Humble Pie-- YUM! (just kidding)

Be careful of the rabbit hole. Once you are in, it is challenging to get out. I found myself falling down it the other day. I just got done paying what bills I could pay for the month. Unfortunately it left many debts unpaid. That situation can become a threat to my sanity if it continues for too much longer. I was circling the rabbit hole. My mind went from calm to tsunami & devastation in a matter of minutes. I'm bankrupt, worthless, disgusting, morally inept, unable to provide for my family. All those things came rushing at me. I've never had a panic attack but I could feel one coming. That's when I pulled up on the chain of my brain and forced it to stop falling down the hole. Wow. How is it helpful to my life, my family and my world if I stay down? I have to look at all the positive things in my life to put me at ease and to realize that I am indeed moving forward. I'm not giving up, although at times it seems like a good idea. I have a lot of life left to live. I need to get my books out. I need to help people navigate the financial system. I need to make a difference in this world. To leave it better than when I arrived.

I have definitely had a roller coaster financial story. I have come full circle with my finances. I've struggled over the years. No matter the struggle I always arrive beyond it. When I became a single mom it was financially challenging. I had a commission only job. As a Realtor, my pay was based on homes closing. I remember a time when I had only one house in escrow and that transaction was difficult. The day before it was supposed to close my client decided to back out. My intial reaction was one of panic as I desperately needed the money. But when I got my mind under control I realized she was right NOT to move forward with this particualr house. At that moment I calmed myself and reminded me that I am a survivor and this was not about me. The details of how I made it through that time are blurred. I got through it somehow. We can allow our fears to run our life or we can address those fears and let them know who's in charge.

Over the years, I've eaten quite a bit of humble pie. My first memory of partaking of this specialty was transitioning out of the restaurant industry into real estate. I had been a bartender for a few years and the lifestyle was beginning to have it's repurcussions. My son was just a year old when I took a job as a receptionist for a local real estate company; Barbara Sue Seal Properties. Here I was, a college educated woman working for $8.00 an hour answering the phones and taking orders from Realtors. I had to remind myself of the goal in mind which was to ultimately get out of the restaurant world.

When I started this job I had no business attire. We were required to wear suits and/or jackets to work so I had to start a new wardrobe with no money. Goodwill has been my fallback over the years. I have shopped there when I absolutely had to and when I just wanted to. Depending on the view, it definitely does look different. I was also blessed by my friend Michelle who had just received an enormous box of business clothes from her employer who lost a bunch of weight. I was able to put some items together from that blessing.

I ate quite a few slices of humble pie in those days. My struggle with money was in effect for several years. When I divorced my son's dad in 2000 I made the decision that I did not want to be a Realtor and a single mom. One of the reasons I got out of the restaurant industry was my desire to have a more 9-3 job; evening and weekends off. Working as a Realtor I ofen found myself working 7 days a week! In order to get more balance in my life I gave up my real estate license after 5 years and moved over to the lending side of the real estate transaction.

My next humble pie happened in my first year as a mortgage professional. I found myself once again out of money and not sure where to turn. It was taking much more effort on my part than I had imagined to get the money flowing again. For a brief moment I serioulsy questioned my decision to give up my real estate business. I had envisioned a more seamless transition and it didnt' inlcude starting a business all over! That's essentially what I had done even though it was in the same industry. I ended up borrowing $1000 from my ex to make it through a month. It never occurred to me that there was public assistance available for me. I have always been about making my own way in the world.

I'll never forget the day I borrowed that money. It was an incredibly low day. One of those times when it seems like the world is a very dark place and there is no way out. I drove to my ex-husbands job at Home Depot and sat in the parking lot collecting my strength. I walked into the store with my head hung low, as soon as I saw him the tears started to flow. He asked me if I was okay and all I could do was nod. He handed me the check and with great humility I took it and walked out the door all the while tears streaming down my face. How did I get to this place?

