Friday, July 31, 2009

Looking Out My Backdoor

Darker than usual. That was the best way to describe the flowers I watered early this morning. It was earlier than usual when I turned on the hose and adjusted the nozzle to the “shower” setting. Sipping my coffee, I watched the hues of the eastern horizon slowly scroll through the color wheel from blue black to ultramarine and finally to streaks of cadmium orange and yellow just before the Venetian red and gold sun crested over the rooftops of the neighborhood across the street. Coffee tastes best in my backyard bistro.

The four empty lots next to ours lay freshly mowed and new footings stood tall on the fourth lot over. It won’t be long before the framers show up and erect the skeleton of a new home. By Christmas, there will be another newly completed home on our street.

It was light enough now to clearly see where to step so I grab the doggie shovel and start picking up after the dogs. My dogs are prolific. I’m glad the lot to the north is still empty. A quick flip of the shovel over the fence top and….

I was amazed at just how much our neighborhood had grown in the past two years. Immediately following our move in June 2007, the housing bubble popped and builders everywhere slammed on the brakes.

During the interim completed housing inventory has been sold and new homes are beginning to show up in neighborhoods everywhere. The number of new homes is more modest and less speculative than in years past. But at least there are clear signs that our local housing market is on the mend.

We were the fourth family to move into our subdivision and just the other evening we had a “block party” where 75 adults and children showed up. I used to be able to see the houses three streets over. Now when I look that direction, I see the front door of Dan and Aly’s home.

For many months our subdivision was quiet and our streets were clean. Now it’s not unusual for the streets to be caked with dried mud from the tires of delivery tucks and workers. When I come home for lunch radios blast mariachi music and quite often I’m forced to take an alternate street because ours is blocked by flatbeds dropping off piles of lumber and stacks of shingles.

It’s a good feeling to drive into the place where we have invested thousands of dollars and see that other families also believe that this will be a good place to settle in and raise a family. There’s landscaping in most of the yards; spots of color, young trees still staked to the ground, pots of plants and sprinkler systems to keep it all watered.

Every evening now there are couples who walk their dogs and children who ride their bikes. When we first started walking the streets of Silverhawk, it was a challenge just keeping the dogs out of the empty lots and sticker patches. Empty lots have now been filled with houses, and stickers have been replaced by thick stretches of fescue and Bermuda. We no longer pick stickers out of paws, but we do carry little blue bags to pick up the canine left-behinds.

The general feeling is that things are improving. Slowly but surely new homes are being started. There’s more traffic flowing through the model homes. They sit on our street and some weekends it’s tough to drive between the cars parked on both sides of the street. We see young couples with kids, older couples with no kids taking the tour. SUV’s and sub-compacts, Ford, Mazda, SAAB, Mercedes, sit in the driveways of homes already owned.

Similar scenes are being relived in new subdivisions throughout our area. The builders I talk with are encouraged and excited that they can once again do what they do best, build. And I’m glad too. I hope they keep on building and that homes continue to sell. I just hope they don’t start a new home on the lot to my north anytime soon. Otherwise, I’ll have no place to toss my doggie droppings.

Monday, July 27, 2009

Settling with Your Lender

A few weeks ago she opened an envelope and discovered that July 23rd was the date set when her home would be among many others on the Sherriff’s Sale docket. Widowed many years ago she purchased the home two years before this year’s birthday; her eighty-third. She put all she had into the down payment for the home knowing, in all likelihood, it would be the only thing of substance she would leave to her children.

The modest home sits in a neighborhood that is showing the beginning signs of deterioration. Her home is in fine shape, but some of those around her are in desperate need of paint and new roofs. One down the street has been boarded up and bears a “CONDEMNED” sign. Two years ago she bought the house for $145,000 and that’s still about what it’s worth.

Where will she go? For financial reasons, her daughter lives with her and her son lives in another city with a family of his own. No assets, fixed income and facing foreclosure, her options are in short supply.

She is learning first hand that lenders are eager to lend money for a home purchase and even happier to take a customer’s payments. But a customer quickly experiences the lender’s Mr. Hyde side when they miss a payment or two.

One of the busiest departments in any mortgage servicing company is Loss Mitigation; especially since many homes were purchased with adjustable rate mortgages and those rates have started moving upward. The department of Loss Mitigation is responsible to ease the company’s losses by collecting past due debts or negotiating various forms of repayment from borrowers.

The people who work in this department are faced with a daunting task made more difficult by delinquent borrowers who fabricate more stories than Aesop. Yet even when dealing with fables, they are still charged with minimizing the company’s losses. And they are ready to do so but there is a protocol that can help any borrower who finds themselves talking with the Loss Mitigation department.

First, get to the right department. The generic customer service representative can only help you find the number to the Loss Mitigation department. Run of the mill customer service is not equipped to negotiate these matters.

Second, make the choice to respond not react. It’s nerve wracking when dealing with anyone to whom a delinquent debt is owed and when it’s your home, the emotions can run especially high. So make the purposeful choice to give calm, accurate and direct answers. Try and remember that everyone involved is interested in minimizing their losses.

Third, understand that they hold the note, so they make the rules. They will require a written letter called a “hardship letter” explaining the circumstances beyond the borrower’s control that led them to the place where they can no longer afford the monthly payment. Just a reminder; evidence will be required for every claim made in the letter, so write a convincing letter, but be able to back it up.

Fourth, be ready to provide financial records. Most likely they will request many of the same documents provided when the loan was closed. Records like two years taxes (all schedules), most recent pay stubs showing year-to-date income, bank statements, and any investment statements, all give the lender a clear picture of your situation.

Fifth, if a settlement is reached or a note is modified, there could still be both credit and tax consequences. Most likely any settlement with your lender will report negatively on your credit report. But hey, over time credit repairs and the house is saved. Some settlements or loan modifications can mean tax consequences so be sure to consult a tax advisor for a more complete understanding of these ramifications.

I’m still negotiating to save the widow’s home and I don’t know the final outcome. But one day at a time we work together to provide the documentation the lender representative requests. Most likely her home will remain on the docket for Sherriff’s Sale, but the amount owed against the property makes it unlikely that it will sell on July 23rd. We’re already planning on continuing the negotiation on the 24th.