You expected that question to end with a promise of riches, right? Well, more and more people have had foreclosures taking them by surprise lately.
Are you behind on your mortgage payments? Are you facing foreclosure? If so, you are not alone. I myself went through it not long ago. At first, I was ashamed to admit it, but now I realize that there is nothing to be ashamed of.
If you are feeling guilty, ashamed, or embarrassed about the financial straits you find yourself in, maybe my story will help.
I worked as an engineer for the same company for the last 17 years. I thought I had job security, but last August I was laid off. This has happened to a lot of people lately.
It wasn’t long before I realized I had a cash flow problem. Unemployment benefits didn’t even cover my mortgage, let alone food, utilities, and HOA owed.
I tried to get my lender to negotiate a loan modification so I could keep my home. But the bank knew unemployment wouldn’t last long, so I didn’t qualify. They wanted to see proof that I could pay my mortgage for years to come, not just the next six months.
Meanwhile, I was looking in the newspapers and on the Internet for a similar engineering job, but the job market was very tight. My previous work experience was in a very specialized field and there was simply no job to be found.
I saw many advertisements for opportunities to earn money online. I thought I could cover my bills that way. So I started following one guru after another trying to make it in internet marketing.
I lost my job in August and by November I had to start choosing which bills to pay and what to expect. The mortgage was my biggest bill, so it always went to the bottom of the pile.
I was lucky to have something to fall back on. You see, I married a Chinese girl whose family was well off. A few years ago, my wife’s family had bought us a house (in China) free of any mortgage. Construction had been finished for over a year, but it was still empty waiting for us to move.
I thought if I lived in China I could rent my house. You could use the rent money as proof of income that the lender was asking for to negotiate the mortgage payment. So the monthly rent would cover the mortgage.
I found a tenant to rent my house, packed up, and moved to China. But the tenants did not pay their rent on time or in full. Without proof of a reliable income, the bank was not willing to deal at all.
With no documentable income, even President Obama couldn’t save my house. Finally, the bank took the house from me.
Did you know that there are over a million families facing foreclosure in the United States today? While President Obama has done his best to help these people, he doesn’t do much for people who have lost their jobs.
So how did we get into such a mess, anyway?
Here’s how in a nutshell:
With interest rates at an all-time low, lenders have changed their business model to make money from upfront points and fees instead of interest paid over time.
This made it possible for lenders to sell the loans packaged as mortgage-backed securities. Since they weren’t planning on holding on to the loans, they went a little crazy and offered loans that they knew would not be repaid.
Homes became more affordable because people who shouldn’t have been able to qualify for a loan were offered offers they couldn’t refuse. With increased demand, the real estate market responded with phenomenal price increases.
Wall Street investors who bought mortgage-backed securities were seeing fabulous gains as house prices soared, so they were willing to overlook the fact that many of the mortgages backing their investments were doomed. failure from the start.
This has resulted in a record number of foreclosures, leading banks into financial difficulties. Credit became increasingly difficult to come by. Businesses that depended on credit had to close. This created a snowball effect that caused consumers to lose confidence in the economy.
Consumers stopped consuming and the economy hit the brakes. A kind of self-fulfilling prophecy: You better save your money because the economy is getting weak because no one is spending money because the economy is getting weak…
Well, things are starting to change and President Obama has started making some changes to help struggling homeowners. There are signs that the economy is beginning to recover.
Most people don’t have the option to pick up and move to China if they wanted to. But there are other options. Some people are turning to novel ways to save their homes. Some of these ways are working. Have you heard of the woman who saved the house from her by selling apple pie?
You can learn more about what people are doing to save their homes by visiting my website.