Dropping My Daily Stool Sample

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There is perhaps the funniest 8 1/2 by Eleven Lucas has published recently.  Priceless punchline, to anyone who has ever dated a woman!  Kudos!

I have been saving this personal story for about 10 months.
Malach has been affected by the Sub Prime Mortgage mess.  To anyone who reads this, don’t let it shy you away from buying a house, especially now (low rates and low prices), but use my story and a example, and heed my advice if you find yourself here.  As for homes, if you can afford one, look for a deal, a home is a valuable asset, that can be used for a number of financial advantages.  A house is also one of the only investments that in 30 years are worth double or triple their value.

Let me start from the beginning.  Malach and his wife bought a small 2 bedroom fixer upper back in 1997 in the City of New Bedford for $35,000.  Yes, you heard that right, I told you it was a fixer upper.  At the time the New Bedford/Fall River area was, and still is, the cheapest area of MA to live in.  During that period, you could purchase a huge suburban home completely renovated for $180,000.  Again, this house was small, a shade under 900 square feet, had a tiny yard (20′ x 20′ at most), no off street parking, but we invested another $40,000 into it and made it one of the Jewels of the neighborhood.  This is the house here, prior to remodeling.  Wifey and I had a wonderful couple years there before we had our first kid and used this house to get out of some debt we were carrying.  We stayed a couple more years and had our second.  Shortly after that, we were ready to look for something safer and bigger, and lucky us, property values in the area, which had been stagnant for a while went through the roof.  It took us a while but we found our dreamhouse.

The house we bought and I am in now, is a beautiful 120 year old gem, on a dead end street in Fairhaven (the suburb, I grew up in and love), with 2000 square feet of living, and almost a acre of land.  The old house sold for $175,000, and we bought this one for $285,000, and had a $40,000 down payment from the selling the old house.  Awesome right? The American Dream.  So, we go to a very reputable mortgage broker, referred to us by number of people, TSF Mortgage.  Our broker, who was a really nice guy, got us a nice rate of 6.2% at Option One Mortgage Company.  I was excited, the rates were down (we had 8.55% on the old house), a beautiful house (2000+ square feet) with nice amenities, and an awesome neighborhood, huge yard; and just excited to move right in.  Everything seemed to be happily ever after, except for one thing.  The broker sold us a SubPrime Adjustable Rate mortgage, never told us, and of course, it was never explained to us at the time of signing.

Now, unlike a lot of people in this mess, we were different than most.  My credit score was 810, my wife 789.  We had almost 20% to put down.  I am not sure why we were given this mortgage beyond perhaps greed by the mortgage broker (come to find out now, these guys were offered big money by these unscrupulous lenders for these loans).

So we move in, and yes, our mortgage for this home, was about 75% more than our previous, but hey, we had a really  small mortage previously and we could afford this.  A year passes we are struggling a little.  I am paying $1000 a month in Daycare (but we knew both kids would get into school that September), and then my wife gets a very significant back injury and is out of work for 6 weeks (Dec ‘06 – January ‘07), we end up falling behind on the mortgage (about 90 days), but I stayed in touch with Option One, and managed to catch the whole thing up by the end of February of ‘07.  Cool, wife goes back to work, we get our tax return, and she gets a bonus, we’re back in business.  This is about the time, the sub prime mess really begins to develop and heat up across the country.

I get my kids out of daycare by May of ‘07, even better.  Then I get the letter from Option One.  Dear Malach, your mortgage as per your agreed upon adjustable rate is going up to 9.89% next month, your payment will be going up almost $800 a month.  WTF!  Where the heck did that come from?  I immediately called Option One and (insert Indian accent here) “Yes sir, you signed the mortgage, there is nothing we can do.”

I asked if they could refinance, especially since I had just read that Option One was no longer offering these types of mortgages.  So they transferred me to their home retention department.  I spoke with some guy who stated that of course he could refinance, he was sorry we ever got into this situation.  He ran some numbers.  Even with our issue with the wife’s back and late payment because of that and daycare, my credit was still 720, and the wife’s 700. 

“Oh you have wonderful credit scores, this should be no problem”.  Cool problem over.

I get call about a hour later, stating they cannot help me because of the late back in January, a late caused by a financial problem.  I am flabbergasted.  Nothing they can do?  Emphatically they state yes.  Of course I begin with pointing out the Sub Prime mess, the fact they no longer offer these loans, etc, etc.  They state, if I can stick out a year (at the new rate) they could try to qualify me again.  WHAT?  I go on to tell them I probably won’t be able to do this, I will be in the same situation I was in this past January, but this time by the end of August.  No they cannot help.

