Looking back at the end of each year , there is always that one transaction that you remember. Most likely it is not the one that generated the most glory, or the most money, but the one where you generated the most good. Here is the story of my most memorable mortgage of 2007:
BEHIND A WHITE PICKET FENCE, A CRISIS UNFOLDS
They were a beautiful young couple, and the house really did have a white picket fence. It was their first house, purchased 2 years before, at the height of the real estate boom. With 2 intense careers and 2 active kids, the last thing on their mind had been their mortgage.
What they hadn't realized when they called me is they also had a 2 year adjustable rate mortgage about to explode in their face.
The month was July. Although I had come to take what I believed to be a routine application, I also asked to review their mortgage paperwork. This was presented to me in a pristine folder, having been handed to them at the closing table 2 years before. It had been thrown into the back of the file cabinet, obviously long forgotten, (as is usually the case).
Have you ever had to deliver news so bad that you wanted desperately to be somewhere else? Anywhere else?
A doctor may have to shatter a life by explaining an illness, but I was about to shatter their financial lives.
WHY THIS MORTGAGE HAD 3 STRIKES
In my professional opinion, their refinance was dead in the water. The worst part? The payment would go up almost $1500 in September and they couldn't afford it. They had the 3 deadly strikes....the reason so many houses went into foreclosure last year, and the kind of situation that should make the entire mortgage industry hang its head in shame.
- 100% Financing (STRIKE ONE)
- Stated Income Loan (STRIKE TWO)
- 2 Year Adjustable Rate (STRIKE THREE)
They owed $700,000 on a house that had comps at about $650,000. Their credit was good, but not good enough. They had very little money in the bank (not surprising).
The mortgage crisis was already brewing, with 100% financing and stated income loans disappearing quickly. Values were slumping as homeowners finally gave in to the whole declining value situation and started to "dump" their houses.
Could this situation and this timing have been any worse? All at once, the mortgage crisis had been personified. It had been defined. It was sitting across the table from me on a warm summer night with the gentle sound of their children playing somewhere nearby.
EMERGENCY ROOM MENTALITY
As I looked up from their paperwork, wondering what to say, they smiled, and asked me if I wanted more ice tea. Why did I deserve that look of total trust when I was a part of a system that had put their financial life at such risk?
Although the mortgage had been done by a relative, who did mortgages "on the side", I still felt responsible.
And for reasons that are still unclear to me, I accepted the tea, and I accepted the challenge.
I now think I behaved much like a doctor in an emergency room presented with a critically injured patient.
The chances may be slim, but you try, you try. It is your job. It is what you do. You do it without thinking.
Because if you fail, at least you fail knowing you tried.
So I said nothing, choosing not to alarm them. And as I drove off into the summer night, moonroof wide open to the stars, I couldn't help but wonder about the enormous task ahead. How would I ever save them from what seemed to be certain doom?
TO BE CONTINUED....
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