Sheriff Forces Owners From Homes

There are few news reports that leave me as angry as I was last week during the 11pm news!

Understand that I seldom ever listen to the news because I am a happy person and I find that the media – for the most part – churns out half truths and airs only what sells THEIR publication or station.  IF IT BLEEDS,  IT LEADS! Consequently, any news will be sensational, shocking or repulsive because THIS is how they get people to read/watch.

As I was about to turn out the light, I watched in horror, as a man sat on the sidewalk, sobbing, because the Sheriff had ‘thrown’ him and his young family out on the street.

The main thrust of the story covered the high foreclosure rate in the nation and was designed to illustrate the despondency of owners who had lost their homes. A human interest story, or at least it might have been, had the truth been told.  Instead, the reporter and photographer concentrated on this family as the little girl emerged from the house with her small suitcase, hugged her sobbing father and said “I love you, Daddy”.

OH, COME ON!

Look it’s truly sad when people are forced from their homes, but here’s the REAL TRUTH – that which the reporter conveniently neglected to make public:

This man, like so many unfortunate people who have lost their homes to foreclosure, fell behind in his payments!  NO-ONE throws an owner out on the street, from a property that has current mortgage payments! PERIOD!

In all likelihood,  this man had an exotic (predatory) loan on his property – one of those where his payments were affordable and then suddenly *hiked*, at maturity.  In other words, either he didn’t read the fine print – or was not informed of the risks, that stated that his loan terms would change after a period of time.  This has happened to countless thousands of people who simply did not keep their eye on the ball!

Many people saw this coming years ago!  My friend told me 7 years ago that his son (a police officer) was moonlighting as a mortgage salesperson and that this was going to earn him ‘a lot of money’!  I was skeptical.  First and foremost, anyone selling mortgage must be licensed and qualified in the field, otherwise it IS a scam and secondly, once the mortgage salesperson got his clients to sign on the dotted line, who was legally going to process this loan, as mortgage lending is heavily regulated in this country?

The answer is that the salespeople would bring in the clients and greedy brokers would process them!

Well,  not surprisingly, the police officer didn’t do this for very long, but people just like him sold a lot of exotic loans to many unsuspecting buyers.

Let’s look at this from another angle:
The buyer is told “Yes,  you CAN have this house, which is WAY out of your earning comfort zone – you will be spending to the hilt to afford this home, with no cushion or safety net”. Does this sound like a good idea to you, the reader?  Yet, thousands of people jumped at the opportunity to buy homes that were clearly beyond their pockets, telling themselves that by the time the period (usually five years for this type of loan) was reached,  they would have a higher income and would be able to afford the additional mortgage payments.

Few of these buyers knew or were informed that their monthly mortgage payment would hike from $2,000, to $10,000 a month (as an example)!  How can anyone afford $10,000 if they were at their limit, at $2,000?

Circumstances changed for some of these people ~ some of them got into their homes and immediately ran up their credit cards on new furniture and perhaps a new car that would better suit the image of the new home.  Some suddenly found the need to populate the new home with a new family (thereby cutting their earning power in half, while mom stayed at home with the kids).

Still,  they didn’t see the writing on the wall!  They still believed that they could pull themselves out of it.

Some clever home-owners refinanced after the second year, or took out a HELOC (Home Equity Line Of Credit) to bridge their finances, never quite realizing that although they were pulling EQUITY (their own money invested in the property), that this was merely a bank loan, using the property as collateral – and because it was a loan, it would still have to be paid back! Regrettably, most HELOCs were simply maintained – in other words, payments were made only against the interest without paying DOWN the capital amount.

And so, my friends, many home-owners found themselves with both first and second mortgages!

As due date approached,  many REALTORS(R) such as myself, visited (with what I can only term as ‘the victims’), in an attempt to offer help – a way to extricate themselves from certain disaster.  In EVERY CASE – yes, EVERY case, the home-owner denied any difficulty or hardship and continued to live according to their same standards with no provision for what was ahead of them and we were turned away!

As REALTORS(R), we ran seminars, spent thousands of dollars on advertisements, wrote blogs and knocked on doors, but we were spurned – the home-owner truly believed that a] this could never happen to him and/or b] something miraculous was going to happen, to bale him out!

Fast forward…..  who saw the recession coming?  Which of these home-owners anticipated being laid off? Who anticipated the sudden hike in gas prices?