Somehow I got through that time, paid him back and turned my entire financial life around. In fact, it was only a few years later that he became one of my tenants! And I gave him a deal, he was paying $300 less than my current tenant. That lasted a few years.. my oh my how life continues to have a sense of humor.

When life appears to be dark and hopeless we can either search to find some source of light or stay in the darkness forever. As a survivor I tend to search for the light. This certainly doesn't mean that I don't wallow in the depths of despair. I have had my share of pity parties. But the point is, to keep moving forward. There's a time and a place for wallowing. Just make sure you get out of the cesspool before you drown.

How the banks are winning...

Until you have experienced falling behind on your payments it might be hard for you to understand what so many people here in America are going through and have been going through for the past several years. I am going to do my best to inform you of how the system really works and who is in control.
Because I get so irritated with the call centers for banks my husband has graciously stepped up to field those calls. I'm the only one on the loan so we have to play the game of giving them all the information over and over to make sure of what exactly? That we are protected? How many times do I have to state the loan number, address, mailing address, telephone number and the last four digits of  my social security number? Get this, even when they are the ones calling me, they go through the same format squeezing as much information out of me as humanly possible.
     The lender I'm referring to is AHMSI; American Home Mortgage Servicing Inc. Mostly they are a loan servicer as opposed to being an investor. So basically all they are interested in is my monthly payment. Or one would think.. For the past 3 months I have had my payment RETURNED to me! They are claiming that I am in foreclosure and until I pay $12,000 they are refusing to take my payment. Keep in mind that I have never received anything in the mail from them with regards to this supposed foreclosure. It is their legal responsibility to follow the rules that the government has laid down for them. How does one maneuver in  a system that is so broken.?
     Of course the call center is based in India and all they ever do is read the script they've been given. How could they possibly even assist? I have nothing negative to say about India but the way we have outsourced our jobs to other countries for money is really unfortunate. They have completely different land laws in India than we do. The point is, they really aren't there to assist, they are there to make telephone calls and collect payments.
     We just spent another 45 minutes on the phone first talking to H5S in India (that's really the NAME he gave us) and once we cleared his security we were FINALLY passed onto someone in the United States of America. At this point it doesn't even matter who we talk to as we are given the same story by everyone. They will NOT take our payments until we satisfy the $12,000 deficit. WOW! I am still going through the motions of making monthly payments but I'm not sure what to do next except file a law suit to stop the insanity.
     I don't want to lose this house. I've owned it since 1998 and it has been a transformational house for me in so many ways. Zillow tells me that the house is worth somewhere in the vicinity of $247,000. The outstanding balance is $314,000, that's a difference of nearly $70,000! Am I crazy to want to keep the house? Should I just let it go? At what point do you just make the decision to cut your losses and walk away? It is currently a rental and the rents are bringing in a couple hundred dollars more than the payment each month. My plan is to move back into this house within the next couple of years. Currently a family of 4 is living in it. Interestingly enough the woman who is leasing it lost her home to a foreclosure a few years back after an ugly divorce.
     The reality of homelessness in America is of epic proportions. In 2007 a study was done by the National Law Center on Homelessness and Poverty and found that roughly 3.5 million people were homeless. Of that number 1.35 million are CHILDREN! It is such a growing problem that in certain areas in the country school buses are picking kids up at hotels and homeless centers. These children are suffering greatly of which no part is their fault. My heart is saddened by such stories out there. This is a problem that cannot be ignored. But what exactly do we do?

     I've been sitting financially precarious for 3 years now, depleting my life savings and robbing Peter to pay Paul. It's an ugly situation and one that at times brings me many times to my knees. And yet, I am one of the lucky ones. I still have a roof over my head and food on the table. I spoke this morning to 2 men who are in the real estate and lending world and both of them commented on how slow their business is. My instant reaction is to help out. But what am I to do? I so hate seeing people struggle financially as I have been on that ride more than once in my life. It really breaks life down to the very basics. Living in the moment. Doing the best you can with what you have. Being kind to strangers. Seeking to understand rather than be understood. 

