The Home Series: Losing Your Home? Saving Your Home? Buying A Home?
This past week I had the opportunity to interview three working women in Orange County, California: an Eviction Coordinator from a million dollar REO law firm, a Loan Modification Officer, and a Real Estate Agent. All three ladies work in the housing industry but at very different ends of the business. All three aspects are fascinating in their own regard. The Eviction Coordinator deals with foreclosures, the Loan Modification Officer helps to keep homebuyers in their home, and the Agent, well, she sells houses.
For confidentiality purposes, I changed the name of the Eviction Coordinator to Martha, as she can be a negative target for homeowners who have just lost their home and I didn’t want that to happen. The Loan Modification Officer also requested that her name and company remain anonymous. The Agent, however, requested that her name and contact information be presented. This series is written in three parts, starting with the Eviction Coordinator’s story, below.
Part 1 of 3: Losing Your Home?
Lana: Martha, please tell me what your main job responsibility is at the law firm.
Martha: My main responsibility is that I take phone calls from the Sheriff’s Office to schedule the lockout date on a property. In order to complete the eviction process I notify the clients, the bank, and the broker (agent) of the lockout date and time to meet the sheriff. The sooner we can engage the lockout process the sooner the agent can get the property back on the market and make money again.
Lana: How long have you been at your job?
Martha: For over two years now.
Lana: Have you seen any changes in the foreclosure business?
Martha: Certainly! When I started at the law firm over two years ago we were processing approximately 25 lockouts a month. Since then they have increased and currently we are processing at least 450 lockouts a month. These lockouts are all over California.
Lana: Wow! That’s a lot of people—and families—losing their homes, and it sounds like the numbers are growing. Are we seeing a bottom yet?
Martha: Unfortunately, the market hasn’t bottomed yet. What we are seeing in the law firm is that the moratorium set in place by President Obama that more or less ordered the banks to put a three-month hold on lockouts is expiring. President Obama wanted to give homeowners breathing room to get back on their financial feet. During this moratorium process what’s been happening is that foreclosures have been gestating and now they are waiting to burst open. Our lawyers agree that we are going to get a tidal wave of foreclosures starting June of this year (2009).
Lana: What is one of the mistakes people make in order to salvage their home?
Martha: People think they can just file bankruptcy and their home foreclosure problem will go away. The reality is that a bankruptcy will only buy time, likely 45 days. This delay is called a “relief from stay.” This relief only prolongs the inevitable and that is a home eviction. Also, a bankruptcy ruins a person’s credit. Home owners need to be extremely careful who they talk to because some attorneys will lie telling them that they will stop their home foreclosure but they can’t, all they can do is delay it. The delay doesn’t solve much if homeowners can’t come up with the money to really solve their problem.
Lana: What are some unfortunate stories you have heard?
Martha: I think that one of the most common stories is that people whose homes have been foreclosed on are operating in denial. At a lockout a locksmith is present to re-key the property. What happens is that a lot of people break back into their homes because they have nowhere to go and because they have not moved anything. They get arrested for trespassing. If people have belongings in the house they have about 18 days to reclaim personal property via appointment with the assigned broker to the property otherwise the items go to an auction.
Then there are the people who strip the house down, taking everything from faucets to toilets to garage doors to air conditioning condensers. I think they try to sell these items to make some money.
There are also the folks who leave their pets behind because they can’t bring them on the road with them nor can they afford them anymore. When this happens the agent becomes responsible for caring for the animal(s) for 18 days before animal control services can pick it up.
Other cases involves families where the husband just leaves and apparently he doesn’t inform the wife that he hasn’t paid the mortgage for months and so she is shocked to learn that suddenly she needs to pack up herself and her kids and find a new place to live.
And still other cases involve the drastic jump in the mortgage. One guy, for example, explained to me that when he initially got his “teaser” loan he was paying $2050 a month and then after about two years his mortgage skyrocketed to $4050 a month which was impossible for him to pay. At that point he was told he could not refinance because his home value dropped. He also lost his job.
Lana: Do these same people ask you for advice?
Martha: All the time. They ask me where they go . . . what they can do. The problem is that I can’t offer legal advice. First of all, I am not a lawyer. Secondly, since our law firm is not hired by the people who have been locked out of their homes we don’t represent them and therefore cannot advise them. Now, not everyone who I speak to on the phone is nice to me. People who are getting locked out are very angry and they seem to use me as their point of verbal and emotional explosion. They curse and swear at me, blaming me for them not paying their own home mortgage. But again this goes back to denial.
Lana: So where do these people go and what happens to them?
Martha: I don’t know where they go and I don’t know what happens to them. It’s a mystery to me. They say they have nowhere to go, no one to turn to. There should be an organization or business out there that helps these people. That’s certainly a good niche for an entrepreneur.
Lana: In your own words, what do you think caused this housing mess?
Martha: The housing market began to suffer for a number of reasons. One of the biggest reasons is GREED—on all ends of the spectrum. Let me explain. When people bought their new home a few years ago the banks that lent them the money didn’t care too much about checking into the income these buyers generated so people had more of an opportunity to fabricate their income. The banks were willing to sell loans to just about anybody who would be willing to sign a piece of paper.
At the same time, these same people were encouraged by their real estate agents to sign right there on the spot at the low rate and then in a few years they could refinance and that their homes would be worth a lot more because home values were increasing. Given the banks leverage and the broker’s encouragement the buyer’s motivation for getting in on a property and making a profit increased. So all three players are to blame—if we are going to point fingers. The reality is that the economy has fallen and mortgages are valued at less then what their initial value was appraised at. These same buyers cannot get refinancing because of the market conditions: their property is valued at less than the original loan they took out. Where is the equity is that? There is none.
Lana: What is your advice for new homebuyers?
Martha: After witnessing all of this housing misfortune, I suggest that new homebuyers have an ethical attorney scrutinize their loan documents. People cannot believe everything their real estate agent has to say in regards to what their potential property will be worth in the future, as we have seen. Homebuyers need to especially take acute responsibility for their purchase. They need to buy well within their budget and be sure they can afford their payments. They need to have a secure payment plan for the course of their mortgage and know what their plan B and plan C is, just in case.
I’d also like to mention that for people who do have money to buy a house now, wait for the buyer’s market to explode in about six months. There will be more supply than demand. On the other hand, interest rates are low right now and they might rise in six months. Whatever homebuyers decide, they are liable for their own choices and they need to really comprehend that.
Lana: Thanks Martha. I appreciate your time and inside information.
Martha: You’re welcome. I hope it sheds some light for people and gives them confidence to take control of their finances with respect to home ownership.
…For the upcoming second part to this three part series I present an interview I conducted with a Loan Modification Officer. She talks about saving your home.
Edited by: Lana Marconi. For more information on Dr. Lana Marconi’s private therapy practice in the Orange County, California area, and to download her self-help books visit: www.drlana.com.
Photo credit: stock.xchng.