All three of our daughters have had their close encounters with the foreclosure fiasco. All of them have been threatened and one of them even got to the point where she had to buy her home back. We did our best to help all of them but with us being in foreclosure ourselves we simply did not have the extra funds to do anything of any significance. What I did do was plead with them to not let their home go into foreclosure.
One of our daughters has a home that, in a normal market, would be worth about $60,000. Her loan on that home is just over $100,000. I even told her to do whatever she could to keep her home. She ended up being successful and is still paying on that over borrowed estate.
There are reasons I told my daughters to keep their home whatever they did. My reasons are realistic though; they have little to do with defaults, rates, loans and so on. I tried to give them what I thought was the most practical argument for hanging onto your home during this time of rampant foreclosure.
5) SHAME: Simple shame. Could you hold your head up at work, at church, with your friends, even within your own family? How do people look at foreclosure? I can tell you from personal experience, they do not find anything positive in foreclosure whatsoever. It doesn’t matter the reasons for being foreclosed upon; you have defaulted and you are the bad guy. I told them to hang onto their home as long as they could simply to avoid the derision and ridicule their peers would cast their way.
4) SECURITY: They need a home. They have one now they are familiar with and they should try to stay in it. The loan is there and they need to try to pay it however they must. Two of the three daughters have children and it would be best for everyone concerned for them to keep their children in the home they were born into.
3) FUTURES: Should they need to trade up at any time in the future or if they would like any other kind of major purchase further down the line, their performance on the home mortgage will be very important. Once a home loan goes bad, it will negatively affect the credit report for at least three years. I know, again, from personal experience that you cannot get another mortgage for at least three years after entering foreclosure. Not in Michigan anyway.
2) INVESTMENT: Don’t lose your investment. Every one of the girls has put a good share of their own funds, sweat and toil into their homes. They will get absolutely nothing for that investment. It doesn’t matter if your home is three quarters paid for; if you cannot manage the final one-quarter you lose everything. I just told the to protect their investment.
1) SELFISH: Don’t give any one of those predators out there the opportunity to capitalize on your hard spent time, money and efforts. There are numbers of agents, brokers, realtors, self-proclaimed investors and others who are just waiting on the sidelines to take advantage of your pain and misfortune. They want to swoop in and buy your home right out from under you. Do not give them the satisfaction of being able to purchase your property at a fraction of the real value.
During my research I must have went to a dozen Internet sites to try to find the rate of foreclosures in certain area. All I could find is how that rate has increased, not what the total rate really is today. What I did run across, in every single search, were separate adds headlined like “Make money on foreclosures”, or “Profit from Foreclosure” and even one that read; “They lost it, you can find it.”
There is more attention paid to how someone can make money off my misfortune in losing my home than there is in how we can help the poor sap who just lost his home, through no fault of his own. If we think the government should be ashamed of how they handled the Katrina nightmare, this one should leave them red-faced forever. This is as bad as the insurance companies telling Katrina victims “You didn’t have flood insurance.”
If at all possible, keep your home; do not let foreclosure line the bloodsucker’s pockets with your gold.