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Archive for Monday, June 11, 2007

Foreclosure rate rising

More in Douglas County face losing their homes

Hatem Chahine, left, an attorney representing local banks, talks with Sheriff's Department Sgt. Ken Fangohr at the home foreclosure auction on the steps of the Douglas County Judicial and Law Enforcement Center. The weekly auction was Thursday.

Hatem Chahine, left, an attorney representing local banks, talks with Sheriff's Department Sgt. Ken Fangohr at the home foreclosure auction on the steps of the Douglas County Judicial and Law Enforcement Center. The weekly auction was Thursday.

June 11, 2007

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Robert Baker, education coordinator and counselor at Lawrence's Housing and Credit Counseling Inc.

Robert Baker, education coordinator and counselor at Lawrence's Housing and Credit Counseling Inc., talks about the reason for foreclosures and how it compares to years past. Enlarge video

Douglas County part of growing trend of foreclosures

It's a problem that has more and more local residents losing out on the American dream. Across the country foreclosures are on the rise and Douglas County is no exception. Enlarge video

A year ago, Sharon Roullins thought she was getting a chance to "start over."

Finally approved for credit after three years of trying to buy a home in the Kansas City area, Roullins bought a three-bedroom home off Ward Avenue in East Lawrence last June.

For the first time, her children had their own rooms. Her two grade-school aged daughters liked their new school, and for single mom Roullins, the difference from Kansas City was "night and day."

But Roullins was in for a nightmare when foreclosure proceedings began. Foreclosure occurs when a lender acts to repossess a property, usually when the homeowners get too far behind on their mortgage payments. This week, her home and four others are scheduled to be auctioned from the steps of the Douglas County Judicial and Law Enforcement Center, 111 E. 11th St. Roullins is one of the scores of Douglas County homeowners who have faced prospects of foreclosure this year.

"I really don't know what to do," Roullins said.

For Roullins, the downward spiral into foreclosure started with a trip to the emergency room last September. The visit was followed by a stay in the hospital that lasted into November, meaning there was little money to make the roughly $850 monthly mortgage payment.

"Basically, I got sick, went into the hospital and just fell behind," Roullins said. "I missed one payment, and it just kind of snowballed."

Now she gets daily phone calls from her mortgage company asking her about the payments and letters in the mail from businesses that say they want to help her.

But Roullins said her credit score is too low to qualify for any of the programs her mortgage company is offering, and she doesn't trust out-of-town companies whose offers to help seem too good to be true.

She can't find the real estate agent who sold her the house, and she doesn't have the expertise to sell the house herself. Nor does she have the money to hire a lawyer.

So Thursday - the day of the sale - looms.

"Social services, church, family - we just don't have those things to fall back on," Roullins said.

Rash of foreclosures

The number of foreclosures has increased across the country, and Douglas County is no exception. In the first four months of 2007, the Douglas County Sheriff's Office - which presides over the sale of homes that go into foreclosure - auctioned 39 homes. Comparatively, in the first four months of 2006, 28 Douglas County homes were auctioned at a sheriff's sale. That's a roughly 40 percent increase.

Many more homeowners, closer to 80, have received notices from the sheriff's office that auction was pending unless they paid up on their mortgages.

Robert Baker, education coordinator and counselor at Lawrence's Housing and Credit Counseling Inc., said a main reason for the increase in foreclosures is a change in the economy.

"The economic times aren't quite as heady as they were in the go-go '90s," Baker said. "So, if people have any kind of economic setback - serious health problems, reduced income, that sort of thing - it is going to affect their ability to pay all their bills, and sometimes that affects their mortgage payment."

Jonathan Becker, a bankruptcy and real estate attorney, lists four reasons for the rise in foreclosures: a lessening of credit standards, an increase in the kinds of loan options, a lack of home value appreciation, and a decrease of new homebuyers' financial experience and education. Combined with any catastrophic event such as a job layoff, reduced income, illness or car accident - "you've got a recipe for foreclosure," Becker said.

Although foreclosures in Douglas County have jumped, those who deal with the housing market in Lawrence say the community is not nearly as bad off as other parts of the country where waves of homeowners have defaulted on mortgages. For the first quarter of 2007, Kansas ranked 34th in the country for foreclosure rates, according to RealtyTrac, a Web site that compiles a database of foreclosures nationwide.

"We haven't seen it here, but it doesn't mean it isn't coming," said Doug Stephens, president of Stephens Real Estate Inc.

Baker, the housing and credit counselor, said higher housing prices in Douglas County have precluded many lenders from issuing riskier loans. Known as subprime loans, these lending options are made to borrowers with below-average credit scores and require little or no money upfront. And according to Baker, they are much more likely in a market where homes go for $50,000 or $80,000, not $200,000.

However, Becker said he is starting to see a lot more homeowners come into his office who are caught with loans that carry interest rates that are suddenly going up.

