Aug052011

A loanowner’s tale of woe

Foreclosure sob stories always seem to lack a few pertinent details explaining exactly how the unfortunate circumstances came to pass. Today’s featured article is written by a renting former owner who works at the newspaper. She tries to portray herself as a victim, but in reality, she is only a victim of her own poor decisions.underwater_01

No refuge from the mortgage crisis

A homeowner tries to work with bankers to hold on to her modest but beloved house, but her pleas mean little to the number crunchers.

By Kathy Gosnell Seiler — July 24, 2011

From the front door of the house to the back is a straight shot unbroken by walls, handy for pacing, 24 steps each way.

It is a small house on a small lot in Highland Park, a Los Angeles neighborhood that was on its way up until the recession. The house has not always been well tended: It’s old and a bit shabby, but it stands pretty much foursquare.

I bought it in 2005 for $503,000, most of it borrowed,

When she pleaded with the number crunchers back in 2005, she was thrilled when they approved her loan. Now that they want her to make the payments and won’t alter the terms to her favor, she considers them heartless. If she borrowed most of the money, the only thing she really invested in the house was her own emotions.

and lived there six years, longer than I’d lived anywhere since childhood. The house was meant to be my refuge, a place where I could plant perennials and know I’d see them flower year after year, an investment for my daughter and me after many years of renting.

The sellers had trashed the house before leaving for Colorado, and perhaps I should have walked away when I discovered the devastation. Instead, friends helped me clear away rotten food and broken furniture and repair gouged walls. I rescued a dog. I made improvements: bolting and bracing the foundation, removing one tree and planting others, installing a security system and attic insulation.

To help pay for the work, I refinanced in 2007 at $511,000 with a five-year fixed-interest first lien and a variable-rate equity loan.

She tried to emphasize her “investment” of sweat equity, but she went to the housing ATM to do the real heavy lifting.

With the real estate market continuing to rise, a Wells Fargo Bank loan officer assured me, it would be easy to refinance to a fixed-rate loan before my rate went up in 2012.

She’s claiming her Wells Fargo representative assured her she could serial refinance? Doesn’t anyone recognize serial refinancing as a Ponzi scheme? Did she not realize the assurances she was receiving mean nothing and that she was taking on a huge risk? She was buying a house she couldn’t afford, but she thought everything would be okay. Foolish.

With little money for extras after fixing the foundation, I scaled back to projects I could do myself: painting and planting. I tore out the frontyard grass and filled the garden with roses, irises, bougainvillea, jasmine, trumpet vines, gardenias, callas and cannas, hibiscus. Springs were glorious.

If she were to keep making her payments, she could continue to enjoy her glorious springs. Since she was relying on Ponzi borrowing, she is going to lose her home. She and everyone else who relied on serial refinancing should lose their homes so they and others can learn the foolishness of that form of financial planning.

By mid-2008, some neighbors on my short hillside street had started defaulting on their loans. One eventually negotiated a short sale; two others went into foreclosure. Worried, I called Wells Fargo in March 2009 to see about refinancing in advance of my adjustable-rate mortgage payments rising significantly. The house was already underwater, the banker told me. My equity was gone, so there was no way I could refinance. He suggested that I wait it out and hope things improved before the rate rise in 2012.

How many other debt zombies are waiting and hoping for future events not to be?

By October 2009, it was clear that the real estate market was only getting worse. I sent Wells Fargo my first application for a mortgage modification, beginning a months-long slog through dead-end phone calls, faxes, lost documents and conflicting information from the bank.

Over a period of five months, Wells Fargo denied three mortgage modification applications.

Loan modifications are not an entitlement, banks don’t want to make them one. She was likely denied because she could afford her payments and didn’t deserve the break.

The last denial was based on a bank error suggesting that I had a spending deficit of more than $1,600 a month, despite my having exemplary credit. When I wrote a detailed explanation, the banker with whom I next spoke said, unapologetically, “We read numbers, not words.”

Why should a bank care about her circumstances? The numbers say she could afford the payment, so she is obligated to make them if she wants to keep her home. She isn’t the only person in America with a sob story, and quite honestly, hers isn’t that compelling.

