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A Christian in foreclosure - Part I

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By daniel sinclair

August 27, 2008

My wife and I have to move out of our home. We are one of the many families in the Central Valley of California who can't afford their mortgages, and must move out. While many judge us for being greedy and buying homes that were more than we could afford, it is seldom that simple. How did we get into this mess?

1. We needed an affordable home near my work.

The problem is, I work near, but not even in, Silicon Valley. My job is in Dublin, CA. The problem? When I was looking for a home, the average price of a 2000 sq ft. home in or near Dublin was $600K+. Now, if I purchased a home 30 miles away from work, I could get that same home for $400K. And if I moved 50 miles into the valley? I could get the same home for $350K.

Now, the homes at 50 miles weren't *WORTH* that much, but that was all there was within an hour's commute. In addition, we were both working, and we could afford it, so we bought a large $440K house. The value went as high as $650K, and we took out a mortgage to $500K to pay off our vehicles and some debt.

And by the way, the home prices over a two year period went up $10-$20K per MONTH - demand was high, so the builders just kept pushing up the prices.

2. Helping out a friend

A friend was losing their home, so I helped them pay their mortage for a year. We then bought a large home so that they could move in with us. The money they would pay me back would help pay down the new home. Then, the 'friend' skipped town with his family, literally in the night, and left us with a $40K deficit. So, my mistake. Never become surety for a friend.

3. The crash of the housing market

Suddenly, the housing market crashed. My wife lost her job, and we had our third kid (surprise!), which made day-care too expensive. So she was at home, and now we had one income. And our 3/1 ARM mortgage ran out, pushing our monthly mortgage from $3K to $4K per month (which we could have seen coming). Add to that both of our aging cars suddenly needed to be replaced (which we might have seen coming), and suddenly, we are going $2K into the whole EACH MONTH.

With the housing crash, we couldn't sell our home because it was worth $200K less than what we owed. At first. NOW it is worth $300K less than what we owed (current value: $230K).

4. No longer paying the mortgage

Short of declaring bankruptcy, we could let the mortgage go, live in the house for 6-8 months, try to pay off our other debts, and do a short sale on the home. Ethical? Maybe not, but we had little choice besides going further into debt.

My credit score went from the 700's to the 500's. My credit cards lowered all of my limits, even though I was up to date on payments. And the bank? They couldn't do anything for us except hound us for the money. All they wanted to do was delay our payments by a month, but not lower them. But no magical income was going to start coming in!

5. Banks do not want to negotiate, even to their own detriment

We tried to get a short sale to go through, but the primary lender balked and let the house go to foreclosure. We would have loved a 'short refinance' to current market rate, but the lenders would rather just take the loss WITHOUT helping the owners. They paid the trustee $180K for our home, and now, we have to go rent somewhere.

So what do we do, as Christians? Are we getting what we deserve? Are the greedy builders partly to blame? The banks who were unwilling to negotiate their rates back down or do short sales?

What I know is that I have to start looking for a rental home, moving my family and belongings, and repairing my credit. And we are very stressed.

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Comments

Displaying 1 - 10 of 41 Comments

Anonymous posted: November 9, 2008 3:56 pm

There are Christians who are losing their homes to foreclosure through no fault of their own. They may have lost their jobs, tried to sell their home, but the property value fell below the mortgage, and the bank won't agree to a short sale. Are they sinning? Absolutely not. Do some people in churches judge them? Absolutely yes. It is very sad how Americanized the church has become. Now if someone purposely bought a home they couldn't afford and just want out of it, that is another story. It depends on the circumstances, but I can't believe how quick people are to judge and form their own opinions without knowing all of the facts.