In the past few years, companies have offered low-interest, adjustable rate mortgages - but the low rate lasts only a few years. After that - for up to 28 years of a 30-year mortgage - the interest rate has a good chance of moving higher.

In the next few years, millions of these mortgages are expected to reset at higher interest rates, meaning homeowners will see a dramatic jump in their monthly mortgage payments.

"The 2-28 loan was becoming the welcome mat into the house. It's now becoming the prison bars when the 28 (years) kicks in," Becker said.

Staving off foreclosure

On Chastity Beerbower's birthday, Jan. 18, her family's house in Eudora was slated for sheriff's sale. If the foreclosure had gone through, Beerbower wasn't sure what her family - husband Jack, three boys and a girl - would have done.

"It's either keep the house or become homeless," Beerbower said. "Right now we don't have the money to move, and no one wants to rent to someone who forecloses."

The day before the sheriff's auction, the sale was canceled. The family was able to save the house by filing for bankruptcy protection.

But it was a close call, Beerbower said. She and her husband, a self-employed carpenter, saw an ad for a lawyer who handled foreclosures. They hired him and were told to file for bankruptcy immediately.

Two years ago, the couple purchased a house on Acorn Street for $145,000. The five-bedroom home in a neighborhood with trees and nice yards was the first the Beerbowers had owned.

"We were going along just fine until (Jack's) knee injury," Beerbower said.

With her husband being out of work for injuries and then not being able to find work, the family got behind in paying their mortgage, Beerbower said. In a year and half, Jack had surgery on his knee and back. And in between the time off to recover from the surgeries, he found a sputtering construction market and few jobs.

A stay-at-home mom for 10 years, Chastity Beerbower went back to work at Eudora's Kwik Shop, where she is an assistant manager. Jack traveled as far as Junction City and Louisiana for jobs, Beerbower said. As foreclosure was pending, they kept thinking the work would come.

"What our plan was: Get income, then pay up and hope for the best," she said.

Eventually, the only choice was to file for bankruptcy, which stopped the foreclosure process.

Bankruptcy allowed the family to stay in the house, but Beerbower said they are still teetering on the edge of foreclosure if they can't make their $1,500-a-month mortgage payment.

The family was willing to take the hit bankruptcy would leave on their financial record, Beerbower said, because it was better than losing the house. The main concern was making sure their children had a stable environment.

Filing for bankruptcy

When a foreclosure is pending, Becker said, filing for bankruptcy can be like nabbing home field advantage for the homeowner. In most cases, Becker said, the bankruptcy has to be filed before the court issues a judgment on the foreclosure and the notices start to go out that the house will be auctioned at a sheriff's sale.

The bankruptcy will allow the homeowner to keep the house and set up a payment plan to the mortgage company through the court. The homeowner also still has to make the regular monthly payment to the mortgage company.

Bankruptcy does leave a mark and stays on credit reports for seven years.

However, Baker said that most credit scores are largely based on payment history from the past two years, the amount of debt and whether there is enough income to cover the loan.

Seeking options

Instead of traveling the bankruptcy route, many homeowners opt for dealing straight with their mortgage company in attempts to save the home.

Baker said the No. 1 mistake is to not act immediately.

"The longer you are delinquent and the more you owe, the less options you have. So start early," Baker advised on seeking help, whether it comes from a certified mortgage default counselor, lender or even a relative who could loan the money.

Becker said many mortgage companies operate on a calendar that starts the foreclosure process rolling when payments are more than 59 days late. Letters are issued and attorneys contacted.

At that point, Becker said, the homeowner has to cover not only the missed payments but also the mortgage company's attorney fees.

"Once you get to the 59 days, the alarms go off," Becker said. "Automatically add on $800 to $1,000."

Looking back, Beerbower said she recommends that those approaching foreclosure stay on top of the problem.

The effort can take hours, but most mortgage companies will work with borrowers who are seeking a remedy.

"They don't want to repossess your house. If they foreclose on your house, they have to market it to sell it," Baker said.

Comments

bevy 7 years, 6 months ago

I saw several comments about having adequate insurance. Have any of you priced it lately? I lost my job last year and have found only temp work - had one job that was supposed to go permanent after 6 months but was nixed due to "corporate restructuring" and lost my barely adequate health insurance. I signed up for BCBS but at 237 per month, I can't afford it on my 250/week unemployment benefit.

My ex and I went bankrupt and had to give up our house about 11 years ago due to catastrophic medical bills on our second child. We were both working "decent" jobs, just hadn't been at them long enough to get health insurance. Since we were working, we didn't qualify for any help from SRS. This was before the excellent Healthwave program was initiated. Thank God! At least my kids are insured, even though I'm not.

