It ended with papers taped to the front door; what Martin Luther would have done with his Theses if Scotch® brand tape had been available in his time. I had expected a notice of a Certified Mail letter, along with the multiple letter copies (these came about a week later) addressed variously to "Crystal Callahan, Trustee"; "Daniel Callahan, Trustee"; and "Resident". Instead I got two smudged copies of a "Notice of Sale". We've received a fair number of official-looking during this time, most of them fake, so the first order of business was to verify the Notice's authenticity.
I called Wells-Fargo and confirmed that the Notice was genuine. So it's official, then: our house will be sold at auction on the 12th of August. That is, of course, if there's someone who wants to buy the property at twice its current market value. No matter—we'll be relocating either way. So that's how the story concludes. How did we get to this point? More importantly, what did I learn from the experience?
Just Sit Right Back and You'll Hear A Tale
I'll spare you most of the sordid history. Let's just say that 14 months of unemployment in a 24-month period didn't help matters. I had actually started the loan modification process last Spring. I had contacted the bank about a modification, to see if we could get some relief. They had me send them several documents: bank statements, tax returns, budgets and the like. Then they disappeared for a while, until they called back one day to say that we made too much money to qualify for a modification. I jokingly suggested that maybe I should quit my job so our income-to-mortgage payment ratio was lower; I'm not sure she got the joke.
As it turns out, fate took me up on my suggestion. My little-startup-that-could was running out of cash, and the equities markets were showing no signs of thawing out. So, I contacted the bank again and asked for a "forbearance"—let me stay in the house while unemployed, and make up the payments once I get a job. Again we went through the cycle of faxing all manner of documents to them. At the same time, I contacted Wells-Fargo Home Equity (the holder of our second mortgage) and repeated the process with them. It shouldn't surprise you to learn that Wells-Fargo-the-First and Wells-Fargo-the-Second had very little ability to talk to each other, share my documents and so on. The bank didn't say "yes" to the forbearance, but they didn't say "no" either. They simply said, "take a few months, find a job, and then pay us everything you owe". I knew that was a non-starter, but I also knew that was a fight that could wait for another day. As for Wells-Fargo Home Equity, after much wrangling they basically admitted that they couldn't do anything for me until I had a job.
After three months, I still hadn't found a job. So I wrote back to the bank and asked for an extension on the forbearance. Again I had to submit a sheaf of documents, and checked daily for a decision. The bank representative apologized for the delay, saying that "my type of loan" was particularly hard to resolve because there were some unspecified number of "investors" that had to be consulted. So there was more than one "Mr. Big", and the bank wasn't one of them. Getting to someone that could actually negotiate an agreement was going to be hard.
Dancing with Mr. Big
While all this was going on (and shortly after starting my new job), I received an email saying that Wells-Fargo was holding a "home preservation workshop" in Oakland. That sounded rather sanitary. I didn't know if it would help, but I decided to go, if only so I could talk to a person face-to-face and ask some questions about the process. I showed up in the morning, again somewhat surprised (though I shouldn't have been) by the sea of humanity there. What I had thought would be a quick one-hour conversation turned into an all-day affair. I basically went through the entire process again, resulting in what the loan adjuster thought was victory. The unnamed "Mr. Big" investors who had bought the derivative secured by our home loan had agreed to add the missing mortgage payments to the back end of the loan. Happy days were here again! I felt bad for the adjuster working with me; she was quite excited to score a victory. Why wasn't I jumping for joy as well?
I was very appreciative, and really wanted to take the deal, if only to be done with the process. But as I thought about it, I realized that after nearly a year of negotiations, I hadn't really gotten anywhere. All I needed was some relief on the mortgage amount, and we could make it work. But I was told that this was the best deal I could expect.
Don't Cry for Me, Argentina
We got together at home and talked about whether to stay or not. We might be able to do it, but it would be tough. We made a mortgage payment as part of the modification agreement while we continued to debate the advantages and disadvantages of staying in the home under the terms of our mortgage. Then I received a cheerful letter from Wells-Fargo saying that they had helpfully paid our back property taxes, and that we could just go ahead and tack on some extra cash to the monthly payments until we had caught up. At that point, it was "game over".
It will be tough to move, no question. We love the area, love our neighbors. And some of us (ahem) are resistant to change. But we've gotten over the emotional part of it, and are looking forward to the part where we get our financial footing back again. We plan to stay in the area and know that we can be happy in a variety of housing situations. So no worries there, and more good things to come.
- Get out of your bubble. The Great Recession that I thought was just affecting me was affecting lots of other people, from all kinds of circumstances. As with layoffs, what felt at first like a personal problem turns out to be something commonly felt.
- I still believe in rational decision-making, but it's clear that I don't understand what matters to the people that bought my loan. They must know they're going to lose money in the deal. They must have their reasons for making the decision they did; just don't ask me to explain it.
- All loans are not created equal. There were people on each side of me in the "home preservation workshop" that were getting loan modifications worked out in real time. As best I can tell, these people had loans that were backed by government agencies, or eligible for federal modification programs. So the banks seem most willing to work with homeowners when they share the financial impact with the government... imagine that!
- No one at the bank knew what was going on, what the process was. I would be told that I couldn't make a proposal for a lower monthly payment, and then be asked on the next call what I thought I could afford. Each person I talked to wasn't sure what the process was.
- As I learned from a loan modification workshop, you want to get in touch with the mortgage holder's "loss mitigation group". They won't be called this; they'll have some happier name. But "loss mitigation" puts you in the right frame of mind: you're a potential loss, and their job is to make that loss as small as possible.
- The above is important because you'll begin getting calls from the collections department. These people, too, will have some happy-sounding name, like "Home Equity Solutions". These people will generally be very nice (I had only a few calls from people screaming at me to pay my past due amounts); maybe that's one benefit of so many people being affected by our dry-heaving economy. They may be nice, but they are not your friends. They have one and only one mission, and that's to collect on your debt.
- Take detailed notes of every contact you have with the mortgage holder. I also learned this during the loan modification workshop. Even though all of your conversations are summarized and put into some giant computer file (along with scans of all the documents you send in), the person calling you will invariably not look at that information. So I when they asked me for the hundredth time why I was behind on my mortgage, I would politely redirect them to their computer file.
- Having detailed notes also helps deflect some of the BS that collections people will toss at you. When I was told, "your loan modification request was denied" I was able to politely ask if it was bank policy to not notify the customer of this fact.
Perhaps the biggest lesson of the entire experience was to untangle the emotional associations we have with home ownership from the financial facts on the ground. I've learned in the past few years that I can be happy in a variety of housing circumstances. I also know that living without some "buffer" between income and expenses is not a recipe for happiness. We've re-learned the value of counting your cash and not counting the willingness to pay as an asset to spend today. Even Wimpy had to make good on all those promises to pay someone Tuesday for a hamburger today.
So this chapter is closing, but another one opens; one that I know will benefit me in the end. Onward and upward!