Anonymous posted: November 9, 2008 3:56 pm

Anonymous posted: September 29, 2008 12:56 pm

My husband and I purchased our house for 450,000 and within 1 year due to illness we needed to sell and look for a place that could have his mom live near us. We had to sell for 397,000 and pay 8K in order to finish with the bank. We were horified that we were selling that much bellow our purchase price, but much prayer and bible study we felt confident in what God was having us do (selling our house). Our house sold in 17 days, and although we knew God's diretion was clear we didn't feel good about losing money. Well now 1 1/2 years later we relize our loss of aprox. 50K would have been well over 200K if we would have waited or held on alittle longer. We can clearly see on the other side how God was weaving His plan through our lives as long as we were willing to listen and obey. Follow Him and His will it isn't to late to submit to Him, and you will be able to look back and hopefully see His hands and where He had your family protected. We cant pull God out of our pocket like a good luck charm when we want stuff and more things but put Him away when we dont like what is happening. Dont forget Him in the midst of trials, He is there.

My husband and I purchased our house for 450,000 and within 1 year due to illness we needed to sell and look for a place that could have his mom live near us.  We had to sell for 397,000 and pay 8K in order to finish with the bank.  We were horified that we were selling that much bellow our purchase price, but much prayer and bible study we felt confident in what God was having us do (selling our house).  Our house sold in 17 days, and although we knew God's diretion was clear we didn't feel good about losing money.  Well now 1 1/2 years later we relize our loss of aprox. 50K would have been well over 200K if we would have waited or held on alittle longer.  We can clearly see on the other side how God was weaving His plan through our lives as long as we were willing to listen and obey.   Follow Him and His will it isn't to late to submit to Him,  and you will be able to look back and hopefully see His hands and where He had your family protected.  We cant pull God out of our pocket like a good luck charm when we want stuff and more things but put Him away when we dont like what is happening.  Dont forget Him in the midst of trials, He is there.

Anonymous posted: September 29, 2008 12:41 pm

I feel so bad for your family, but you must remember that God loves His children, and cares more about our hearts towards him than the mistakes we make, or the things we have ei big houses, beautiful cars, boats, pools. The hard place is in the bible it speaks clearly to pay off our debts, but when our debts we have chosen to take on are far above our means, we must ask the question of how and why we made those choices, and what would God have us do now. He works differently in every cicumstance, but if we are to follow His wisdom we must spend time with Him, and His word, He never contradicts His written word. So as you make a choice to walk down the road of foreclosure, or short sale, please spend time with Him so He can speak to you directly about His plan for you and your family. Ultimately this is not our home, and we should make choices that keep that clear. Eternity is where our hearts need to be not here in this decaying world. May His love be on you as you seek Him

Anonymous posted: September 7, 2008 2:52 am

Daniel, from my perspective, it sounds like you didn't understand the difference between need and want. Do we "need" a large home? Our large homes, new cars, latest fashion etc. are luxuries entirely out of the realm of possibility for the great majority of the world. It sounds as though you had many opportunities to make wiser choices that could have avoided or fixed the problem. I can only tell you our experience. We moved to the Central Valley 24 years ago. We were approved for a mortgage of $125K. Ended up buying what we could afford if only one of us was employed...$50K. Small home-just under 1500 square feet, 3 bd, 1 bath. Nice quiet, old neighborhood. Drove older vehicles-no payments, small garden, raised 3 sons in this home-we're still here. It's paid for--no more mortgage payments! AND all 3 sons went to private school, participated in competitive sports, and college. One graduated from Berkeley with 2 degrees, 2nd graduated from a private Christian college with double major in math & philosophy; the 3rd is finishing a degree in economics from a private Christian college. He's now overseas completing a 6-month internship. All that on one salary which started at just under $35,000 annually and grew to just under $60,000 annually, supplemented with a home business that brought in about $10,000 annually. It wasn't easy, but is was possible. It was Christians from our church who wouldn't visit us because we "lived in the wrong part of town." We even had an elder from the church come and tell us we "needed AMWAY" and offered us the opportunity to join his pyramid. Our circumstances have changed. Started a business 3 yrs ago. We did take a line of credit (half the value & used 20% of the total) against the house. Now the govt wants to increase taxes in part to bail out people who had little judgment in managing their finances/debt. Time to accept responsibility, downsize and make wiser choices.

