Via Malik Crichlow (GoodBuy Homes NJ):

I was speaking with a home owner a few weeks ago who was upside down in their mortgage and I had to ask the question ” How did you get here?” their response was not shocking but a little hurtful to be honest because its the American dream turned nightmare.

They explained to me how they purchased their home in 2007 for 589K and at that time was told the house was worth about 650-675k, about a year after the purchase their loan officer called and was promoting a Refinance program that they could utilize to pull some cash out and do some needed renovations around the house. All they needed to do was refinance, pull some cash out and take care of the work, he explained to them that they were refinancing their entire loan into a new product which happened to be a 5/1 Interest Only ARM.  He promised that they could Refinance out of this product once they were done with renovations and get back into a fixed rate program.  But for the time being they could save a little by having interest only payments while taking care of the renovations. To my sellers this was what they were waiting for; a chance to fix the house in one shot without having to work 80 hours a week for the next year to do so.  So they agreed; this move when looking back was the beginning of the end. 

The started renovations and realized that to complete the various projects it was going to cost an additional 10-15k in labor and material;   they called their loan officer and explained the situation, he said that there home has gone up in value since the initial refinance and why not go back in and take out another 25-30k just to be sure this was the last time. So after careful consideration they pulled the trigger again. 

At this point they had mortgaged their home all the way up to 694k between actual cash out and closing cost. The sellers explained that even though they were paying more than 100k more than their original purchase it was OK; because their dream home was complete.  The only problem is that the economy is starting to shift in a different direction and values are dropping very quickly. My sellers whom both worked in the financial industry were given severance packages and laid off as a result of the unsteady market.  Now they had some cash, a house priced about 100k + over market value and no where to turn, so they asked their loan officer; “what should we do?” he stated that without equity there wasn’t much he could do.   My sellers realized that the hit to the market was now very close to home so they I attempted to liquidate their assets in hopes of keeping the wheels turning but that was short lived as they realized that the severance package money was not going to be enough to hold off the bill collectors for long.  It was in that December of 2009 that they went through their first late mortgage payment. It was a blow to my sellers ego’s as they both had  750 + FICO scores and was not accustom to paying bills late, they attempted to send partial payments but those were returned by the lender…. after 3 more months of late payments and non payments, they decided that it was time to sell. This was a very sad and embarrasing time for my sellers.

They struggled for the 3 months as FSBO trying to eliminate the Realtor fees in hopes of just selling the house. But that didn’t work, now they are well over 6 months behind on their mortgage; they contacted me as a Short Sale specialist in the area and they expressed interest in attempting a short sale on the property.  Although at this point they owe roughly 726k between past due amount, lawyer fees and bank fees. We listed at fair Market value for just under 560k, it took about 2 weeks and we just received an offer for 549k…

In the loan officers defense, my sellers don’t blame him, he did what was being done everywhere which was lend money off of inflated values and put home owners in some sticky situations. It was basically 3 blind mice the blind leading the blind… Many of past judgement on folks in this situation, but Who do you blame? the home owner, the loan officer, the economy, the appraisal…who? you be the judge…or not

About susanmorrison

After living in Walpole, MA for many years, our family was transferred to the west coast when I was a senior in high school. In 1983, I graduated from Mission San Jose High School in Fremont, California. I am also a 1987 graduate of Providence College with a major in liberal arts and a minor in business administration. I bring to the table many years of sales experience beginning with thirteen years in Corporate Sales at Delta Air Lines. I'm the mother of three children and I'm very active within the Franklin, MA community. I am also a cancer survivor and support the American Cancer Society Charities.

My husband and I have built five homes and I've lived in a variety of other locations including Toronto Canada, Irving Texas and my current home in Franklin, MA. As a result of all my moving around, I came to the conclusion that I was an expert at moving...why not become an expert on the other side of the table? I earned my real estate license in 2004 and believe that I have found my true niche'. I can empathize with my clients on a variety of levels; whether they are buying or selling. And, like so many other good realtors out there, I believe that possessing good communication skills is one of the many keys to success.

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