How I almost lost my house
If you haven't heard the news, on Friday the 13th, a lot of unlucky people received some lucky news. Two of the country's biggest banks, J.P. Morgan Chase & Co and Citigroup Inc., announced that they are stopping the foreclosure proceedings while the Obama administration hammers out its plans to try and help more Americans save their homes. And it's hardly a permanent stay-of-execution. J.P. Morgan Chase is only halting new foreclosures for owner-occupied home loans until March 6, and Citgroup until March 12, or sooner if the Obama administration finalizes the details of its loan modification program earlier.
This temporary moratorium came about just days after bank executives were brought into the House of Representatives. The chief executives from Bank of America, Bank of New York Mellon, Citigroup, Goldman Sachs, J.P. Morgan Chase, Morgan Stanley, State Street and Wells Fargo were all on hand, and by all accounts, it wasn't pretty.
For their role in the subprime market debacle and all of our other economic problems, Massachusetts Democrat Michael Capuano told them, "I can't believe no one's prosecuted you on this. It's my hope that you will be answering for that in court one day."
And Jeb Hensarling, a Republican Congressman from Texas, promised the bankers, "You will be publicly pilloried," and added, "some of that will be richly deserved."
So, gee, amazing, isn't it? A few days later, and two banks are suddenly finding it within their means to help people with lesser means. But never mind why it's happened, I'm just glad that it has.
As I mentioned, I kind of know what these people are feeling. In early 2007, there was some change in staff at a couple magazines I was writing for, and a year-long writing project that had paid well came to an end. My funds dried up quite a bit, and suddenly I was late with my February mortgage, and then my March. I think I paid February's mortgage payment in April, and by May, probably was willing to pay March, but as anyone who has fallen far behind on their mortgage knows, eventually it's an all-or-nothing proposition. If you owe six months mortgage, and you send them enough to pay for two months, they won't accept it; a mortgage company will return your money.
Although you can sometimes work out a deal where you'll do something like pay just the principal for a couple months, once you're seriously late with your mortgage, it's a deep hole to get out of. And when you're short of cash, you think to yourself, "Well, do I want to pay my mortgage but not have the revenue to pay my electricity bill?" And so you make choices, and not necessarily good ones.
For whatever reason, 2007 turned out to be my recession, more so than 2008 and even 2009. That entire year now feels like a hazy dream, a dream I'd rather not think a lot about. I certainly was working, writing a lot and promoting my book that had just come out, thinking that all of those sales would help lift my fortunes up (yeah, that worked out well), but the assignments simply didn't come in as much as they had in the past.
As the summer ended, I was about five months behind and receiving ominous letters indicating certain doom from my mortgage company.
When I received a letter telling me that my house was going to be put up on an auction block, that was unpleasant, but what really rattled me was an unexpected visit from two nattily dressed people, a sober-looking man and woman who appeared on my driveway one afternoon.
While my wife and daughters watched from the living room window, I listened to them explain how they could help me save my house. Obviously, they had found a public document mentioning the status of my residence, and then raced over in their car. I accepted their business card to be polite, having no idea if they were legitimate or not, but somehow the encounter on the driveway made the upcoming sheriff's auction seem all the more real. I think that snapped me into action.
In any case, I solved my problem by doing what I should have done all along: staying in better touch with my mortgage company. Believe me, I did keep them informed of my situation during the spring and summer of 2007, but during the fall, I was calling them every week, or at least every other week, as opposed to every two months. And eventually, as I had been afraid all along, I wound up getting my parents and mother-in-law involved.
In November, 2007, when I was seven months behind on my mortgage, and 23 days before my house was scheduled to be auctioned to the highest bidder, I was granted a loan modification.
It's a loan modification plan that the Obama administration is trying to construct for homeowners now.
I lost all of the accumulated equity in my house, which wasn't too much, because there was still a few thousand dollars that needed to be paid afterward. My parents and mother-in-law, whom I will always be supremely grateful to, pooled some of their resources, and suddenly I was caught up on the payments. My mortgage ended up climbing another $100, which worried me at the time, but I haven't had trouble paying it since.
Obviously, many of the Americans whose homes are in danger of being foreclosed never should have gotten a house in the first place. We all know that giving home loans to people with shoddy credit and few resources is a large reason our economy is in the tank.
But I didn't have a subprime loan; what I had was a very bad year. For many people, their bad year is 2008 or 2009, and unlike the banks or auto companies, distressed homeowners aren't asking for a billion dollar bailout. They're asking for some mercy, perhaps, to be given loans with a lower interest rate. They're asking for the gift of time. But it's not as if any homeowner expects to be allowed to live in their house without paying serious money.
I know that not everyone will agree, but if the government and banks can work out a deal that readjusts some loans and allows people to climb back up on their feet, I can't help but think that's a good idea.
Geoff Williams is a freelance journalist and the author of C.C. Pyle's Amazing Foot Race: The True Story of the 1928 Coast-to-Coast Run Across America (Rodale).