Lenders Behaving Badly

Until it happened to me I would have had a hard time believing it. And then, when I started to do more and more research out there I realized that this was a problem well underway and affecting millions of people. So let me just walk you through the gist of it only so you are able to see it from another angle.
When my industry hit hard times my income went from a nice six figure to less than $10,000. When the real estate crisis began I did the only thing I knew to do and that was to buy yet another piece of real estate and flip it. I had never been a big fan of "flipping" houses as many people don't come out ahead and it can be a challenging business to maneuver. So here I was attempting to make SOMETHING work for me. My husband did a beautiful job of remodeling this house but unfortunately we picked the wrong neighborhood and the market was on it's way down. Needless to say our great plan turned out to be a big loss!
I did what I thought was responsible. I cashed out everything I had ever saved. I borrowed against my life insurance policy, my son's policy, my 401k and that money went to my lenders for payments. Now in hindsight I can say that this was not a financially prudent thing to do. Had I took all my emotions out of it and looked at my situation from a purely practical standpoint I would have made different choices. But I had always paid my bills on time and kept my credit in good standing. It seemed like the responsible thing to do. I even had a coworker tell me that he was taking a short sale on his house because he didn't want to tap into his nest egg. I just assumed he didn't have one. Because wasn't a nest egg for emergencies? And hadn't the mortgage crisis turned into a financial emergency?
The problem with where I am now sitting is that I have taken my financial life from one of high debt and no assets to very little debt and lots of real estate and a sizable emergency fund. I spent an entire decade learning about money and ways to turn my financial life around. And I did it. All as a single mom. Now I'm in the position of not being able to refinance any property because a) the values have dropped below the debt and b) I have very little income c) oh, and my credit SUCKS! The only option is to have lenders work with me. And that experience has been a joke to say the least.
Let me share with you how insane our system is.  I made a mortgage payment in December. The money cleared my account so I assumed all was well. When I got a call in January informing me that I was 30 days late I let the representative know that I indeed had made my payment. After being transferred to several different people I spoke with one person who told me that I was short on my payment $50 for a "late" fee. Because the payment I sent was short they did NOT apply it to my account. Instead they put it into a "side" account. I didn't even know that was legal. It probably isn't. I sent them the $50 as quick as I could but by this time it was a month later and now I was put into their "bad person" program. Here's how "bad" it got. I have since sent them 2 other payments which they have promptly returned to me telling me that now I'm in foreclosure and they cannot receive any payments from me. ARE YOU KIDDING ME??
The worst part is that every time I call them I am talking to someone in INDIA who has no idea what the laws in America are AND they are only hired to read a script. They cannot assist me. So now I have them transfer me to someone in America and THEY cannot help or assist me in any way. The system is so screwed up and they are taking complete advantage of people. How in the world am I supposed to even talk with someone who can actually assist me? I can't even walk into an office and try to reason with someone because there IS NO OFFICE! If I wasn't as fired up and persistent as I am then this property would end up back on the lenders books.
We are in such a national problem with lenders behaving badly that who knows where this this will end up. I do know that in 50 states the attorney generals are now paying attention to what is really happening to people. There are cases all over with people finally getting fed up with not being treated justly. It wouldn't be such a crime if the banks didn't benefit hugely from the government bailouts that YOU AND I are and will be paying for years to come. At some point it just makes sense to stand up and fight.