Don't be too quick to judge people. Most americans are only two paychecks away from homelessness, some because they live beyond their means, but many more who are working hard to get by every day.

Kat Christian 7 years, 6 months ago

GREED... it's all about greed. People should all have a place to live. There shouldn't be people living on the streets. It shouldn't be that difficult to find a place to live. It should not take an arm and a leg to rent a place to live. Yes there are people who make it bad for most of us - so why punish everyone?? There will come a time when there will be more people living on the streets then today and more empty houses and apartments.

Jean1183 7 years, 6 months ago

You have it spot on, Bowhunter.

We did a 3 year "arm" for a refinance with one of the low "teaser" rates. I carefully kept track of when the arm would be up and we refinanced again before the interest rates could rise. We gained a big chunk of equity in our home, got a low interest rate, and our payments are lower than they were with the arm.

You have to listen to the details and ask questions BEFORE you sign that loan. If you refinance before the arm is up, you will be penalized. Ours had 6 months before they could adjust the interest rates so we had 6 months to refinance.

BTW, Bowhunter........I also bowhunt.

Richard Heckler 7 years, 6 months ago

Medical problems force many many into bankruptcy according to Bob Baker. Should this be the cause of bankruptcy...of course not. Not all are poor that fall into this trap but cancer can take a family financially down very quickly. Oddly enough until there is no more money there is no help.

Sharon Roullins is a perfect a why this country should have universal healthcare for all. It would be best for the economy. Certainly 100 times better than foreclosures.

KS 7 years, 6 months ago

Okay Merrill - Let's let someone else pay for everything. That is the answer, huh? When I read this article I thought for sure that I would see a posting suggesting that someone else pay for our healthcare as the "first" posting. What took you so long? Bowhunter hit it on the head. Take some responsiblity.

buffalo_star 7 years, 6 months ago

it's not greed it's business and life is full of risk. sometimes you eat the bear and sometimes the bear eats you.

mommy3 7 years, 6 months ago

We lost our home 3 years ago, for the same medical reason (my husband injured his leg at work). It is so hard to bounce back once you get behind. I don't believe the mortgage companies want to work with you, they were very hard to work with when we fell behind. We had our house sold (for more than we owed) and they turned around and said NO they were proceding with the forclosure because they can sell it for more money. If someone gets seriously ill, then it is over. My mother is very ill, and she gets approx $250/month from state. Luckily her home was paid off prior to my father's death, but she has been waiting over a year for disability to kick in. If she would have had a house payment, then she would have lost her home a long time ago. We had a horrible time finding a place to live (rent). If we found a good place, they would run a credit check and turn us down. It was a very emotional and trying time. My prayers go out to all these families. There is light at the end of the tunnel. We are preparing to finally buy our own home in the next few months......Good luck!!

Sharon Roullins 7 years, 6 months ago

I wonder how those of you would act if this were you? Yeah, you may feel safe and secure now but I'd like to see what your first reaction would be if the wind blew a little hard around your neck of the woods. Things happen to people and I am sure that you haven't been fortunate all of your lives. She doesn't appear to be asking for pity, just sharing her story. I am so glad that all of you are living comfortably and not having bills and other financial nightmares darkening your doors.

acg 7 years, 6 months ago

Wow I can see the typical spirit of love, compassion and charity is running rampant on the board this morning. It's so nice to know that so many of you are caring individuals, that you would take 2 minutes out of your lives to feel a bit of sympathy for a family losing their home. I especially like how none of you insinuated that poor woman is wasting money on frivolity like cable, cell phone and internet costs or how you didn't automatically assume that she didn't do everything she could to save her house. I bet she appreciates it, too. There's nothing like knowing that you're going to lose everything and that your community is rallying around you trying to, if nothing else, make you feel a bit better about the situation.

Godot 7 years, 6 months ago

I believe I have posted before, home ownership is not for everyone. I am sorry that the couple in Eudora are having problems, and hope the husband finds work son, but a house payment of $1500 per month on a $145,000 house tells me they got 100% financing, meaning they did not put any money down to get that house. Then they missed payments. No equity in, no equity lost. At least they did not lose money on the deal.

sourpuss 7 years, 6 months ago

Well, for those of your on your high horses, I hope the fall will not be too hard. If you think you can just follow the rules and have everything work out, you are wrong. Sure YOU were lucky in that disasterous things didn't happen to you, or you were lucky that you got some help when they did, but not everyone has those luxuries. Especially in single-income homes, what are you supposed to do when the breadwinner can't work or is dead? What are you supposed to do when your sweet little child is diagnosed with a horrible medical problem?

