As one of the approved lenders on HUD's Hope 4 Homeowner's website, we have been inundated with phone calls from homeowners who are either (a) in foreclosure, (b) close to having a foreclosure action filed on them, or (c) struggling to pay their mortgage because of the current economic CRISIS we are experiencing here in the US and abroad. This program appears, on the surface, to be a possible solution to many of these people but at this point, nobody in the country is even able to do it because HUD isn't yet set up to insure the loans. It's very depressing - you have no idea of the stories we hear day in and day out. "I lost my job", "My husband left me", "My wife passed away", "My hours were cut at work", and one that I understand, "I'm in the mortgage business and my pay is now about 20% of where it was 2 years ago". I don't think that people outside of our industry really understand just how bad it is and may get to be in the not too distant future.
Yesterday, I was contacted by a national news program that is reporting on the state of the housing industry, and Florida in particular, by "putting a face to those people that are struggling". They wanted me to provide them with the name of a family that I knew of that they could focus. I had the perfect family: a friend of mine and her husband and their 4 kids. They bought their house in February, 2007 for $208,000 and did a conventional, 100% fully-verified 30 year fixed rate mortgage. At the time, she was making between $75 and $90k a year as a salesperson at a furniture store - she is a decorator and sold condo packages (I'm in a resort area in Florida). He is a liquor salesman and was making good money, as well. In February of this year, their income had come down by about 35% from where they were at the end of 2006 and they tried to refinance (they didn't come to me because of pride and I could kick them for that now.) The mortgage company they were using told them the loan was approved, to not make their mortgage payment, and to use the $2,000 that was earmarked for the mortgage to pay down some credit card debt, which they did. UNFORTUNATELY, this mortgage company wasn't aware of our declining market status, evidently, and put the cart before the horse. They hadn't received the appraisal when they told them this, and it came in at $168,000 - 20% less than they purchased the house for 12 months prior and 20% less than they owed. "Sorry - your application is denied" was what they next heard. Since that time and now, their 14-year old son, who was the #1 athlete in our county for baseball, basketball and football, was seriously hurt in a boating accident this summer, her husband was involved in a car accident that totaled his car and the other driver had no car insurance, and their 16 year old son was involved in a car accident. They have been trying to work with their investor and are 60 days late as of right now, but to no avail at this point. Hopefully, getting them on the national news and having them mention their mortgage company may help not only them, but others whose circumstances are the same.
Now to the controversial part: There are an estimated 750,000 homes in the US in foreclosure. The number of foreclosure actions being filed was 71% higher last month than the same time frame last year. There was a total of $850,000,000,000 ($850 billion) earmarked for a bailout. Why in the WORLD did/is this money going to banks, investment companies, etc??? If these funds had been allocated to 17 MILLION distressed homeowners, they could have each gotten $50,000, had it applied to their mortgages, and had their mortgages recast (reamortized over the remainder of the term based on the new principle) to help lower the payments of many and keep many more in their homes. The banks and lenders would STILL have gotten the money, but the way it would have been done would have made a HUGE difference. Do I have a suggestion as to how to determine what homeowners would have gotten this money? I have suggestions, but definitives would be hard to come up with, I'm sure. Would it have been "fair" across the board? No, but neither is the way it is being handled now. Would this amount ($50,000) satisfy all of the foreclosure actions? Probably not. BUT WHY WASN'T IT EVEN AN OPTION ON THE TABLE??? Instead, we have given this money to banks who are not willing to help out most "Joe the Plumbers" at a time when our housing industry crisis needs to be resolved to help aid in the recovery of our entire economic system. John McCain is right: we have to get the housing industry repaired ASAP to help with the rest of our economy. Barack Obama had it right - recovery starts at the bottom with the little person (although he wasn't talking about the housing market - I think it was an entire other subject to which he was referring but this statement is true as it relates to fixing the housing market).
Do I say this to you because I feel that in getting the market fixed it will help me to grow my income? NO. Unless you are talking to a great number of people who wind up crying on the phone and feel that they are going to lose their homes (I am doing these in Alabama, Georgia, and Florida, with the higher number so far coming from Georgia) you can't even imagine how horrible and how extremely widespread this issue is. I am sure that all of us know someone in this situation and our heartstrings are tugged continually. When you talk to the number of them that we, and those other lenders listed on HUD's Hope 4 Homeowners website have talked to, it's like a humongous ache that stays in your heart and eats at you trying to figure out how to help these people.
I am not in this business for philanthropic reasons - this is my career - but I have to tell you: I have NEVER IN MY LIFE done more work for clients that I know I will never get paid on in my life. It's an embarrassment to our country, in my opinion, that we think so much of banks and those entities who's entire purpose in being created was to "protect our money" <cough cough>. In doing so, they have cost many of our brethren their homes.
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