In November 2009, the Los Angeles County assessor’s office informed me that the assessed valuation of my home had dropped $129,060 since the 2006-07 tax year. As I grew more anxious about money, my health declined. Problems that had been in abeyance for more than 20 years returned, and my medical bills began to climb as a result.

She should let go of her attachments which are causing her grief. Further she should probably strategically default on her loan because either the payments will wipe her out, or the stress will. If we can expect reduced housing costs due to stress, I want my landlord to give me a break as well.

In January 2010, one of the telephone bankers at Wells Fargo suggested a short sale. It felt like a gut blow. Sell my home? My refuge? My garden full of flowers and fruit trees?

Her reaction only underscores her need to let go of her attachments.

In February, Zillow.com said the house on which I owed $511,000 was worth $381,500. A comparable house a block away sold for $260,000. I clearly needed a bailout.

WTF? She clearly needed to bail on her mortgage and get out of her house. Perhaps she felt she needed a bailout, but who is supposed to pay for that? The bank? Me as a taxpayer? Screw her.

I made my last desperate bid for help from the bank, offering to pay the full mortgage at a lower interest rate if only I could keep my home. I also wrote to regulatory agencies and to my elected federal, state and local politicians to ask for ideas. Some responded; most didn’t; none could offer an idea I hadn’t tried.

I have an idea: strategically default on the mortgage and walk away from the house. Once it’s over, she will be able to grieve the loss and get on with her life.

In April, I consulted a credit counselor; he said that I was doing all the right things and that my credit score was “fabulous.” His only suggestion was the one I’d already rejected: Consider a short sale.

In May, a senior vice president at Wells Fargo Home Mortgage suggested a short sale.

On June 1, 2010, I acknowledged defeat. I declined to make my mortgage payment and two weeks later hired a short-sale expert and listed the house.

She declined to make her mortgage payment? She means to say that she strategically defaulted. Have you ever noticed that people come up with unusual evasions when confronted with their own guilt? Bill Clinton said, “I did not have sexual relations with that woman.” Sexual relations? This woman’s evasion is just as odd. Why doesn’t she just admit she told the bank to take their loan and shove it?

That decision brought no relief. Instead, I endured months of daily dunning phone calls from Wells Fargo, which then rejected an offer from a buyer. The bank set a date for a foreclosure sale, then postponed it. Finally, in April, it agreed to an offer of $325,000 for the house. The sale closed less than 48 hours before the bank’s scheduled foreclosure sale.

By that time I’d moved. My rental house is three times as far from work as the old one and about half its size.

If her rental is further from work and smaller than her old house, she must have drastically reduced her housing cost because the house she owned would have cost twice as much as a comparable rental. She is attempting to make is sound like she took a big step down in lifestyle, but I call bullshit on that notion.

The new neighborhood is quieter and less friendly, but the air is cleaner. Gardening, once a joy, is a chore I’d rather skip.

I noticed the same thing when I sold my house. The housing bubble and crash is causing great psychological harm. I get no joy out of maintaining plants in a rental. It’s hard to feel rooted in a rental, and tending a garden is all about being rooted to your surroundings.

Once in a while I return to Highland Park, but I cannot drive past my house. I fear the changes I might see.

A couple of months before moving, I applied for a small credit union loan, just to see if I could get one. I could not. My credit, once exemplary, is shot. My lack of financial security is disconcerting, and I expect it will dog me for years.

No. It won’t. Strategic default consequences minor and likely to decrease. She is succumbing to the lies perpetrated by the lending industry to deter strategic default. It just isn’t true.

I can’t find a life’s lesson here;

Open your eyes: you were irresponsible with the debt you took on. Perhaps this will help:

Further, it is not wise to form such strong attachments to anything in life.

no insight into why this has happened to so many people.

This happened because many people stopped making their loan payments. Duh. Many were just as foolish as this author.

The banks could help us, but they don’t.

I will recover, but it’s unlikely I will ever own another house.

Kathy Gosnell Seiler is a copy editor at The Times.

If she saves some money, Fannie Mae will let her buy another one in two years.

Are there really no lessons to be learned here? Is this woman so vacuous that she does not see the mistakes she made? If she isn’t bright enough to figure it out, I don’t hold out much hope for the rest of the clueless masses.