You "bootstrap" people really goad my goat. Sometimes there aren't any bootstraps. Sometimes there aren't any boots. Try a little compassion in your cold-hearted lives. And no, I don't think banks should just let things slide, but there are a LOT of obstacles for the poor out there and if you aren't poor, you don't know about them.

mom_of_three 7 years, 6 months ago

These families are very brave to tell their stories to the paper. Everything is going great until an unforeseen illness or injury strikes. We would have been in the same boat a couple of years ago, but fortunately we had great health insurance through our employers and decent paying jobs (now, which wasn't always the case) which covered our kid's $22,000 hospital bill.

Nick Combs 7 years, 6 months ago

First of all, it stinks that this family is going through foreclosure. Not a fun process, one that I wouldn't wish on anybody.

That said, speaking generally, most people just have no freakin' clue how to manage their money. I don't know anything about this family at all, but my guess would be some lender saw them coming a mile away.

It's alot easier to get ahead if you plan ahead. Most people don't take the time to sit down once a month, write out a budget, make sure you're prepared. People also tend to get out of college heavily in student loan debt, then live off credit cards for a few years because lord forbid you not have a brand new car and plasma TV.

If people spent a few years of beans and rice instead of spending like crazy and living paycheck to paycheck, they'd be alot better prepared for their future.

Again, my condolences to this family going through foreclosure.

Ken Miller 7 years, 6 months ago

Yes, I feel bad for people who have medical situations befall them which, in turn, make it darn near impossible to pay their regular bills. Yes, I want to believe that everyone took the necessaary time to think things through before getting that "interest only" and adjustable rate mortgage loan. But some didn't, and were fleeced.

Previous comments are covering those issues.

But how about the slick marketers and fly-by-night refi companies that baited the less-than-savvy into taking on loans that by all accounts were way beyond their means? Remember the radio and TV commercials a few years back? They made it out to sound like the deal of a lifetime - low rates - interest only loans for the first year.... and now our government is trying to figure out how to bail out the poor saps who fell for it.

Predatory lenders. That's where our wrath should be focused.

Nick Combs 7 years, 6 months ago

Oh, and avoid Adjustable Rate Mortgages like the Black Plague.

KS 7 years, 6 months ago

offtothe right - you said it, not me, but I TOTALLY agree with you.

kujayhawk 7 years, 6 months ago

I'm sympathetic for these people, but I also see it from a different point of view. Most mortgage companies don't begin the foreclosure process after one missed payment, it's usually only after months of not paying will they begin this process. Plus, I work at a mortgage company and have witnessed many, many good people get laid off due to the spike in foreclosure rates. So who should I be sympathetic towards, the people that aren't making their payments or my former hard working coworkers that are now out of work due to the higher foreclosure rates.

Mommy3 - I'm sorry about your hardship, but your comments make absolutely no sense. Why would the mortgage company care what you sell the house for as long as it's enough to cover the loan? If they sell the house for more than you can sell it, you'll get the difference between the sale price and the remaining balance anyway. And mortgage companies WANT you to pay, it costs the bank/mortgage company a fortune to foreclose on a home.

Kat Christian 7 years, 6 months ago

AMEN sourpuss. Good for you acg and the other kind thinkers. Shame on you hard nose folks. You'd change your minds if this happened to you and folks lent a hand. Perhaps you've never had any real kindness in your lives yet and that is why you are so cold hearted like the reality companies and bankers. It's all about MONEY and image and no heart anymore these days.

Sharon Roullins 7 years, 6 months ago

Actually she was working three jobs prior to getting ill.

Sean Livingstone 7 years, 6 months ago

The message behind: If you cannot afford a home, but buy one. There are plenty of nice and affordable rentals around. I could rent a 3 bedrooms in a nice area for $800-1000, but the mortgage will usually be around $1500 or more (with 20% down). I always make sure I have certain amount of money in my bank and not all will go to mortgage.

I have friends who worked for mortgage companies and who got their properties foreclosed. It's really not the responsibilities of the mortgage companies to tell you all the details, you gotta read the fine prints and ask lots of questions before you sign.

Godot 7 years, 6 months ago

People who are having problems meeting their obligations could get some help by listening to Dave Ramsay:

http://www.daveramsey.com/

Godot 7 years, 6 months ago

Maybe some of us got hard noses by going through some really bad times, several times, and fighting our way out.

samsnewplace 7 years, 6 months ago

acg I agree with you, where is the compassion in this world today. If you mighty one's fall on hard times in your lives, I hope you then can find the compassion you've lost along life's pathway. I feel sorry for everyone who has to lose their homes due to medical reasons. Sometimes when you have children, you cannot work two and three jobs like some dumb person above suggests. In this day and age, we will only hear more and more of this and it makes me sad for those folks. We are all about one paycheck or two away from the start of these type of troubles. Don't be so critical to judge others when you have no idea what they have done to try to keep what they have.

OldEnuf2BYurDad 7 years, 6 months ago

"GREED: it's all about greed. People should all have a place to live."

Do you do something that earns you money, Sunshine? Does that make you greedy?