The Article

When lived fully, life is an amazing thing. By taking chances and risks I have opened myself to pathways I didn't even know existed.
James Pitkin called me last week and informed me he was a reporter from Willamette Week and wanted to do a story on my lawsuit and MERS. Since from the looks of it my story does not call for compassion I was hesitant. I really thought that my friend, Ama, would be the ideal person for this story. She's really the only reason I started doing this. A mom with 2 boys living in a house that the lender wants to take back. Add to it that she is not at all well versed in the mortgage and lending world. The fact of the matter is her house is at risk. She has tried over the last year to modify it. The run around she is getting is one that millions of homeowners are getting. How does it benefit the country for lenders to take back millions and millions of homes? There's a home in my parents neighborhood that has been vacant for over 2 years! It is an eyesore for the neighborhood because quite frankly, the banks don't give a shit about neighborhoods. It's about numbers. And then let's talk about the fact that they are not lending much money. They helped create the problem and now they no longer want the risk. It's understandable really.
So back to James.. I was uncertain about putting myself out in the public and at the same time a little bit excited for the opportunity to get this out to the people that mattered.  I've been down before but not like this.  I have always paid my bills on time. In fact when I erroneously forgot to make a payment I beat myself up for days.  I certainly wouldn't have been ready until this year to let my story out. I figured, what the heck. Here's what I didn't know. The wealthy cut their losses before they dipped into their investments. It became a matter of financial decisions without the emotion. Enough people were buying houses when the market dropped and letting the undervalued home they currently had go back to the bank that new underwriting guidelines came out addressing this issue.
For those millions of Americans who have found themselves in this situation their first reaction is to keep it a secret. It's embarrassing & humiliating. Why would they want that to get out? Keep in mind that many of us, myself included, were informed by each lender that in order to qualify for any kind of modification we had to be 90 days late. Did you know that lenders have been holding money and not applying it to the loan if we didn't include the late fee? The stories I have heard of lenders behaving badly was enough for me to be the one to take a stand.
James did a fair job of interviewing me.  And yes, I said things in there that probably got misconstrued. The part that needs clarification in my mind is that "I was part of the problem, and now I want to be part of the solution". I helped many people into homes. I helped them understand their money. I counseled them to save money, get out of debt and think about retirement. I helped people become investors. I helped them understand cash flow. The problem is I believed that home prices would continue to climb at 6%. I assumed the 6% would go on forever. I consider that the illusion of hope. So now there are clients who CANNOT refinance or do anything because; their income dropped, the value has dropped and they are upside down. Oh wait, that's me too! So my "theory" that was being preached all over the industry is you can refinance in a few years if you wanted to. That's because for many years it was the norm. And what about all the help the government has informed us is available. Loan modifications, the HARP program, help for homeowners etc. Do you realize that the people who need the help are not the ones getting it. Out of my hundreds of clients only a high paid administrator in the schools was able to take advantage of those programs. Does that not seem ridiculous?
How I want to be part of the solution is by taking a stand against the lenders to tell them to operate in the LEGAL sense. Is that so wrong? I am so not worried about myself. I'm a risk taker, I'm a survivor and most of all I'm a trailblazer! But what about the Ama's of the world? And believe me I've met quite a few. That's what this is all about. If it was about me Senate 484 would not even be up for discussion.
We can all sit back in our cozy little lives and throw stones of judgment at people. However, I would caution your judgment as I am living every judgment I ever had about people. This housing crisis is enormous and I certainly don't have the answers but I am open for discussion.

