Many Are Only a Few Pay Cheques Away from the Stark Reality of Foreclosures
Figures do not tell the whole story – unaccounted for are many who are only a few pay cheques away from the stark reality of foreclosures. In a recent speech President Obama neatly summed up the picture and said, “A young family …they save up. They search. They choose a home that feels like the perfect place to start a life. They secure a fixed-rate mortgage at a reasonable rate, make a down payment, and make their mortgage payments each month. They are as responsible as anyone could ask them to be.” Suddenly there is a slip he went on and added, “Perhaps someone loses a job in the latest round of layoffs, one of more than 3.5 million jobs lost since this recession began or maybe a child gets sick, or a spouse has his or her hours cut. In the past, if you found yourself in a situation like this, you could have sold your home and bought a smaller one with more affordable payments. Or you could have refinanced your home at a lower rate. But today home values have fallen so sharply that even if you make a large down payment, the current value of your mortgage may still be higher than the current value of your house. So no bank will return your calls, and no sale will return your investment. You can’t afford to leave, and you can’t afford to stay.”
The situation is grim and those that have not fallen are tightrope walking over an abyss of foreclosures.
Joseph Zachary was a firefighter. Finally he started off on his own business – demolishing houses. With it he maintained his living in a stately house with plenty of trees. The house had been bought for $100,000. He renovated it steadily by dipping into the growing equity but when the market fell he owed double the value of the house. Matters became worse when a chance accident disabled him from continuing with his work. He found it impossible to continue with the mortgage payment of $1,647 per month. In 2008 he got a call from the servicer of his mortgage asking him to apply for modification of the loan. The loan was for 30 years at the rate of 8.99% interest. Today the Federal Reserve is trying to bring down the rate to below 5%. But since the first call a second call came but nothing materialized beyond that. His application got lost in a flood of others.
