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A letter to our state reps

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Anonymous
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A letter to our state reps

Sent this letter to both of our state reps today... 

 

I would like to express my opinion on the current mortgage crisis and the bill that would allow bankruptcy judges to reaffirm mortgage loans to allow people to keep their homes. 

 

My husband and I filed for bankruptcy in 2006.  In that bankruptcy was our home that we sold to someone else on land contract because we moved 2 hours away.  The people who bought the home made two payments and that was it for a year.  We drained our savings and all other resources to try to keep this home current, while paying for another rental to live in.  Once we found out we were pregnant we decided we had to let the other house go and plan for our future.  Since that time, we have worked to rebuild ourselves and get back to good again.  We are there.  We have saved up more than $10,000 for a downpayment on a home, we both have great jobs and security.  However, we can't get a home loan because FHA states we have to wait for at least 3 years from either the discharge of our bankruptcy or the final sale date of our foreclosure in order to qualify.  The loan officer told me this would have been a "done deal" if not for the dates. 


So this is why I write.  Our mistakes were honest and we paid for them.  We have worked diligently to get back on our feet.  We now have 2 children and want to buy a home for them to grow up in.  There was no "crisis" when we were going through ours.  There was no urgency to keep people in their homes or help with foreclosures.  Yet, we have proven in the past 2 years that we can responsibly pay our debts, but there is nothing else we can do besides wait.  Why are only the people who are currently in foreclosure being offered help?  What about those of us who also made a mistake, but did so when it wasn't a national crisis?


If congress is so quick to allow changes to be made to existing mortgages in foreclosure, why not also extend some help to those who have proven they can also own a home again?  Why not reduce the three year requirement to match the bankruptcy requirement of two years?  By doing so, you will allow people, who just like all of those facing foreclosure today, own a home and start over again. 

 

Thank you!

Message 1 of 6
5 REPLIES 5
Anonymous
Not applicable

Re: A letter to our state reps

Have you looked into USDA loans? I think they're a bit less strict, although they do limit you to rural qualifying areas.

 

While i sympathize with your plight, why choose lowering it to 2 years? Why not 1 year or even 6 months? The penalty, honest or otherwise, is 3 years. Personally, i don't find that to be a very severe punishment. A lot of people are upset about this because they want to take advantage of the $8,000 tax credit.

 

I won't claim to know a whole lot about bankruptcy but if i'm not mistaken, you take a hit to your credit/reputation and the debt is essentially forgiven? Meaning you don't have to pay back what you owed on the home at time of foreclosure, right? If i have that straight, it seems odd to me that people in that situation are able to bank $10k just two years later when their lender had to eat the loss as well as the city/lender or new owner on back taxes. Situations like that end up imposing insurance and interest rates on the people that have never defaulted equally with those that have. I just don't know what to think about all that but i do know 3 yrs doesn't seem like much of a penalty to me... someone that has rented for close to 15 years and has never owned a home to default on Smiley Happy

 

 

Message 2 of 6
granny031350
Established Contributor

Re: A letter to our state reps

 

 

So to the OP, hang in there.  Your time will come albeit not as soon as you would like.  But it will come.  And when it does, it will be the right time and you will find the perfect house.

 

The advantage you have now is that when your time period is past and you can apply, no one will think twice about you having a foreclosure or a BK on your credit report.  There will be millions in your shoes.  The stigma is gone.

 

 

And to Ladyofnight:  yes it is true that in a Chapter 7, one is relieved of paying back their debts.  Everyone has their own opinion on the right or wrong of it.  However, I was one that used to be quite judgmental of individuals who found themselves in Bk until it happened to me.  I never expected to wind up in that situation.  But sometimes you just have no control, like trying to make 2 mortgage payments because tenants have decided not to.  Making a job change, divorce, illness, death all influence one's finances.  And when you have no control over those events, then sometimes bankruptcy is indeed, a fresh start.  Everyone is entitled to their own opinions of course but a word of caution. As Elizabeth Kubler Ross said "It can happen to thee and to thee, and to thee, but not to me"  I learned the hard way that it can indeed "happen to me"  I could spend the rest of my life with the woulda, shoulda, coulda but I chose to move forward and make the REST of my life the best that it can be.

