Fighting Off Foreclosure: One Woman's Three-Year Ordeal
When even a single home goes into foreclosure, the effects can be far reaching. In the case of Dee, when she faced foreclosure on her home in Prince George's County, Maryland, the potential hardship extended well beyond her immediate family.
Dee's home not only shelters some of her six children and occasionally her four grandchildren, but is also a place of refuge for neighbors, friends, and sometimes complete strangers who need a roof over their heads.
"I'm on the front lines of what's happening in our economy in terms of unemployment and people losing their homes," says Dee (who asked that we not use her last name). "I've been the neighborhood mom and have fed or given shelter to many people since I bought this house in 1999."
Recently Dee provided a safe place to stay for a single mother and her four kids. "She had lost her job and her apartment and was going to sleep in her car," Dee says. Dee and her adult children (ages 19 to 29) helped the woman get back on her feet. The woman found three jobs, started college classes, and gets her kids to school daily. Now the family is thriving in a safe environment.
Things could have turned out very differently for the woman, her kids, Dee and her family, and the entire community. And they almost did when Dee nearly lost her home.
The First Blow
Dee says her home wasn't "comfortably affordable" right from the start, but she felt it was smarter to own a home than rent because she was a single parent with six children. She was fearful that rising rents would push her out of an apartment, so locking into a mortgage seemed to make more sense even though it was a stretch for her budget.
Dee worked for an international law firm and, thanks to her base salary and overtime pay, she was able to cover her mortgage. "I was diligent about paying my mortgage and I didn't refinance when my home's value increased," she says.
That changed in 2008 when her company eliminated all overtime. "My income dropped. Although I tried to continue making payments, my mortgage eventually became delinquent," she says.
She sought a loan modification to make her mortgage payments more affordable. "But the bank returned my loan payment and began the foreclosure process."
Then on Sept. 11, 2009, Dee and 43 other employees of her law firm were laid off.
The Harder Blow
Dee tried for three years to get a loan modification, repeatedly sending reams of documents to her lender. Discouraged after not receiving a favorable response -- and often, getting no response at all -- she placed her home on the market.
Not a single offer came in. Her home needed repairs she couldn't afford to make, and she was competing with a glut of foreclosures and short-sales nearby.
She stayed put long enough to benefit from the state of Maryland's moratorium on foreclosures. But eventually the moratorium was lifted. Then Dee received a notice from the bank that they were going ahead with foreclosure proceedings.
Bad News Came with Good Options
Along with the foreclosure notice, the lender sent Dee information about some of her options. One of them was to receive housing counseling. She attended a housing fair sponsored by the Prince George's County government and met representatives from HomeFree-USA.
With the help of a counselor, Dee was finally able to obtain a loan modification.
She also benefited from recent changes in the law that permitted contributions from other family members to be included as part of the debt-to-income ratio, even if the person contributing is not on the deed, so they included one of her son's contributions to obtain the loan modification.
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The modified loan payment is about a third less than what she paid three years ago. But it still requires careful budgeting and eliminating nonessential expenditures since Dee's income is approximately a third of what she made three years ago.
"When the resources that I thought I had, like a law degree and a job, disappeared, I had to learn where to find other resources," Dee says.
Another important lesson she learned was that you need to be brave enough to ask for help. Now she is just relieved that she has a house to save.
Right now Dee is in the trial period of her loan modification, which will become permanent once she makes three on-time payments for the reduced amount. Her future prospects look promising: She is just started a new job with a better salary, and she's doing something with which she has hands-on experience: assisting others with loan modifications.
