like the pot at a hot poker table in Vegas. The friendly neighborhood mortgage broker was more than happy to refinance the young couple so they could finish the remodeling, buy furniture, a new car, and eat out while remodeling. How amazing! It only cost them $10-15k of their equity each time they refinanced which was 3 times in three years and their interest rate was getting worse because of their debt-to-income ratio and all of the other purchases they were making. The couple started falling behind on their mortgage and credit payment. They went back to their mortgage buddy for another refinance, and were told this time that they were at nearly 100% leveraged, and there was no more money to take out. The couple panicked and fell behind in their mortgage, month after month. They borrowed from everyone they could and dug themselves deeper into debt, and the value of the house was sliding.
In January 2008, the couple and their four children were ordered to vacate the family home.
This story is especially tough for me because it's my mom, my sister and my former family home that endured the emotionally and financially damaging ordeal. Throughout the process I offered my knowledge, programs, and solutions, but it's difficult to explain moderation when the bank is giving you money hand over fist. All they heard was the media touting the unstoppable market and that money was as free flowing as the Mississippi River, until one day it was not.
The best part of the story is that after all my constant phone calls, emails and text my mom called to ask me about grants programs that might work for her. She said she really believed she could own her own house by herself, but would need to stick to a budget. I tell you, it felt like Christmas. My mom, who never thought she could do anything without my dad, BELIEVED she could own her own house. So we got to work…together. We found a program called ACORN and she filled out the paperwork, went to the classes, got pre-qualified and in that same January 2008 my mother became a born again homeowner.
Perhaps, one day, my sister and anyone else who has suffered loss will also become a born again homeowner.
In the words of George Peppard from the A-Team, "I love it when a plan comes together."
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Acorn Housing Program
Born Again Homeowner
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May, 2012
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