For me, the housing market implosion became personal. If you’re reading this article it’s likely that the crisis has become that way for you, too.
Never in history has so much wealth “evaporated” so rapidly. It became a global problem, too, as mortgage-backed securities and derivatives are traded on exchanges around the world.
Approximately 15 million Americans purchased homes at the height of the housing bubble (from 2004-2006). Today they find themselves at “Ground Zero” in the housing crisis. Some experts say more than 8 million homes (16%) will go into foreclosure before 2012.
Over 600,000 loans were modified in 2008. That number is expected to quadruple in 2009. The burning question on the minds of homeowners today should be, “How much and how rapidly can I modify my home loan?“
For me this has been a “Blinding glimpse…of the OBVIOUS.”
In 2005 I purchased a long neglected home with big dreams of rehabbing it for my own. It seemed like a sweet real estate deal – and it was – until the U.S. housing market collapsed.
Unfortunately, by that time I had already sunk $90,000 into improvements, so I resigned myself to riding out the housing downturn. At least the home turned out lovely and my wife of 34 years was pleased.
If only it were that simple! Not only did the housing crash wreak havoc on my home value, but it also tore a chunk out of my primary monthly income. I limped along financially until the summer of 2008, when I was hit with a particularly slow period in my work.
Suddenly it seemed financial calamity was upon me! It was clear I couldn’t meet my obligations. I racked my brain for a solution: “Where could I cut back? What is the absolute minimum I could pay? Do I have any stocks or investments to sell?”
IndyMac held the 1st Mortgage on my home. So, I swallowed my pride and called IndyMac. I knew that IndyMac itself had failed and had recently been taken over by the government (in other words, my tax dollars were keeping it open).
I batted away initial rejections and pushed forward to one supervisor after another. I found out they did, in fact, have programs that were designed to help but I didn’t qualify because I had been paying my mortgage on time! Talk about getting kicked while you’re down, huh?
It made me angry that an honest, regularly paying homeowner could not get assistance when the lender itself (and all of its executives) had already received significant assistance with tax dollars.
I Wanna’ talk about ME!
I have always been conservative. I take pride in working hard and dreaming big. Like most Americans, I don’t expect handouts. I’m proud of my ability to care for myself and raise a happy family with solid moral values and work ethic.
You get the picture…I’m probably a lot like you! “Salt of the earth!” But I began to feel that the economy had fundamentally changed, especially the housing market, and normal homeowners were being left behind to carry the burden.
New tales of corporate excesses are revealed daily. We learned of VIP loans for Senators and platinum parachutes for executives at Countrywide; Detroit’s big three automakers flew into Washington on private jets to pick up their government handout; Wall Street theif Bernard Madoff admitted to cheating clients out of a cool $50 billion; and on and on! It looked like a collapsed house of cards.
Remember Blazing Saddles? It contains a scene in which Gene Wilder’s character describes good, traditional citizens. He says, “They have unchanging values, the salt of the earth people – you know – morons!” That’s how I felt. That’s how I still feel…moronically passive while getting robbed!
My first loan modification was absolutely torturous. I actually failed three times on it before I finally cracked the code! I read through hundreds of pages of information published by non-profits, spent hours on hold with the bank, and attended one of the first Loan Modification live events designed to assist homeowners in distress.
Instead of the anticipated turnout of 200, some 2,000 people showed up. Many of them waited over 5-hours just to talk with a bank representative.
“Can we just start again?” I asked. “Sure,” replied the bank rep, and he deleted my entire file! Slowly, I was learning the rules of this game.
Finally I caught a break from IndyMac! It happened at a live event that was part of a nationwide effort to help at-risk homeowners. It was strange scene in Van Nuys, CA. Desperate homeowners overflowed the facilities and overwhelmed the staff. The crowd was made up of lawyers, construction workers, stay-at-home moms, real estate agents and just about everyone else you can imagine. It took hours to get through the line which snaked out the door.
In my lifetime there had never been an event like this, and it was impossible not to see the similarities to the long lines of desperate
Americans in line for soup and bread during the Great Depression.
Well, it certainly shook my psyche a bit. But sometimes reality bites!
Here’s a copy of my modified loan agreement that came out of that meeting:
Just look at how this modification helped me!
IndyMac – 1st Mortgage on my own home
Original Rate: 6.5%
New Rate: 5.125%
Monthly Savings: $686
This effort netted me $686 saving per month. Do I have your attention now?
Needless to say, it got my attention! How often do we get the opportunity to reduce monthly expenditures by $686? Most people have to get a 2nd job to earn that much – and that’s taxable income!
And, here is the financial benefit to me:
National City Bank - 2nd Mortgage on my own home
Original Rate: 9.0%
New Rate: 1.0%
Monthly Savings: $262
Loan Modification Hardship Letter
I had gone from inept bumbler to laser-focused loan mod mercenary. I was fast, fearless and dead serious about getting the best loan modification! Now, my experiences can help you.
I learned from my mistakes and documented them. I refined my process. I became extremely efficient and deadly accurate.
