McMansions, Hummers & Hubris

So here’s the deal about a house in Avalon – once an upper middle class, predominantly Irish-Catholic resort town populated with modest homes, station wagons and moms down for the summer with a gang of tow-headed kids taking sailing lessons and pedaling rusty bikes, at some point in the late 90s it went ostentatious, Philly-style. Older homes that once housed multiple generations and extended family were razed to build giant plastic trophy houses complete with elevators, palladium windows and more bedrooms and baths than a boutique hotel. Air conditioners hum 24/7 in the hermetically-sealed houses as late-model BMWs and high-end SUVs glide in and out of garages, the unseen inhabitants always behind glass. No one is outside except for the service people: landscapers, lawn crews, house cleaners and pool boys; the hulking monuments sit empty ten months out of twelve. So there’s little sympathy to be had when you tell someone about your home in Avalon and how you need a loan modification.

What I can say is this: I mow my own lawn, clean my own house, maintain and repair my aging wooden docks; I have an annual yard sale and go to yard sales year-round to hunt for bargains and I live for bulk trash to reuse, re-purpose and recycle.  I don’t have air conditioning, a television or a new car – the cars I do own were bought used and each has well over 100,000 miles; they’ll be driven until the wheels fall off. I’ve always had a job, usually more than one, and I’ve been gainfully employed for over 35 years; dutifully making mortgage payments for over 25 years. Where am I going with this? Not everyone who needs a loan modification bought more house than they could afford, lied on their applications or lived large. At least I didn’t.

In retrospect, what I did do was stupid, but it was done with the best of intentions. After many years working in any and every state except my home state of New Jersey, I got a job in Cape May County, ten miles from my home. The prior four years had been a struggle to make ends meet so I’d run up a little credit card debt with American Express and the rate on my existing mortgage was high and set to increase. It was the right time to consolidate and re-finance, and it was not especially easy. My mortgage broker recommended a program with Washington Mutual, a first-class, very reputable bank that didn’t grant mortgages to just anyone. Indeed, we jumped though many hoops, including writing a letter of intent regarding the purpose of the loan, the fact that I now had a great job “at home”, wished to clean up a small credit card balance, etc., etc. It was a stated income, asset-based jumbo “no-doc” loan, with an awful lot of documentation; in fact, this is when I learned the importance of copying and submitting EVERY page, even the pages that say “This page intentionally left blank”. 

After reams of paper went back and forth, one happy day the mortgage was granted and paperwork signed. My mortgage broker explained the fascinating aspect of this loan – you could “pick & pay” the amount you wished to remit each month. And yes, the interest rate would re-set once a year but that was no big deal, because after 30 months you could re-finance and the way things were going, that would be a no-brainer. The no-brainer in the room was me, a lesson learned much later.

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One Response

  1. Of all the bad sorts of loans, you unfortunately found the worst combo: stated income (though it sounds you did not over state your income), adjustable payments (which almost always means the borrower will end up adding to their principal rather than paying it down) and adjustable rate. Our first mortgage was eventually bought by WaMu, but was fortunately not predatory. The second mortgage, a piggy back to avoid PMI, was adjustable rate and when we were forced by rising rates to refinance that portion, we could only refi into an interest only mortgage. If I had only known at the outset what we’re all finding out now…best of fortune to you.

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