The lawsuit

Life is really an interesting thing. What I have experienced is that when I open my mind to the possibilities and TRUST MY INTUITION I can create great things! Here's how the lawsuit started.
My friend received an unusual letter that claimed the banks might not have a right to foreclose. She decided to schedule a meeting with the person who sent the letter. Her boyfriend thought it could be a scam, so she called me to go along with her to the meeting.
Knowing the letters I've been receiving since I got behind on  my own mortgages I wondered too if it was a scam. We met Michael at a busy coffee shop. When I arrived we looked around and noticed this older, disheveled man that was pouring over what appeared to be legal documents. This was going to be an interesting conversation. My first motivation was to protect my younger friend. I most definitely had my guard up.
Once we got to talking I learned that Michael was "voluntarily homeless". He is 67 years old and from the first appearance looks as if he has had a hard life. What I found out was that he really understood the law and had filed over 35 different lawsuits in his lifetime. The more I listened the more I realized that this was a man who wanted to help people understand the system and the fact that it was broken.
After the first meeting I walked away thinking how bizarre that experience was. It was like being in the twilight zone. Here I am, an educated, intelligent woman taking advice from a homeless man. Wow. But my instincts told me that he really did know what he was talking about.
I've grilled him on what his purpose of this is. He said he wants to help people stay in their homes. But why, I asked? There's got to be something you want. His final response to the question I asked over and over was, "maybe I will get a house out of it".
This lawsuit is not about money. The pure essence of it is to stop the madness in the foreclosure world and have not only the lenders but MERS take responsibility in abiding by the LAW. I am fully prepared to give back my house to the bank. But from the foreclosure letter is is so muddled it's hard to tell who is really foreclosing. This isn't about a free lunch. I'm a responsible adult and have asked for little help along the way in my life. Hearing the stories of people who are in this situation, terrified and embarrassed and unable to maneuver in the system that is currently set up I am just willing to take a stand.

The mortgage meltdown

  My naivite made me believe the story. The American dream. That every American that wanted to could and should own their own home. I bought into that dream. I shared that dream. I wanted people to be able to change their story and own part of the DREAM. I got my real estate license in 1996 and my first step was to buy my own house, which I did in 1997. And then it went from there. I bought my 2nd home in 1998 and turned the first one into a rental. Owning property was always on my radar and having rentals was a way for me to have a retirement and a way to pay for my son's college.

In 2000 I divorced my son's dad and realized that being a single mom and a Realtor was not a good mix for me. I decided to go into the lending side of real estate for more stable hours and specifically, weekends off! So in 2002 I became a Mortgage Broker by simply filling out an application. Unlike real estate, no license was required. That struck me as very odd but, whatever.

Fast forward to 2011. I have owned a total of 12 homes. I sold my first home for a loss in 2009. I took my first foreclosure in 2010. Currently I have a total of 9 pieces of real estate. I am behind on nearly every single home. I have struggled financially to make ends meet since 2009. My industry took a humongous nose dive after the mortgage collapse and I dipped into every investment/retirement I had in order to stay afloat.

I never, ever expected to be in this situation. The emotional roller coaster has been amazing. Add to it the burden I carry for my clients that are under water, behind on their mortgage or losing their home. It has felt overwhelming at times. My whole goal in being involved in real estate was to make a better life for myself and at the same time to help people become home owners and investors. It was all good until the summer of 2007 when the mortgage world began feeling the affects of the crazy lending.

I went as far as to take over payments for a past client who's mortgage had "recast" and she didn't know what to do. She had moved out of state and I offered to take over the property. I thought getting another piece of real estate was in my best interest and I didn't want to see her fall. The property was negatively cash flowing by $300/month when I took it over. My husband and I improved the property in a huge way. Thousands of dollars in landscaping, painting, and other various repairs. I still believed in real estate

Unfortuantely when I ran out of money in January of 2010 I had to give the house back to her. I had fallen behind on the mortgage because I was too proud to let her know that I was broke.  By then the property was only losing $150/month. I used the deposit money to cover the costs and pay the mortgage during the time that there wasn't a tenant. It was a bad situation.

I have a new understanding for the ramifications of what the government did along with wall street. The process of being behind on any payment is humiliating, distressing and devastating. So many of us bought into the idea that home ownership was truly for anybody. The lenders lowered their standards so much that I once helped an UNEMPLOYED person get a loan. Of course he had incredible credit scores and lots of assets but we did a NINA loan which is no income no asset. For this particular loan it was not required to list the income or assets. In fact, they went as far as to say DO NOT LIST ANYTHING in the income and asset statement.

Lending with no documentation was on the rise. Lender after lender would come into our offices and tell us how to "structure" loans so they would get approved. I understood this as part of the process. Credit score wasn't as big of a deal as people believed. Of course those with higher scores (680 or greater) would get into the best matrix of rates and loan-to-value.