No one who has ever benefited by borrowing money from a lender should ever complain about the "greed" of banks. Those lenders lose their shirts on more loans than you'd believe, and if they didn't lend money to risks such as you as I, we wouldn't drive cars or own homes.

The credit counselor guy was dead on: people don't educate themselves and they wait until things are out of control. Credit counseling is something to consider BEFORE you are 3 payments behind on everything.

"she doesn't trust out-of-town companies whose offers to help seem too good to be true" - This statement makes my point. She's making decisions out of fear, not from a position of knowledge. Those out-of-town companies probably could have saved her. Now, shes in ANOTHER crisis because she failed to learn and failed to act quickly.

I'm not bagging on her. She is representative of many. I've seen attorneys and accountants who acted the same way. People get scared, and they don't make good financial decisions. It's a shame. She'll either learn, or she'll repeat this history again.

Chicago_JHawk 7 years, 6 months ago

I can't figure out how you could have a $1500/month mortgage payment on a $145,000 loan. Even with 100% financing, a 30 year loan would need an interest rate over 12% to have a payment that high. Over 9% on a 15 year mortgage. Doesn't make much sense to me.

acg 7 years, 6 months ago

Chicago, interest rates on loans vary according to one's credit score and debt to income ratio. She may have gotten a lender to lend her 100% of the purchase price on the house, but if her dtr is high or her credit score is lower than 700, the interest rate isn't going to be the cushy 5-7.75% offered to people who are doing well. It's going to be much higher. Oh and kujayhawk, last year my husband hemorraghed a disk in his back. He was off of work for 6 months and we got 2 payments behind on our mortage and they started the foreclosure process. 2 payments!! Not months of payments, just two. I had never paid late before. I have purchased and sold two houses using the same company so I have a 10 year history of exemplary credit with this company yet, still, two payments and bam, they're hitting me with foreclosure statements. I was lucky in that I was able to sell some land and make up those payments quickly, but others aren't always that lucky. To hear some of you tell it, life is a bed of roses and we should all have a coke and a smile and shut the f**k up. But the truth of the matter is, all it takes is one seriously rotten thing to happen and it can change your whole world. Layoff, sickness, death, etc. Earlier I said we should be compassionate towards this woman. Should I pay her bills? No. If I had extra money laying around I would pay the bills of the many broke friends I have who are going thru rough patches themselves, cause I don't know if ya'll realize it or not, but the cost of everything, except wages, is going thru the roof and lots of folks are teetering on that brink. Should we sit around and bash that woman and say "she's got cable and a cell phone and probably goes out to dinner twice a week" and "she should've had better insurance or planned for her future" blah blah blah. Truth is, none of you know this woman and unless you've been there you have no idea what she's going thru. Give her a break and stop being so damned judgmental.

lmpaul 7 years, 6 months ago

Ok, Douglas Co. has 80 foreclosure notices now and only 39 auctioned homes in four months. One of the neighboring counties had more that 30 auctioned homes in the month of May. Jan - April there were close to 100. Several reasons these folks lost their homes, but most were comfortable until their fixed interest rate turned into varied. And one late/missed payment doesn't foreclose a home. Several of these homes were 6-8 months behind, one was a year. One morgage company told me "we don't want the house - we want people to stay in their homes. But our company has obligations that we have to meet."

I wonder why the contractors are continuing to built huge homes (5 bathrooms) and people are continuing to get in over their heads. (I know one builder who has 3 houses he can't sell - and he has to keep electricity and heat going.) And we are bull dozing farm land to build these huge houses. I'm guessing in about 30-40 years, we will be tearing down the big houses, jackhammering the asphalt and planting food.

And, yes, I'm well aware of struggling to make all the payments every month. Our refrigerator is so bare, I'm threatening to unplug it to save on electricity. The only place I drive is to work. We have no cable, no internet and don't leave lights on. We buy our clothes at the thrift shop and, baby, we're not eating steak. I'm sorry for families who are out of their homes. By God's grace, we're still in ours.

unite2revolt 7 years, 6 months ago

Amen to insurance, you'd think since buying a house usually requires income and homeowners insurance, that they could just change the system a bit to require new buyers to purchase insurance on their income as well. I carry a LOT of insurance, mostly because I don't want to be in a situation were my family ends up homeless just because I can't work or one of them falls ill, has an accident, etc.

I have never bought a house so I am clueless as to the dealings of mortgage lenders and real estate dealers. Why weren't these people told about Primary Mortgage Insurance, or even required to get it before they bought the house or borrowed the money? I thought it was designed for this sort of thing.

