• Interrupted Blogs

Foreclosure, the 2020 Pandemic and Me: Survival 101

Updated: Nov 8, 2021

I’m a 43-year-old homeowner whose faced foreclosure three times between 2019 and 2020. I make over forty thousand dollars a year at my current place of employment. I’m a student, blogger, and freelance journalist so the question lingers, how did we get here?

Year 2008

I purchased my home at the age of thirty, while still young, focused, and responsible. I made less in taxable income than I do now, punching in the clock at thirteen dollars and fifty cents an hour. I’m somewhat astounded as I look back at how everything fell into a place.

Purchasing a home was on my “you will complete 5 goals by the age of thirty” list. I called it my “5 by 30,” that I marked off happily in 2008.

When I found my 4-bedroom home, a foreclosure property, it wasn’t my dream house that I envisioned but it was my startup home, and just enough to fit my budget of raising four young children. I had one credit card, three-hundred and fifty dollars’ worth of SNAP/food stamps (Supplemental Nutrition Assistance Program), a two hundred and fifty dollar car note for one vehicle; and more importantly, I had cash in the bank.

I had no idea that I was buying a house in a fickle market—Wall Street run amuck, mortgagers were selling houses to just about anyone even if they couldn’t afford the properties (including myself, maybe), creating an inflation and a volatile situation that eventually collapsed. I’d be remiss if I didn’t tell the truth, that I lived comfortably during that timeframe of making less per hour in an antiquated evolution. I had simple wants and needs unquestionably before the heaving of my social media presence.

“The collapse of the housing market — fueled by low interest rates, easy credit, insufficient regulation, and toxic subprime mortgages — led to the economic crisis”

(Quote from Business Insider)

Year 2011

First Mistake:

I was on my second car, a 2007 Chrysler Pacifica, and a three hundred and thirty three dollar car payment. I didn’t need the car. I wanted it because I knew that I had good credit and could get it. The payment jumped eighty three dollars. It was still affordable.

The plot thickens.

I began getting behind on my mortgage. As the breadwinner who seemingly had it all together, I was, I am, terrible about finances.

By the end of 2012, I was applying for a loan modification, and got approved. I never heard of such a thing before, modifying the terms of a mortgage loan, but it seemed like a legitimate “easy out of debt” clause that the bank put into place for struggling homeowners.

A loan modification is a solution for delinquent homeowners, that places the owed amount to the back end of the loan.

It’s a fancy way of saying payment arrangement and deferment plan where the homeowner is responsible for paying the missed payments later although it increases the mortgage term depending on the delinquency and workout solution. While some modifications won’t change the term of the loan, there are others that will extend the timeframe while calculating a new mortgage amount so owed debt can become paid, including the new contractual agreement. (Loan Modification vs. Refinance | Rocket Mortgage).

Let’s say you started with a thirty-year mortgage. By the time the bank adds the missed payments to the back end of the loan, while reconfiguring the payment amount, you will have several additional years tacked on, extending the mortgage from the thirty years you started. Keep in mind that you’ve been in the property x number of years already. This cancels out the original agreement and replaces it with something more affordable. The only problem is that the mortgage starts over from the date the new modified mortgage goes into effect. In essence, this new plan wipes out all the equity and escrow within that account assuming there’s something leftover when the bank modified the terms of the loan. You were in the house nine years already— Now, you’ve attained a mortgage for thirty years (under the new terms) plus the nine that you were there.

Considering that breakdown, bear in mind that when I got that modification in 2012, the bank didn’t discuss the number of times I could get approved for a modification (prior to the 2020 Pandemic). Maybe I didn’t ask the lender the right questions. There is a limit. If the borrower defaults on their initial modification, the borrower cannot get another loan modification for 12 to 24 months. It depends on the type of modification, and it’s solely up to the discretion of the lender, or the investor if they are willing to approve it. There is something else that homeowners should know if they are considering the modification program after falling behind.

  1. Is the housing market moving?

  2. Did the investor/banking servicer make money on their investment when they gave you the loan?

  3. Who is holding the note? Just because the bank is servicing the loan, it doesn’t mean the bank is holding the note.

  4. Did your property depreciate over time?

  5. Did you do anything to add value to the depreciated property to hike the appreciation back up?

  6. Did you make payments while in delinquency?

Both 4 and 6 are very important questions. We will get to that soon.

If you continued reading until the breakdown: Sorry. You won’t get any rewards but you’ll receive transparency, feedback, and free golden nuggets of how I overcame foreclosure.

Slowly and catastrophically, the toxic cycle of bad money management initiated 2011. I received several pay increases from my employer, and it still wasn’t enough because with each increase, I’d upgrade something else that I didn’t need like a new 2010 Ford Explorer with a new car payment of four-hundred and thirty-three dollars (2013). Therefore, the state stopped giving me SNAPS. I now fit the description of middle class by North Carolina guidelines for receiving assistance.

Year 2013

You tend to make bad decisions when you’re in trauma or grief. The brains fight or flight strategy kicks in when dealing with high levels of stress, and you do odd things that you wouldn’t normally do like dining on comfort foods or retail therapy, shopping until you drop. It’s our natural response to dealing with trauma, and it’s a recipe for disaster because we either lose money or gain weight from compulsive spending and eating.

My sister died March 5, 2013. I was already recovering from debt pangs, and the possibility of foreclosure when she passed. I had two things going for me. I was employed and I knew the loan modification was optional if needed to get back on track. (The arrogance in me spoke loudly).

I welcomed my sisters four boys to my family because I understood the assignment, and I knew my sister wanted it that way. She would’ve done the same for me without hesitatio