Message Edited by granny031350 on 03-12-2009 06:50 AM
Message 3 of 6
Anonymous
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Re: A letter to our state reps

I don't think Ladyofnight was trying to say anything personally about the OP.  I think the intent was to say that having walked away from a house and gone through a BK, 3 years of "penance" time before buying another property is fair and completely understandable. 

 

As far as all the new foreclosure prevention and BK loan modification stuff, people have to realize that these are being done now not to help people who have gotten in trouble.  This is being done as emergency actions to keep the entire housing market from collapsing.  No one really wants to reward investors, flippers, or people who should have never gotten a house in the first place.  These actions are necessary to prevent every house from loosing another 30% of it value as the housing market collapses.  The same with all the loan modifications the bank are doing and such.  Years ago these were not options except in extremely dire cases.  Now they are becoming commonplace with banks calling people even before they fall behind in some areas to offer help.

 

As much as it is frustrating, you did loose you house in what were GOOD economic times when the options for employment and financing were plentiful.  It is a tough pill to swallow, but today's situation is alot different and althoug I whole heartedly disagree with the BK/loan mod part,  I understanf why they are doing it.

 

Personally, I think allowing mortgages to be modded by judges is going to scare investors away from the mortgae business, raise rates, and make people who don't really need to do a BK do so to get their mortgage under control.

 

I also think that in all but very clearly defined cases, it should be at least 3 years post BK and 3 years post foreclosure before one can buy again at all and.  That is just me.

Message 4 of 6
Anonymous
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Re: A letter to our state reps

Thank you, mickie, that's exactly what i was saying. Three years seems more than fair. I also realize it could happen to anyone but i also consider myself a bit old school in thought about debt. Many of these past situations are not out of one's control. Death can be countered with life insurance. A bad tenant can be countered with not renting in the first place. Sell the property or stay in it until you can sell it. They're certainly not ideal situations, nobody likes paying high life insurance policies or being prevented from moving for whatever reason. But choosing to rent or go without adequate insurance is a risk a person takes. When we take risks we have to be willing to suffer the consequences... and unfortunately in this case, the consequences are a 3 yr wait to buy again. Not a bad deal when it comes down to it if you ask me. If you look through history, once upon a time all these people would've have ended up in debtor's prison. Now they have the opportunity to walk away and just deal with a rep/credit hit for 3 years. I apologize if i offended you, grannie, i was just trying to give another perspective.

Message 5 of 6
Anonymous
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Re: A letter to our state reps

The current "economic crisis" has been going on longer in some areas than others. Look at Detroit, or the Cleveland area where we live. I feel the same way as the OP. I'm glad to see that something is being done to help people now, but we were just as "innocent" in our own crisis a bit longer ago. Over a five year period my husband lost two jobs because his employer (manufacturing companies) went into bankruptcy. After being out of work for awhile he became a contract supervisor for GM. Less pay, no benefits but at least it was work. Then they cut back and fired all their contract workers. We used up all our retirement funds to try to meet our mortgage but eventually hit bottom. With a foreclosure in the works, we filed BK in Oct '05.

 

We included the house and moved shortly after. We didn't get discharged until Mar '07 - the trustees office screwed up (they thought it had been filed) and we didn't know any better. We found out after someone requested a copy of the discharge and we started asking questions about it... so they filed it then. 

 

The bank didn't complete the foreclosure until Nov '07. This is the problem that is going to come back and bite a lot of butts. We had control over when we filed BK. In a normal case the discharge comes in a few months. We had NO control over when the foreclosure was completed. Three years from the property sale will be more than five years from when we filed BK. My husband has been working a steady job for the past 2½ years. We've reestablished credit and want to buy another house before our children move on to college. 

 

Fortunately most of our school district qualifies for USDA and it looks like that is going to work out for us. If we were in any surrounding area we'd be out of luck.

Message 6 of 6
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