BTW I have a gut feeling that laid-off workers at a predatory lending company deserve just as much sympathy as contract workers on the Death Star. You know as a worker what kind of company you work for. A good morgage company is going to work to save its bottom line by saving homes, aka investing in people, a bad one will cut its losses and its employees to protect its shareholders dividends, aka exploiting people. Ever hear of the saying Evil never rests? Lots of hard work does not equal good work. You reap what you sow. Before you think I am unqualified to speak on this, know that I have worked for a company that exploited people for profit, nothing illegal was going on, it was just not moral. Everyone working there knew it, customers and employees were treated poorly, and the owners got rich. I am one of a very few who voluntarily left that company.

Jamesaust 7 years, 6 months ago

The irony is that we're drowning in compassion - just compassion for the wrong people.

In the 1930s, along with many other governmental programs, we began a process in this country as a matter of national policy to aid the poorer and less fortunate in putting a roof over their heads if it was at all feasible. It worked and today we have the highest rates of home ownership ever.

But, over time, like so many targeted programs, the politicians and the middle class taxpayers have converted this from a policy to aid the poor into welfare for the middle class. Approximately NINETY percent of the federal tax benefit for home ownership (a/k/a, income taxes the IRS never will see) goes to mid-to-upper middle class households that would STILL own a roof over their heads if the entire benefit was abolished. In other words, we pay people to do what they would do ANYWAY.

In contrast, very little is done for the poorer folks, most of whom (harsh judgment or not) shouldn't try and most likely never will own their own home (at least not for long as this article documents). The best policy we can make for them is to see that decent rental housing is available. And the money to pay for that is literally the tax revenue disappearing into the mid-to-upper middle class house - in Lawrence roughly $200-$300k.

(Don't get me wrong, I enjoy the feds subsidizing my lifestyle. American housing over the last half century has exploded in size and quality due to the benefit. I just find it ignores the poor and in the end a futile attempt to aid even middle class people - literally, the left hand subsidizing the right hand, which nets to $0, and leading to overinvestment in non-productive assets.)

Luxor 7 years, 6 months ago

I don't get it. If you can see that you're not going to be able to make your house payment, wouldn't it make more sense to sell the house than to let it go into foreclosure?

unite2revolt 7 years, 6 months ago

Also I think the best quote in the article is the one were the credit counselor guy tells the reporter he is hunting a story that doesn't exist in Lawrence because our housing market has priced out the predatory lenders. Talk about expensive housing markets! It's nice to know that we have successfully kept all these poor people from being forclosed on by preventing them from being able to buy a house here in the first place. Good for us!!

Sharon Roullins 7 years, 6 months ago

Maybe she wasn't ready to be a homeowner in Lawrence. She owns a house in Kansas City though.

Confrontation 7 years, 6 months ago

I bet that many posters claiming to be financial experts are actually lucky to have been born to wealthy parents. There are those who truly earn their living, but even more get financial gifts from their parents. No student loans. A big chunk of money for a down payment or the gift of a house. Not everyone is so lucky. The rest of us who actually have to earn what we get, need to pay close attention to what we're buying and how we do it. Although we didn't get a free ride, we shouldn't make other people pay for our mistakes (children included).

TheOriginalCA 7 years, 6 months ago

I make a handsome wage and my wife does not do too bad herself. We have a son who is chronically ill and has been hospitalized 14 times in the last 3 1/2 years. We are in DEEP debt and are climbing out of it. We do not whine about it nor do we expect others to bail us out. It is what it is and that's OK.

People MUST have a reserve no matter WHAT. If you don't have one then this type of thing happens. No one is at fault here though but Iam sure it feels to themn as though they are being blamed because they are the ones being punished. It seems to me as though the lender should make it a stipulation of the financing that they collect an additional $100 per month to put into escrow for medical, auto, and home maintenance emergencies.

Nick Combs 7 years, 6 months ago

Confrontation-

I wish I had rich parents! My parents didn't pay for college, but they DID buy my first car... for $500.

I'm not a financial expert by any means, just a guy interested in money.

Ceallach 7 years, 6 months ago

So a person is heartless if they do not think that big bad business is at fault? That is nonsense. Living from payday to payday with nothing going into a savings account is courting disaster. Budgeting your income will go a long way toward avoiding such tragedy. That doesn't include good intentions such as, I think I can cut back here, or there, or there. A budget gives you weekly, bi-weekly and/or monthly reality checks. If you can't afford it . . don't buy it. These are lessons I learned the hard way. It took several years for me to get back to somewhat stable financial ground. Now, the budget determines what I will buy. The peace of mind I get from that is much more important than driving a new car every couple of year, buy a newer, larger house, (having Gold internet service), or anything else.

I am concerned about the mind-set that is becoming so prevalent in today's culture. Entitlement, entitlement, entitlement, I need, I need, I need. If you read many of today's posts there seems to be an underlying theme that, while it is not new, it is reworded and ends up a lot like "From each according to their ability and to each according to their need." Is that really what we want for America today?

mommy3 7 years, 6 months ago

KU....First of all, my comment made perfect sense. I guess you had to be the one going through the forclosure. Yes, the mortgage companty did care what we sold the house for. We had an offer for more than the loan was for, they denied it, and sold the house after the forclosure was final. I later received a statement saying the debt was paid, and it showed what they sold the house for. So I should have money coming....strange three years later no check.

