Story Behind A Foreclosure

[MichaelC 160]

This story was in today's local paper. It caught my attention and I wanted to share it here. Often, we forget that behind every property we deal with is a homeowner with a story of their own. Here is one homeowner's tale: http://www.sun-sentinel.com/business/sfl-f...la_tab03_layout

 

Even low-risk borrowers facing credit distress

Harriet Johnson Brackey

 

Personal finance

 

July 29, 2007

 

She used the skills she honed in her public relations career to attack the problem. Wendy Lester didn't really know what else to do.

 

She is caught in the issue that's worrying lenders, upsetting the credit markets and roiling Wall Street. It's the credit problem, spreading now from the riskiest borrowers to good ones.

 

By the numbers, here's her dilemma: Lester bought her house in Fort Lauderdale shortly after she was diagnosed with breast cancer in 2003. She says she owes $315,000 on it. She can't afford to pay it anymore. If she tried to sell the house today, she says she would probably get $240,000. If she tried to rent it, she figures she'd get $1,300 a month, but her monthly payment is $2,700.

 

Meanwhile, the cancer resurfaced last year. Now her credit-card accounts are being closed. There is at least one lawsuit for nonpayment filed against her. She can't work, because she's still recovering from a second round of chemotherapy and an operation. Her family and friends have helped as much as they can.

 

It's not a nice picture. And so, she shared it. Lester made her story into a video and put it up on YouTube. She sent out a press release about herself. "I put it out to the universe," she said.

 

The problem is obvious in hindsight — and it belongs to Lester, her lender and to the cancer that prevents her from getting a full-time job. When her home went up to $340,000 in value, she says her lender allowed her to borrow $325,000 against it. Now it's not worth enough to salvage the loan.

 

An attorney advised her to give it up and file for bankruptcy.

 

"But a lot of my identity is tied up in always doing the right thing, paying all my bills," she said. "It's a shock to the system to imagine bankruptcy and foreclosure."

 

Nationwide, the number of people in situations like Lester's is growing. The credit shock first arrived in the subprime mortgage market, where delinquencies are soaring. The second one was the news last week that borrowers from the nation's largest mortgage lender, Countrywide Financial, were getting into trouble because of home-equity loans — to borrowers with good credit records.

 

And here's something perhaps you haven't heard: People with the lowest credit scores are making a decision to pay their credit cards rather than their mortgages. If you want to hold on to your house, that's the wrong decision.

 

The credit bureau Experian looked over four years of payment records ending last December and uncovered the surprising trend. "In what was the common hierarchy of payments, the home came first, then the unsecured credit," said Experian's Linda Haran.

 

If the financial wolf is at your door, paying the credit cards is not what you should do. Here are a few things you should do instead:

 

Be early to act. If your situation is deteriorating, it's likely your problems with any payment will affect your credit score. A delinquent payment of any kind has almost equal weight, be it your mortgage or your credit card, said Experian's Haran. And when your credit score is lowered, that makes it more difficult to refinance your mortgage.

 

Talk to your lender. "Make sure it's an ongoing conversation between you and us," said Bill Higgins, director of lending services at ING Direct, which has had only one foreclosure among 70,000 home loans made since 2002. Explain the nature of the problem. Don't expect it to last forever, so engage in planning for a return to financial well-being. Higgins says in general, most "credit distress" periods last three to six months, unless an illness is involved.

 

Ask for forbearance. This is a temporary agreement to pay less or, in extreme cases, nothing at all on your mortgage, if you can show you'll make it current later.

 

Be very careful. Foreclosure prevention schemes are all around. One is for the "buyer" to ask you to sign over your deed while you move out. The "buyer" then might not pay the mortgage, which is still in your name.

 

But also know that lenders don't exactly want to own your house. You can hope yours has enough flexibility to make a new deal.

 

For Lester, there's no Hollywood ending to this story. The YouTube video has produced only $170 in donations. She says she needs at least $50,000 to stave off foreclosure.

 

"It's not working out," she said. But she's still trying. She and her lender are trying to arrange a payment that Lester can afford.

 

Harriet Johnson Brackey can be reached at hjbrackey@sun-sentinel.com or 954-356-4614

 

 

 

watch

See how Wendy Lester is dealing with cancer and possible foreclosure in a video at Sun-Sentinel.com/ business

[Steve Morton 0]

Be very careful. Foreclosure prevention schemes are all around. One is for the "buyer" to ask you to sign over your deed while you move out. The "buyer" then might not pay the mortgage, which is still in your name.

 

It's funny how people in the media always have to put it like that.