Ok, so I proceed to call around all these mortgage companies that are offering “ways out of the Sub Prime APR Mortgages”. I did the Lending Tree thing, had five people call me, but none could help me because of the late back in January, I called TSF again, same thing, and then laid into them for selling this mortgage initially.  I tried Countrywide, Quicken Loans, and the such, still no one could help.  And what pissed me off most, was everyone was impressed that I had been on time, even with the rate hike, and my credit was still pretty good, but that late period they could not get around . . . At this point it is now the end of July, and I had paid 2 months of this mortgage and still kept up my bills as I had a little socked away in savings, but I am at a point where I begin paying credit cards, school loans, car loan late, so I can try and keep up with the mortgage, and as August rolled around, I ran out of Savings.

So, I then hear about this new program through MassHousing.  This programs was designed to help families just like me, get them into long term low fixed rates for those facing an adjustment, or who have already adjusted.  This was state program used to help people with similar issues to us,  get the loans to help them get out of the problems.  Even better, you had to have a score of 560 or higher, which at the time, I was way above.  I had even more luck on my side.  You see, you had to see a qualified housing counselor first before you could access the applications.  Well, I happen to work with one; Carol Hernandez.

Carol was on vacation and it took me another two weeks to meet with her.  At this point it is end of August, all my bills are behind, but my mortage is not (it will be next month).  Carol who I get along with extremely well, immediately processes me through MassHousing application (I am her first) and is excited as I should easily qualify for it.  She then sends me to a MassHousing Vendor, St. Anne’s Credit Union.

First let say St. Anne’s was awesome. I met right away with the Vice President of Home Lending.  She was nice, and she felt, we met the MassHousing program with no problem. I was also her first and she processed it right away.  She even told me, that my credit at the time was 650, the wife 610, and we would have qualified directly through St. Anne’s if not for the late at the beginning of the year.  This actually surprised me, I was always under the assumption you need absolute perfect credit to get mortgage from a bank.  She was very hopeful and thought that MassHousing would have the solution.  She even wrote a nice letter explaining our financial hardship earlier in the year to them.

A couple days passed, and she called with some bad news.  MassHousing denied us.  Both the woman from St. Anne’s, and Carol called to find out why.  The late back in January was their reason.  When they mentioned to MassHousing that was caused by a financial hardship, they came back and stated we had a late in December of 2000.  What, a 7 year old late payment?  This is the only lender who went back that far; a lender who was designed to help people like me.  I wasn’t the only one this was happening to either who went though MassHousing.  You should of seen the e-mails I fired off to Duval Patrick, Barney Frank, and Mark Montigny.  I need to  give each of these politicians credit, their offices called me within days, but there was not much they could that I already had not done, and they inundated with these types of calls.  But they did get to hear about how unhappy I was with MassHousing.

So needless to say, Carol was floored and lodged a complaint to MassHousing too.  It was now mid October, and last month’s mortage which was paid late, led to October’s being even more late.  I was still trying to keep up with utilities, and probably would not have the money to pay October until mid November.

Carol then referred me to an amazing woman.  Susana Neves from Bank of America.  It took Susana a while, and bit of creativity, but she found a fixed rate mortgage that not only was back in a decent rate, but we qualified for.  She did everything she humanly could to assist us, and went above and beyond.  Again it took some creativity, but she knew the ins and outs of the game.

Ok, cool, we qualify, and get all set up, Susanna sets a closing date for the late part of December.  At this point I haven’t paid the mortgage for November and December and had just paid the October mortgage.  The day of the closing, I get a call from Susana.  Option One just sent in their closing costs, and it is $5000 more dollars than what they anticipated them needing to close, and $5k more that what I qualified for; I needed that money to close.  Option One’d closing fees totalled almost $12,000, by comparison Back of American was a shade under $4k.  We were all floored, Susana, Carol, myself, the Lawyer handling the closing.  It was the week after Xmas, and there was no food in cupboard.

The Lawyer handling the closing was Atty. Brian Glover.  He was also awesome.  He helped us fight Option One, he himself a sort of a Option One Victim.

I called Option One that day to see if they could lower fees to close.  This started my war with India.  Basically they refused to negotiate the fees, even willing to go so far as foreclosing on a $245,000 mortgage over $5000.  I was transferred all over India, as I asked to speak to supervisor after supervisor and got the same answer (insert Indian accent) “No Sir, you signed the contract those are the fees, we do not change fees, but if you would pay us to catch up the mortgage, we could apply you to a program we have and adjust the terms to something more affordable, no credit check, based on financial need.”  WTF.  WHY DID THEY NOT OFFER ME THIS BACK IN MAY?!?!?!?!  But it was going to cost me $6000 to catch the mortgage back up that way, I didn’t want to deal with India anymore so I begged around for money.

