The Foreclosure Crisis Essays

The Foreclosure Crisis Essays

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This subject is a poignant one for me, and I write a response using the personal experience of our family as an illustration.
My mother, a well educated, high-income earner, had an auto accident in 2004 that caused her to quit working due to permanent brain injury. She was no longer the primary breadwinner. She was given a modest settlement, and decided that rather than invest in the market she would put the money into something she knew a lot about – real estate. With assistance from my father and friends, she purchased a property that was affordable, with house and lands enough to subdivide into several properties. Her interest was to create a gift to each of her children for their future since she could no longer work. The property transaction went through in 2007 with a purchase price of $405,000 and a mortgage of $364,500.
Over the next year, her consultant worked to divide the property, and after much work and cost, was able to gain approval to split the parcel in two parts. The review by the lender to do so took almost nine months to gain their agreement. In that time, the market in California began to implode.
It became obvious that she would not be able to sell without taking a huge loss, and settlement funds had run out. Eating into personal savings, my parents kept the mortgage going.
Perhaps no one knew how desperate the economic situation was to become. Perhaps there was a perception that the bounce-back would be quick. By 2008, the property value went from $405,000 to $250,000. Negotiation ensued with the lender for a loan modification based on the current value, and at a lower interest rate. My parents felt that they could “keep it going” out of savings until the market improved, if the lender r...


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...s and inability to do a work out with a mortgagee that makes sense due to severe regulation, really the most effective process for the United State and its citizenry? At this juncture, the process seems to provide mechanisms for the money lenders, and its guarantors, to avoid further destabilization.
People want to avoid foreclosure at all costs. Lenders and the government should not hide behind the regulations and time delays, and realize that helping the mortgagee IS helping them. Once a property held in Deed in Lieu goes or Foreclosure actually goes back to the lender, the house is often suffered from disuse, vandalism etc, which costs money to fix up and put back on the market. Using the illustration of my parents, the property would today be listed for $175,000 – the SAME amount for which the lender was offered an all-cash offer six months ago!




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