Daniel, from my perspective, it sounds like you didn't understand the difference between need and want. Do we "need" a large home? Our large homes, new cars, latest fashion etc. are luxuries entirely out of the realm of possibility for the great majority of the world. It sounds as though you had many opportunities to make wiser choices that could have avoided or fixed the problem. I can only tell you our experience. We moved to the Central Valley 24 years ago. We were approved for a mortgage of $125K. Ended up buying what we could afford if only one of us was employed...$50K. Small home-just under 1500 square feet, 3 bd, 1 bath. Nice quiet, old neighborhood. Drove older vehicles-no payments, small garden, raised 3 sons in this home-we're still here. It's paid for--no more mortgage payments! AND all 3 sons went to private school, participated in competitive sports, and college.  One graduated from Berkeley with 2 degrees, 2nd graduated from a private Christian college with double major in math & philosophy; the 3rd is finishing a degree in economics from a private Christian college. He's now overseas completing a 6-month internship. All that on one salary which started at just under $35,000 annually and grew to just under $60,000 annually, supplemented with a home business that brought in about $10,000 annually. It wasn't easy, but is was possible. It was Christians from our church who wouldn't visit us because we "lived in the wrong part of town." We even had an elder from the church come and tell us we "needed AMWAY" and offered us the opportunity to join his pyramid. Our circumstances have changed. Started a business 3 yrs ago. We did take a line of credit (half the value & used 20% of the total) against the house. Now the govt wants to increase taxes in part to bail out people who had little judgment in managing their finances/debt. Time to accept responsibility, downsize and make wiser choices.

daniel sinclair posted: September 6, 2008 5:12 pm

> if you bought the home expecting its market value to appreciate, then why are you not just as greedy as this builder You could be, or you could be a smart investor. Greed is in the heart. If I bought a home expecting it to go down, would you then approve? I hoped it would keep it's value so that I could sell it if I must, but it dipped 60%. But your discussion of cost and value is not that relevant - the *local* value compared to the 800K houses closer to work was good, but relative to other parts of the country, and my paycheck (remember, we had two incomes when we bought it), perhaps it's value was lower. Anyway, it is hard times for most of us here.

Anonymous posted: September 5, 2008 12:39 pm

> Builders didn't create the bubble -- buyers with easy credit did. Builders, if anything, POPPED the bubble! No, but they capitalized on it, and greedily took advantage of the situation, took the money from the stupid lenders, then sat back while the lenders took it on the chin. But of course, their greed also killed their golden goose. They only popped the bubble by their own greed, not by any virtue.

Anonymous posted: September 5, 2008 12:36 pm

> How can the value of a thing be anything other than what someone is willing to pay for it? There is no such thing as the "real" value of an asset. That is not entirely true. You can easily quantify what the houses COST the builder to build, and then calculate their profit. Did they profit %5 per home, or 500%? Gouging and price fixing are real evils, and I suspect that the builders did the former, if not the latter. How much do think the builder spent on a home that they initially offered for $180K, but raised the price to $500K?

Anonymous posted: September 5, 2008 11:54 pm

If you don't get that there are important differences between "cost" and "value," then it's clear why you got into the trouble you did. A housing transaction involves willing parties on both sides. You cannot sell something for more than someone else is willing to pay. If you could, then YOU wouldn't have a problem right now -- you could just "gouge" someone else for $650k. And I'd really like you to answer the question : if you bought the home expecting its market value to appreciate, then why are you not just as greedy as this builder? If you had sold your home when it was going for $650k, would you be a "gouger?" And if not, why not?

Anonymous posted: September 5, 2008 12:14 pm

I'd love to hear what Dave Ramsey has to say about your issues. From what you posted here, there were a lot of opportunities for you to fix the problem (Don't lend to your friend, refinance earlier, don't buy cars with payments, buy cheap junk cars, get a 2nd, thrid job etc.). Not trying to be a downer, but from my perspective, people in CA, thought that housing would increase forever. That's not the way it works usually, so always be prepared for rain I guess. Seriously, if you haven't, check out Dave Ramsey, who has great financial advice, and can be found on many radio stations.