“I Can Not Change The Laws Of Physics Captain!”…

… this of course is said with a strong Scottish ascent.

Now, if you’re an original Star Trek fan, this needs no explanation. For those that aren’t, here’s a short one: Captain Kirk would frequently get his ship and/or crew in such situations that he’d need his chief engineer (Mr. Scott – “Scotty”) to bail him out. He’d have to do things like re-start the engines in 5 minutes (a normal 60 minute process) or get the Enterprise to run at warp 12 (normal top speed is warp 8). More than one time, after this request, Scotty would reply “I Can Not Change The Laws Of Physics Captain!”

What does this have to do with Michigan foreclosures? Here’s a story…

Yesterday I talked to a gal in Kalamazoo convinced she would find an answer to her problem – she just needed to talk to enough people. Now I’m all for that. Every person she talks to will have a different twist on the situation, and offer different suggestions. I certainly don’t know everything! The problem is, she wanted it all. She wanted to keep her house, her cars, all of the stuff she bought on credit cards, but make most of the debt go away.

Let’s just focus on the house. She had a “normal” (before she got behind) house payment of $1500 a month. She got behind because of health issues and a job loss (normal reasons that cause this – which is why so many people are losing their houses to foreclosure in Michigan. She wanted to keep her house, and have a payment of $800 a month. I did the math – she’d have to refinance at a rate of about 1.5% in order to get this done. There’s two problems with this plan.

1) If she had perfect credit today (which she doesn’t since she’s 120 days late on her mortgage), the best 30 year fixed interest rate loan I’ve seen is a around 6%. But of course because of her credit, no one will finance her – at any interest rate.

2) You can’t get caught up by slowing down. Here’s the analogy: If you’re in a row boat with a small leak (a mortgage payment), as long as you keep bailing the water out (making your normal monthly payment), you’re OK – you won’t sink. If you stop bailing for a period of time (lose your job and can’t pay), and want to not sink, you have to bail faster (start making bigger payments). She wanted a way to plug the hole (get rid of her mortgage payment but keep the house), but of course, you can’t change the laws of physics.

I felt bad when I hung up – I tried to help and explain there were other options besides the eventual Michigan foreclosure that was bound to happen. But, she was just so focused on the belief that someone would have an answer, there was nothing I could do. She’s going to have her head in the sand for 4 more weeks until the foreclosure sale at which point it could be too late for me to help.

The moral to the story? Realize that no one, not even Scotty, can change the laws of physics (or finances)!

Emily

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