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Chasing home values before Chase appraises

While waiting for Chase to schedule the appraisal I met with a realtor friend to figure out how much my home might be worth. A true professional, she had prepared a comprehensive market analysis along with the closest things she could find in the way of comparable sales. It was slim pickings and she didn’t mince words. 

“Your home is off the beaten track. It’s not on a desirable street. It takes a special kind of person to live on that street and you know that. I have clients who won’t even look at homes on your street. It’s too far from the beach and the center of town.” Yes that was true, and probably why I liked it so much. The somewhat secluded location overlooks the Cedar Island Bird Sanctuary and I hadn’t been to the beach in years. 

“The adjacent lot on your east side has been on the market since the day before forever; they’ve reduced the price several times and it’s still not selling. No one is financing land; it needs to be a cash deal and no one’s interested in paying cash for the lot.” I knew that was true – the speculator who owned it was underwater, but the local lender who held the loan was working with them. 

“The adjacent house on your west side has been on the market for three years; it has 3 bedrooms, 2 baths and a proven rental record. They’ve just listed it with a different realtor and reduced the price again but it’s still not selling. At least it’s rentable. Your home, with 2 bedrooms, one bath and no air conditioning, isn’t even really rentable.” I hadn’t designed my home as rental. It was tiny and it was my home. I traveled a lot in July for trade shows so I’d rented it to some like-minded folks the last few years to help cover expenses, but it wasn’t a rental property. 

“Martha, if you were to ask me to sell your house I’m not sure who I’d market it to. With all due respect, it’s a tear-down and the spec builders who might buy it can’t get financing. They’re stuck with inventory and losing their shirts. With spec builders off the table that leaves the general public. You were an exception – almost no one wants to design and build a new home on their own, nor do they have the money to. You really need to work it out with your lender.” Yes, I really did need to work it out with Chase, and I’d been trying for over a year. Why wouldn’t they work with me?

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Learning Curve

Throughout August, September, October and November I went to large banks and small banks, banks I’d done business with in the past (Wachovia, Citizen’s & Sturdy Savings Bank) as well as banks I’d only driven by (1st Bank of Sea Isle City & 1st Colonial National Bank), meeting with residential loan officers to explore any and every possible way to refinance. Could my parents co-sign? Could a friend? Could I do something with home equity against a house I owned? Maybe a reverse mortgage? I also met with mortgage brokers who promised the moon, only to be shot down or not even called back.

I went to my investment advisor to look at raiding my retirement savings and he directed me to his mortgage guy. This guy helped him out when he was going through a divorce and his wife had destroyed his credit – he was a miracle worker. The guy was sharp and professional but there were no miracles for me. His response:  “Yes, you have equity, yes you have assets, but the banks want to see income, it’s all about income and cash flow. You need to cut your losses and move on; there will be other houses.” 

A friend in Florida told me I had to talk to her mortgage guy, he was the best. He took all my information on November 13, 2009 and called back four days later. He said there was absolutely no one who would touch a loan of this size without a comparable salary; did I have any wealthy relatives or stand to inherit any money soon? His advice: “Stop paying your mortgage, now. Write your senator; write your congressmen, there’s going to be a revolution. Mail in your house keys and walk away.” I patiently explained to him that perhaps he wasn’t hearing me correctly. I was not underwater in the loan. I had equity, enough equity that I’d been denied a loan modification, I had assets; my credit rating was decent (701 Equifax, 706 TransUnion, 732 Experian) and I’d never missed a loan payment or even been late. I could drain my retirement savings and hang on, ride this thing out until things turned around and I got a good job again. His reply: “As long as you pay, they won’t play. Stop paying now. So what if there’s a tax lien. That will get their attention. They only address the squeaky wheel. You are not a problem so they won’t work with you, they won’t talk to you, and they’ll just string you along because you are a performing loan. They will bleed you dry and take every penny you have. They just want their money. Stop making payments now.”

But I couldn’t stop paying the mortgage. I had an obligation. Only bad people didn’t pay. Plus I’d ruin my credit rating and never be able to get a loan again. It should have occurred to me that despite my good credit rating, I couldn’t get a loan now, and besides, what did I need a loan for other than a mortgage? I didn’t finance new cars, boats or anything else. I didn’t buy anything new, and I wasn’t about to start. Credit cards weren’t important – I didn’t carry a balance with American Express and used it only for work; the only other card I had was my debit card. 

I met with more loan officers, mortgage brokers, neighbors and friends of friends. I asked anyone I knew to hook me up with a senior loan officer, bank CEO or board member, any introduction where I could meet face to face and work out a way to re-finance. I talked to a lot of people but I didn’t get a loan.

In all that time, from July to November, no letter from Chase/WaMu regarding a loan modification application, review or denial ever arrived. The only thing that arrived with resolute punctuality was the monthly mortgage statement and payment coupon.