Looking at the world from where I am currently sitting I can see how far my industry tipped. Stated income loans, also known as "liar's loans", were initially put in place for self employed individuals. The reasoning was their tax returns and documentation was much more complex than W2 employees. Besides, they had so many deductions who really knew their "true" income. As a self employed person you could deduct just about anything as a business expense. From the underwriting stand point it really did make sense to me.

When they came out with stated income loans for people who had a W2, I was surprised but jumped on the band wagon with all the other mortgage brokers out there.I mean, the whole idea was to help more people get a piece of the real estate action.  Looking back, this was the pivotal piece of the economic destruction that we have seen. This was the nail in the coffin for subprime mortgages. And the collapse of the real estate industry.

For nearly a decade real estate was booming. From 2005-2007 it seemed that the entire country was having a real estate frenzy. People who knew nothing about real estate were buying up houses with pure speculation of making huge profits. And many people made a lot of money. Others weren't so fortunate.

I was never big on expecting huge appreciation. And my real estate philosophy has been buy and hold. I have taught my clients to anticipate a 6% appreciation which was the case from 1968-2004. The 20-30% increase that was happening beyond 2004 had mostly to do with the loose lending guidelines. The availability of money. The fact that the government thought it would be better to increase home ownership.

Mortgage Modifications & other Myths...

I have known that a credit score is important for a variety of reasons. I have been diligent over the years to keep it clean and in good standing. Here's the interesting thing about lenders. They have some really weird guidelines. They refuse to let anyone apply for a mortgage modification until they are NINETY days late on their mortgage. Now what kind of sense does that make? They won't even consider a modification if I'm in good standing? So, in order to play the game it requires the players to make a decision about ruining their credit. Seems crazy doesn't it?

And the modification process takes a long time. I've been in the process for nearly a year and I still don't know if I will get it. I'm in a different situation than most as I have had virtually no income for a few years. I could completely understand if I did not qualify. However, there are thousands of people who SHOULD qualify because they have an income but the banks are just toying with them.

Wouldn't it be in the banks best interest to work with individuals who have a proven history of making payments? Communicating with each and every lender ( I have dealings with 7 different lenders) is a difficult and arduous process. The worst is when I cannot understand the person on the other line due to a heavy accent. YIKES! Isn't this America? And they continue to read the script to me on every single call. No one is taking notes on my files it seems  and according to them, it is virtually impossible to call the same representative to talk about my case. Why is it so difficult?

I have relatively thick skin and I understand more than most how the lending process works. Lenders were so quick to issue loans and one would think they would be just as quick to NOT foreclose on people. I certainly don't want to lose my house however I completely understand if it happens. I have been late on my mortgage. Here's where it gets complicated. There is a process that lenders need to follow when foreclosing on a home and my guess is that they have taken a God like stand to behave however they choose.

Because of the fact the most individuals do not understand their rights and don't have the time or energy it takes to be in communication with their lender they just give up and let the house go back. Obviously the past several years have been financially challenging for the majority of people in America. Part of the problem was easy credit which the banks were eager to participate in. Now that money is tight they have virtually turned their backs on working out ways for people to stay in their homes.

I have a friend who moved out of her house because the bank was going to foreclose. This was AFTER she had applied for a modification. They kept losing her paper work and denied her a modification initially. She moved into an apartment with her two big dogs and the lender KEPT CALLING! When they realized she was no longer living in the house, according to their guidelines, they would not even consider a modification. So, she moved back into the house which would give her a greater chance of a modification. To top it off she has had a steady stream of income which was the reason she initially fell behind. Seriously? Imagine moving out and then moving back with all the labor of the actual moving, changing  utilities, packing & unpacking etc. Why are the banks allowed to get away with this?

Ideally I would like to band together and help people who don't understand the process. Ultimately I want the banks to operate in a humane & legal manner. Perhaps a class action law suit would force them to behave appropriately. I know it has been done in other states. Is it worth the fight? That's the question...