Well, it took me a few weeks to scrabble up the money, and luckily my tax return in going humongous cause of this stupid mortgage interst ($16K alone in mortgage interest), so I will pay back those that assisted, but I wanted to use it to catch up the rest of my bills, hopefull Dubya’s $1800 comes soon. 

So, now it is last week, I am almost 3 months behind, I have the money, I call Susanna and Brian, he gets another payout statement from Option One. Boom! another surprise.  Option One sends a payoff dated to the end of February, charging $60 a day to keep it open until then.  This basically means the closing is going to cost another $1000 more than it should.  Brian asks me to call Option yet again to see if the will write another one dated to next week, basically saving me $1100.

Ok, this should be no problem, so once again, I called India.  The refused to issue another, they don’t do that, it is against policy.  I loose it.  I start swearing at the poor Indian guy.  I really went off.  When finally he could get word in edge wise, he did tell me, they would refund any extra beyond the official date of closing.  Ok cool, could I get that in writing?  No of course not, so I let him have it again and hung up on him in mid-sentence.  I must apologize to my Indian internet friends.

Well, we finally closed today.  I am free man, I am back to a mortgage that I can afford, back to square one saving money.  All my credit cards are defaulted, but only owe like $1200.  My car payment is a month behind, I just paid the cable bill, and I am going to start on the utilities next week (thank GOD for the moritorium).

I also found out through some friends who have an Option One mortgage, and Carol, Option One is now foreclosing on properties 45 days behind, Financial troubles for Option One?

So, first, I need to thank a few people, specifically my mother and father, and my wife’s aunt who helped out immensely in this process (they know what they did, and I thank them for it).  I need to thank Carol, Susana, and Brian, they were extremely helpful.

So some advice:

1. Talk to your Mortgage Company, they never once started foreclosure preceedings on me and they could of.   I assume it was that I would always call and keep them informed and try to pay something on it..
2. If you can only pay one thing on time make sure it is ALWAYS your mortgage.
3. Immediately seek professional help, have a advocate on your side if you get into a situation like this.
4. If you are in a house that you can’t afford even if they refinance, work with your mortgage company, some of them will allow you to try and sellv quickly and forgive the the remainder, give back the title, or something to that effect.  It cost banks a TON of money to foreclose, so they will usually work with you to try and prevent this.
5. Never, ever, EVER call anyone who tacks signs to telephone poles saying “Stop Foreclosures, We Buy Houses” or sends you hand written letters.  You will be surprised when you fall a little behind, the signs appear on a pole at the end of your street and you get a few letters in your mail.  99% of these guys are crooks.   If it looks too good to be true, it probably is. They don’t buy your house, what they do is convince you to put them on the mortgage, and then they wait for it to foreclose, and buy the house out from under you at a reduced rate and leave you with the balance.
6. Foreclosure is not the end of the world, and in the whole scheme of life it is just a piece of property, and it is VERY recoverable from, but takes time.  I convinced myself of that just in case it occured.  I would have hated to lose the house, but I would not have let it ruin my life.
7. Some people might convince you bankruptcy is your only option.  I will help with your other debt, it won’t reduce your monthly house payment, it will lock it in, and you won’t be able to refinance for at least 2 years.  It is  option if you are at a payment that you can afford, have huge debt, and don’t plan on moving or selling for a while.

For help, if you live in SouthEastern MA.

1. First and foremost contact Carol Hernandez at Catholic Social Services.  Carol rocks, she also speaks Spanish and some Portuguese.  She works in the Fall River Office, her number is 508-674-4681.  You can tell her I referred you, use my real name.  You don’t have to behind.
2. If you want an excellent mortgage resource contact Susana at Bank of America directly.  Her direct line is 1 – 800 – 370 – 0126.  Susana is amazing, worked for a long time in collections, tax services, and legal services and knows the ins and outs of everything mortgage related from foreclosures to capital gains tax.  She gave 1000% to me and my family and deserves a hug.  I am not sure if she is this region only.
3. If you don’t live in the area, but live in Mass, use these steps from MassHousing.
4. If you are not from Mass, look around, or feel free to contact me, I might be able to refer to the right sources.

I am glad to finally get that off my chest, and now start commenting to the Sub Prime issues this country is facing.  Feel free to refer anyone to the blog post who might be having issues, or having people contact me.

Malach’s Quote of the Day

There is always hope. – Aragorn.

I am Malach and this post made me tired.