Enough blood, yet?

With no other choice,  the home-owner chose (and rightly so) to feed his family and allowed the mortgage to go unpaid.

In order to understand how unpaid mortgage works, let’s say that the first unpaid month goes by – the bank calls and the first few calls are accepted, saying that the payment will be made. Then it gets embarrassing as payments are still not being made and the calls are ignored…  we’re probably into month two or three by now which means that a $2,000 payment has become $6,000 or a $10,000 payment has become $30,000!  If the home-owner couldn’t afford to pay $2,000, is $6,000 easier?

Then comes the Notice Of Default – a document stating that if the past due amount is not brought up to date, the bank will proceed with foreclosure. Because of the laws in this country, lenders have to wait a specified amount of time before proceeding and depending on the volume of NOD’s (Notices of Default), the bank can take several months before that letter is sent, advising the home-owner that the bank will be foreclosing. 

At this stage, the home-owner can still make good, IF he can bring the payments up to date which for reasons already stated, is highly unlikely.

In the absence of settlement of the outstanding amount, a notice of foreclosure is posted and the process begins – again, this could take months, depending upon how many foreclosures the bank is processing. Some home-owners have been able to stay in their homes for up to a YEAR before being locked out – that’s a YEAR of NO MORTGAGE PAYMENTS! Where can you live without paying for the roof over your head for that long, and yet, when the Sheriff arrives, the home-owner looks surprised?

Banks don’t want to own residential property however, what recourse do they have when a home-owner has basically defrauded them out of (in excess of) $24,000, that they promised to pay?  That was the deal…  the house is yours to live in AS LONG AS payments are being made.

As a REALTOR(R),  I have pretty much seen it all during the last few years!  The creative ways in which home-owners get out of paying the mortgage and still make the system work for them.  Take the condo owner, who not only stopped paying the mortgage but also neglected to pay the HOA dues (in this case,  the HoA dues mounted to a whopping $18,000)!  In addition,  when the writing was on the wall,  the condo-owner rented out the property to unsuspecting tenants…..  POCKETED THE RENT MONEY and allowed the property to go into foreclosure, resulting in the tenant being thrown out on the street!

Where’s the fairness in that?

I have more than once, seen a home-owner rip out kitchen cabinets and appliances, rip up carpeting and remove hot water heaters (selling them to friends or on Craigslist), before disappearing into the night, leaving the bank to recover funds from a home now almost impossible to sell at market value!

There is no fairness to any of this – it’s a lose/lose situation where everyone loses and people are left embittered. Where did it all start?  With the greedy mortgage brokers? Perhaps. Or did it start with the buyers wanting to live beyond their means? This is the American Dream, where the government encourages spending and banks encourage the use of credit cards with extortionate interest rates. Read our Constitution again – that is NOT the American Dream!

Gone are the days where we spent according to our earnings and only spent what ACTUAL money we had – now America spends the banks money and the cost of this is called high interest! We live in an age where we rob Peter to pay Paul and pay credit cards with credit cards and this can only last SO long before the day of reckoning arrives.

And so, dear readers, perhaps now you can see why I became so agitated at that news report that reflected only PART of the truth. Part of the truth is always misleading and open to conjecture. If we are to clean up this unholy mess that has been created from greed, we need ALL of the facts in order to work together towards a better future. Your children don’t deserve to leave your home holding their worldly posessions in a small suitcase, nor do they need to see you sobbing on the sidewalk. They deserve better and everyone knows that you want better for them.

It all starts with responsible spending and in order to spend responsibly everyone needs to know how to budget – Economics 101.  Turn off the TV with all those shopping channels… delete those Spammed e-mails that promise to make you rich overnight or thin in 30 days…  stay away from the sales where you spend twice as much because it’s cheaper.  Sit down with your family and ascertain their NEEDS – not their WANTS and above all, always make sure that you have a cushion of savings in your bank account to cover contingencies and emergencies.

If you, or someone you know, is facing hardship and is/are unable to meet those mortgage payments, contact me.  As a certified Foreclosure Prevention Counselor, I will be more than happy to offer you a FREE consultation to discuss ways that you might negotiate with your lender.

Let’s look to a brighter future – a better economy in 2009…..  spend responsibly!

 

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Althea Garner
Executive Real Estate
House Of Homes Online
http://www.HouseOfHomesOnline.com

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