Stop Michigan Foreclosure

…And So It Began

Back in May of 2008, NPR aired an episode of This American Life entitled “The Giant Pool of Money,” which aimed to inform listeners of how the housing crisis started. Now, I’m not actually going to get into what the “giant pool of money” is, but you can listen to the entire episode here.

In the beginning of the episode, one of the show’s hosts brings up a situation involving a man named Clarence. Clarence had been working 3 part time jobs and was pulling in about $45,000 a year when he came across some rough times and needed some cash. Lucky for him, his lender let him borrow $540,000 against his house – and they did this without even verifying his income! Let’s put this into perspective. Spread out over 30 years, and at 6% interest (a near best case scenario) Clarence would be making monthly payments of around $3,250 a month. Now, let’s look at his income. Clarence makes $45,000 a year. Even if just 10% of Clarence’s paycheck went to taxes, he would only end up with $3,375 a month take home pay. That would leave him with $125 a month for EVERYTHING else – food, clothes, utilities, medical bills – everything. Obviously, Clarence was doomed to default on his loan from the very start.

The question then is this: why would a lender offer to loan an individual this much money? Well, I’m going to briefly explain that right now.

A few years ago, mortgage backed securities became the hot new investment. In short, this is how it works: First, a mortgage broker gives a person or persons a loan, then turns around and sells it to a small mortgage company, who then sells it to an investment firm. These mortgages are then chopped up, bundled together, broken down into shares, and sold to investors as mortgage backed securities. These investments were considered low risk, and were generating a lot of profit for the purchasers, which of course made them very desirable. In fact, they started to become so hot that pretty soon brokers and investment firms were running out of mortgages to sell! That’s when the lending restrictions started to loosen up, and continued to loosen until all you had to do state your income and assets and the bank would take your word on it and hand over a shiny new loan. Verification? Not necessary!

And so it went for a few years – people were being given money that they wouldn’t be able to pay back. During this time house prices kept increasing and many people stayed afloat by taking out home equity loans on their homes. Then… the bubble burst.

I’ll continue on in my next blog about the bursting bubble, but this is really where we come in. Many of you have been the victim of predatory lending, including being talked into borrowing more than you needed or taking on adjustable rate mortgages (ARM) without knowing the ramifications of either. Chances are, you’ve also been affected by the extreme decrease in home values. On top of those, you may have additional burdens that are forcing you to default on your mortgage (loss of a job, divorce, forced to relocation, disability, etc).

Call us – we can help. We will never ask you for any money, never ask you to make any repairs, we will keep all of your information confidential, and we will work harder than anyone else to permanently solve your Michigan foreclosure.

Holly

Today I went on a search for some fodder to inspire a new blog, and what I found was, well, a blog. “Love in the Time of Foreclosure” is a blog written by a California couple going through a foreclosure. One would think that something based around such a somber situation would be sort of dark and depressing, but it isn’t!

The hardship that they are facing is that Steph is a playwright who hasn’t had any income in five years and Bob, the sole breadwinner, lost his job. They have since been working temp and contract positions, but still do not pull in enough money to pay their mortgage. Their house, which they sunk a lot of money into, is not worth the amount they owe (very common nowadays, especially in Michigan) so selling is out of the question for them.

The great thing about this couple is that they are trying really hard to save themselves from having their house foreclosed on and are open to possibilities. They set up meetings with their mortgage company, inquire about all of the loan modification programs they find out about, and eventually negotiate a short sale. (Though the foreclosure/short sale is behind them, they are still blogging.)

It’s really too bad that they don’t live in Michigan because we could have taken a lot of stress out of their lives by doing the short sale for them. The good news is that if you live in Michigan, we may be able to help you. We keep it pretty easy, too – there is absolutely no fee of any kind and we never ask you to make improvements to your house. Give us a call and you’ll see!

Holly

The other night I sat down on my couch, tuned on my T.V. and took in a newish episode of the Simpsons. Now, I don’t do this very often because what used to be my favorite show jumped the cartoon shark many seasons ago, but I’m really glad I did.

It started off with the Simpson’s throwing an elaborate Mardi Gras party and Homer being asked how he paid for it. He responded that he used his equity line, saying that he got to use the money, and the house got stuck with the bill. Oh, Homer, you clueless sap! It cuts to the next scene as Homer and Marge are sitting down with their mortgage officer (at Countryfine – the Mortgage and Lemonade Company.) He’s calculating interest at astronomical rates (37%? compounded every minute) and there’s a “not understanding the contract” fee.

This part is meant to be funny, but for a number of Michigan families this is reality! Many people who took out adjustable rate mortgages and equity loans (or balloon notes, as is the case with the Simpson family) didn’t have someone to explain to them what they were really getting into. Next thing you know the Simpson’s house is getting foreclosed on, and the Simpson family watches as Ned Flanders buys their house at the auction for $101,000 (quite a steal for Springfield properties, even in this market).

It really made me think about how the housing crisis is getting so bad that even the Simpsons are losing their house! If only we worked in the greater Springfield area (who knows, maybe they live in Springfield, Michigan?) we could have negotiated a short sale for them. Instead, Ned Flanders ended up renting the house back to them and hilarity ensued, but of course this is as unrealistic as the episode where Homer is chosen to be an astronaut. Anyone else craving a squishee? 

Don’t let this happen to you – call us now!
Holly

Hi Everyone! My name is Holly and I just joined the Great Lakes Home Solutions team a little over a week ago. Prior to my time here I worked at a bank for two years and have seen first hand how many people in Michigan are hitting a rough patch right now.

All people are different and therefore their hardships are different as well. Some people are struggling with adjustable rate mortgages – their payments started out reasonable but have increased hundreds of dollars. They might keep up for a few months but soon find that they can no longer make these oppressive payments. Others are having problems stemming from our economic climate. Many people have been laid off, lost jobs, or taken an income cut that they could not have foreseen when they took on their mortgages.

Though the banks and mortgage companies are offering loan modifications, they can be almost impossible to get to get and are often only a temporary solution. While working at the bank I couldn’t help many people with their situations unless they could pay the back mortgage payments they owed, which was almost always unrealistic. Fortunately, now I am on the other side and working with a great team that can help people with a permanent solution to their problems!

I look forward to helping you.

Holly