In these troubled times, I am often approached by people who are having problems making their mortgage payments – usually through no fault of their own. They are just victims of the turbulent economy that many of us have fallen prey to.
No so much by choice, but by demand, I have done a lot of digging into this field these past few years. I have learned more about what goes on behind the curtain in a distressed sale then I ever wanted to. It is not an easy body of knowledge to wrap your hands around. A lot of that has to do with the sheer amount of chicanery and charlatans ready, willing and able to prey on the desperation of home owners in trouble.
The other issue is that the rules of the game are constantly changing. And all of us are learning as we go. It has been 80 years since our economy has experienced this kind of turmoil (but we are NOT in a depression – this is just a recession. And if you believe that, then I have some ocean front property…)
In the last Great Depression, homeownership was not nearly as widespread as it is today. Prior to FDR’s sweeping changes in the way people bought and financed homes, homeownership was a privilege granted only to the wealthy. Mortgages as we know them today did not exist. When you bought a home, you typically put half down and financed the balance over 10-15 years. Homeownership was the purview of the wealthy – not something that the Average Working Joe ever aspired to.
Through FDR’s creation of Fannie Mae – and then later Freddie Mac and Ginnie Mae, banks now had a place where they could sell their loans, freeing up capital so they could make more loans. Prior to the formation of these quasi-public institutions, banks did not have a secondary market to sell to – and so kept those loans in their own portfolio.
So even though today’s tough times share many similarities with the last Great Depression, today’s set of circumstances are totally unique from that historical situation. However, there can be no question that today’s economic situation requires bold action probably on a scale similar to what FDR did. Whether our leaders are capable of such bold action seems extremely doubtful.
In the meantime, if you are a homeowner faced with foreclosure, what should you do – and what CAN you do?
- The very worst thing you can do is bury your head in the sand and hope it all goes away. While facing the issue squarely in the face may be one of the hardest things you have ever done, it is the only way you will ever be able to get out from under.
- In spite of all the PR to the contrary, the bank is NOT your friend. Calling the bank to ask for help is like opening the gates and inviting the barbarians into the compound. Think of it this way: when you are served with the papers of a lawsuit, is that the action of a friend? In a foreclosure, the bank is suing you. They are, most decidedly, NOT your friend!
- It is clear that you will need professional help to get through this. And this may be the toughest part of all – because there are way more charlatans out there then competent professionals. And even honest, well-intentioned ‘professionals’ may not be competent to properly advise you.
So what can you do to protect yourself?
First Step: DO NOT SIGN ANY PAPERS YOU DO NOT THOROUGHLY UNDERSTAND AND DO NOT GIVE ANYONE ANY MONEY – FOR ANYTHING!
Second Step: Go to http://HUD.gov and get the name of an approved HUD counselor. This service is free – or available at a very nominal expense. So go ahead and make an appointment to meet with a housing counselor. They will tell you what documents you need to bring to the appointment.
Within the city of Chicago, you can dial 311 and ask to speak with a housing counselor. You don’t even need an appointment. If you have all your documents on hand, they will interview you on the spot right over the phone!
Third Step: Once you have reviewed all your options with the HUD counselor and you have determined a strategic plan to follow, give me a call. I will put you in touch with reputable and competent professionals who will take you by the hand and walk you through the process.
Do not succumb to the negative feelings financial problems may cause you. If ever there was a time to pull yourself together and look reality squarely in the eye, this is it. Do not make things out worse then they are – nor pretend that everything will be fine if you just ignore them. Be grateful for the good things you DO have. Learn to have a grateful and humble heart. Forget about unimportant things that only serve to upset you. Learn to focus on and appreciate the really important things in your life – the love of family and friends who are there and willing to help. Do not suffer alone in silence – ask for help. Friends and family can be invaluable aids to get you through this tough time. Remember, no person is an island. There is not a person alive who hasn’t needed a helping hand at one time or another. Swallow your pride and ask for the help that you need.
Step by step, you will eventually emerge from the nightmare of losing your home – and, if you choose, you will be stronger and wiser for the experience.
(For additional details on some of the various legal options available to you, click here now.)
