Hey AR, it has been a pretty sobering experience to speak with some many folks who now face the simple fact that their homes are now worth less than they owe on then. Hence the terminology being "underwater". For the people that have not experienced the joys of home ownership yet, it equates to the same thing as your car being "upside down" where you actually owe more that its worth. I have been impacted by this behemoth phonenomon because we decided to build a custom home in a brand new golf course community. Being the 2nd or 3rd home sold, we felt we got in on the "ground level" before the word got out and prices got jacked up.
Now I probably need to preface that statement because I don't want it to be taken out of context. We are investors and have other real estate and the house was an investment for us. Not only financially but it was part of my dream to be able to afford our aging parents some serenity and affirm to our grown children the meaning and sense of family ties and values. If that sounds hokey to you...blame my mom for sending me to catholic schools and coronating herself as the patron saint of care-taking.
Anyway, just the other evening a noticeably excited neighbor stopped by to give me some news about how he was able to modify his loan. Of course, he got my attention because we both have similar styled custom homes which we have watched lose about half their value. He then proceeded to tell me that his mortgage company modified his interest rate to 4% and his actual mortgage balance to coincide with the current market value of the home. He went on to tell us about the friend (who told him) that he got mods to his loan to include only paying $200 per month for a max of 24 months which will allow him to find reemployment. "But today is the last day and you gotta get down to the World Congress Center before 8pm!" As I closed the door, I jumped on the computer to verify what he just stated. A few days earlier I had just learned that the $320 Billion Hope-4-Homeowners had only modified one mortgage. Just that quick, I was greeted by the wife's shriek...."Let's go!" I guess that assumption was relevant enough to move her to action.
All I can say is with Blitzkrieg the wife and I jumped in our car and headed downtown. I had a notebook
full of certified letters I prepared to the mortgage companies that also contained BOPs, Appraisals, Recent Homes Sales, and info from Zillow and what ever else I could find and use to verify that our area and specifically my home was in distress. You see my subdivision was started by very reputible builders that had successfully developed other golf course communities. These builders and their vision along with several others who built spec homes around us are now all gone. The leftovers were numerous vacant lots, plenty of new foreclosed custom and spec homes, and tons of promises. Of course, the golf course is the goose that laid the golden egg so its still the focal selling point of the community. So sell they must and did! The foreclosures started to be sold by the banks as we watched the value of our investments get desecrated.
Well it turns out that the program that our neighbor was describing is The Homeowner Affordability and Stability Plan (Hope Now)as part of the President Obama's strategy to help families restructure or refinance their mortgages to avoid foreclosure. To be honest folks as Realtors and Mortgage professionals most of us have seen the mortgage meltdown and the down turn of the economy impact our ability to make a living in the industry. I won't even mention job losses....they speak for themselves. Our family had it cutting both ways. My wife was in the mortgage business (until recently) and I was in real estate. All I knew, is that I have a family to protect; 3 kids still in college, a son with a new baby and my dad fighting diabetes and cancer. As astute as I felt I was in investing, money and finances, it seemed that I was looking at the only viable alternative...walk away from my home rather than to continue to invest in a asset that would never regain its original value. Even a short sale was eliminated as an option because the bank would report the difference from the short sale and send it to the IRS where then it becomes subject to taxes. Uggghh!!
So pretty much we met with the officials representing our mortgage company(s) and began to discuss the program, options, and requirements. The requirements were minimal, the reps really helpful and the stated time it would take to find out if we qualified went from the months that I have been sending certified letters to a matter of days. Now, it should be mentioned that all the qualifying financial instutions do not have a finalized plan in place but it looks like most are very close to closing that gap. You don't really grasp thefull magnitude until you looked at the sea of people waiting on this the 3rd and last day. It should be noted that from the explanation we received from one of the mortgage reps it appears that the banks will somehow assess the market value of these troubled assets and modify the loan amount to current market values and work out terms that are advantageous to the homeowners and investors based on their financial conditions and ability to pay.
As we left and was driving back home exhausted, my mind drifted back to earlier in the day. I had just completed an afternoon of looking at homes with an out of town client. But on the way back to my client's hotel I noticed a man on the highway. He looked about 30-something...unkempt, his clothing tattered and in his dirty hand was a sign soliciting drivers for money to buy something to eat. People past him annoyed but I stopped rolled down my window and gave him a dollar bill. Just then I noticed a shinny-new black Mercedes slowing and literally stopping traffic. A man's suited hand emerged and it had a large number of bills in it. I slowed down so the man could run up and get the donation. Then as I exited off the highway I was stopped by the light. looking left, I noticed a young lady in a wheelchair with a QuikTrip cup. Both her legs were missing and it looked like the amputation was recent because the wounds were still healing under a dirty nylon stocking dressing.
It almost broke my heart because I have a daughter too! I looked at her, smiled and crazily all I could think of to say was to ask how she was doing. I got a broken smile back but what got me more was what I saw in her eyes. It was like all the humanity was gone but the reflection went much further and it seemed as if I looked into her soul and there she was a person with all her appendages....flesh and blood just like me and the only thing that made us different were our circumstances. What was a short time seemed like forever, as the light changed to green. I again reached in my wallet. I felt bad because she said I had to throw the money at her because the curb restricted her so she literally could not meet me to get it. I drove off trying not to let my passenger know my emotion at that moment. That emotion must have sparked another image in my head. But this time it was someone I had recently spoke with that in our initially meeting seemed to have it all and now other personal circumstances seems to have pierced through to the spirit. It was the eyes.....not the same color but just the same as I had seen twice earlier!
I immediately looked over at my beautiful wife and grabbed her hand. in an instant it seemed like all the problems that I personally was experiencing seemed so small. I remembered her saying that my preoccupation with my business and the economy was consuming me and that I was missing out on what life was really all about. No it wasn't that I was a bad husband or father. It wasn't about the house or all the things we had accumulated or some now even lost. Then I remember the question she asked me, "Greg if we lost everything....we would still have us, right?"
Folks, I can't predict what will happen to our economy....heck I can even see to type this post without having glasses on. However what I am sure of is that through it all remember and hold on to those things that really matter......close!
Comments(16)