People keep saying that you should prepare....I agree. However, when you are paying high rent and someone offers you 100% financing on your very own home.....what do you think you would do?

Godot 7 years, 6 months ago

"However, when you are paying high rent and someone offers you 100% financing on your very own home:..what do you think you would do?"

Walk the other way.

kujayhawk 7 years, 6 months ago

If they truly sold it for more than you owed, you are due the balance.

Godot 7 years, 6 months ago

If your only option, other than renting, is 100% financing, or an interest-only loan, just keep renting. Then when the roof leaks or the stove quits working, you do not have to pay to fix it. If disaster strikes and you can't pay rent, it will take awhile for the landlord to evict you, and the fact that you did not rent probably will not show up on your credit history. If the rent increases more than you can afford, all you have to do is find a place with lower rent, and move; you do not have to worry about selling before you move.

Home ownership is not for everyone.

mommy3 7 years, 6 months ago

They truly did. I recently received a letter from the IRS stating that I owed taxes on income received from the sell of the house. However, I had to argue with them, and prove I never received a dime from the sell. It sure would have come in handy. We really put allot of elbow grease into that house, and made it worth more. It really ticks me off that the only reason they sold it for more was because we put so much into it. No one ever said anything about getting the difference.

Sharon Roullins 7 years, 6 months ago

The assumption here is that the lady facing foreclosure is pointing the finger at someone; blaming the bank, lender, etc. I don't see that. She stated the facts involved in her particular case. I don't even see her holding out her hand asking for help or standing on a corner holding a sign saying "Will work for .......". Yes, she should have planned better but I bet she didn't see a sickness coming that would land her in the hospital for almost two months and unable to communicate verbally with anyone. Most of us are living paycheck to paycheck and think just because you have a few dollars in the bank that tragedy or situations won't come your way. Life is unpredictable as it is and yes insurance is great to have because you never know when a situation like this is going to arise. Instead of playing the blame game and putting people down, why not offer some sound advice or solutions?

Ceallach 7 years, 6 months ago

Does Lawrence still have its new homeowners training and assistance? A friend used that program, I think it was called HOOT, anyway, she went to classes that helped her learn to budget, clean up her credit record, etc. It worked great for her. She has been in her home four or five years now.

unite2revolt 7 years, 6 months ago

Just as a side note Ceallach, I understand where you are coming from. My point is not that every one should be able to own a home. I can't and I don't, not here in Lawrence anyway. I try to provide a comfortable living for my family on my modest income, I do everything I can to protect what we have and save for the future. The largest budgetary expense I have is insurance. Its higher than my rent. We still struggle with making ends meet and live paycheck to paycheck. I am furthering my education and my career at the same time in hopes of securing a larger paycheck and more financial stability, despite significant scholarships and grants I am still going into debt to accomplish that goal. I am not asking for anything. I fully intend to be able to pay back the debt after finishing school. My point is only that it seems wrong to exploit the poor for the purposes of building your own wealth. Poverty is a serious problem that is only getting worse, the reasons are myriad, but ignoring it and blaming the poor for it will only cause it to get worse.

Godot 7 years, 6 months ago

How did the JW know these folks were in financial trouble?

Now, the next time they apply for a job, or credit, or housing, this story is going to pop up on a google search.

More unsolicited advice: when the JW calls to interview you for a story, make the reporter agree to not reveal your name, and do not let them take your photo.

mommy3 7 years, 6 months ago

ok, so my husband almost getting his leg cut off was not living up to my agreement? We tried to sell the house prior to the final deadline to be out. The mortgage company denied it (even though it would have been more than enough to pay the debt, and then later sold it for more than we owed. Ok, you act like finding a place to rent is so easy. We have three kids and were able to find a loand lord that would allow a family of five to live in a two bedroom house for next to nothing a month, so we could save for a down payment on our own home. Prior to that we lived in a outrages duplex and then were asked to leave by the bank because the landlord was forclosed on, and was going to prison for multiple DUI's.....Prior to that that landlord decided she was selling the house, and told us we could buy it, or move. She bought it on a balloon note, and falled to mention that upon our arrival. See renting sucks, I'm tired of moving. I want my kids to have a HOME, not always be at the mercy of a landlord. I am not seeking sympathy, I just was hoping to help you understand that you can't control everything. Crap happens, and it's not always your fault.

Sharon Roullins 7 years, 6 months ago

Lawrence Journal solicited the people for the story because of some information they got through their sources.

Confrontation 7 years, 6 months ago

offtotheright (Anonymous) says:

"Everyone who was born into a wealthy family, does not work, and has it all handed to them, raise your hand.

Give me a break confrontation!"

I didn't say everyone. Having a rich family who can bail you out and provide a source of interest-free money is a privilege that not everyone has. Having that privilege would make life a heck of a lot easier for many people. It sounds like you feel sad because your folks actually made you do something other than live off of them. How sad.

ilovelucy 7 years, 6 months ago

Just remember the next time you hear Ray Vincent on the radio touting 4.25% interest and a monthly payment of under $1200.00 per month on any price home. What Ray isn't telling you is that it will cost upwards of $5k or more to get into the home, and the 4.25% rate is more than likely a 6 month teaser rate. I do believe the gov't is attempting to crack down on predatory lenders. The bad thing is that they waited until now to do so. Most of these homes were sold during the refi boom, with many of the people going through the internet for their loans. Maybe if they would have discussed options with a local lender, they could have gotten into something more affordable. I DO feel for the people in foreclosure. However, I just don't think they were counseled properly. Hopefully, this will make people think before leaping into the pit.

monkeyhawk 7 years, 6 months ago

Ok, I admit it, I am addicted to real estate. Maybe it is because for the greater part of my life, I was real estate deprived. I wanted to buy my own home for many years, but did not because I knew at that point I could never afford to do it in spite of a perfect credit record. 10 years ago I finally had the wherewithal to plunge in. Though I have tried hard over the past couple of years to break my habit (and make my life easier), it seems a great property comes along just about the same time I sell one. I am down to 6 properties and have never missed a payment on any of them, or any of the ones that have sold. Luckily, I have a good relationship with a mortgage company and my bank. They know my repayment habits and they also know that I always lay down at least 20%, never, ever pay PMI, and I always finance at a fixed rate. I go into each transaction with a little fear and a lot of faith.

It is too bad that some of the foreclosed will not have the opportunity to see their properties increase in value and reap the benefit of that equity. Hopefully, when they clear up their problems they will try again. I'm sure the next time they will be better equipped.

Staci Dark Simpson 7 years, 6 months ago

I am one of those people that got in one of those stupid 2-28 loans. I was not educated about this situation at all. If I had known what I had gotten into we would never have bought the house. We have thought about selling it but here in TOnganoxie the market is dead. The house across the street been for sale forever and it is a very nice home. I don't think if we sold our house we would make enough money to even pay the realtor. Luckily we can pay for it barely. But if we ever have a crisis we are doomed. Save money? Yeah right. It takes every dime for utilities, food, insurance and mortgage. In a perfect world we would save some money but for us its not possible

kujayhawk 7 years, 6 months ago

"Luckily, I have a good relationship with a mortgage company and my bank."

Translation: I haven't missed any payments yet. Once you get behind, it's amazing how quickly these relationships can dissolve.

ilovelucy 7 years, 6 months ago

Mommy3: you sound like a perfect candidate for the Homeowners to Tenants program (HOOT). Their offices are located in the United Way Bldg. I'd call to see when their next informational meeting is and go from there. Good luck-

Richard Heckler 7 years, 6 months ago

Yeah I know foreclosures build character and stamina. Universal healthcare will build character for all knowing we are helping each other along the way so at least it will not be medical bills seriously disrupting those who are putting effort forward to make lives for their families.

Richard Heckler 7 years, 6 months ago

This super duper financing from GMAC is screwing lots of folks. Shame on the bad guys and girls of corporate anti america. Local real estate folks/bankers came out smelling like a rose cuz they get to keep the money.

Godot 7 years, 6 months ago

Yes, Merrill, and you can thank John Edwards for lending his time and name to the sub-prime lending industry for just a paltry several hundred thousand dollars of compensation, meanwhile claiming to champion the plight of the poor. Maybe in his vocabulary "champion" means "exploit." It just depends on what the definition of "is" is.

Godot 7 years, 6 months ago

Wasn't the Ward neighborhood touted by the Commission as an "affordable housing" area?

frank regnier 7 years, 6 months ago

Everyone is right. Persons who purchased homes in Lawrence when it was a "Seller's market" ended up with a overpriced home using a "adjustable" mortgage rate. Same persons "probably" took out a home equity loan using a "adjustable" interest rate. Housing bubble popped and left the same buyers with a overpriced home with a higher monthly payment not to mention the inflated home equity loan payment. Can't sell because the housing market went stale and hadn't lived in the home long enough to have a substantial equity. Not to mention, higher property taxes (still rising) and higher fuel cost. Who is to blame? Home buyers should read the fine print, lenders should be shot for attempting to "hook" new home buyers into the "adjustable" rate trap, and the city needs to lay off supervisors and managers and assistant mgrs. instead of the men and women who are actually doing the work to help lowering the taxes.

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