Friday, October 11, 2013
Refinancing and Economic Ups and Downs - Part 2
I NEVER wanted to borrow on our home. But there would be forces working against me. My spouse was one.
One day in early 2000, John came home with a brand new vehicle! He had purchased a 2000 Ford Ranger for $23,000. I asked how we were going to pay for it. He looked a little sheepish,and didn't answer. I asked how much the payments were. He replied, "$495 a month. We were on a tight budget at that point and I wondered he he could do that without discussing it with me first. I told him we no longer had the income to support those payments. His pension and Social Security payments were used to pay our mortgage and living expenses and weren't enough to make payments on a vehicle. I wasn't old enough at the time to file for benefits myself on my 35+ years of comparatively low earnings, mostly in the clerical arena.
John would have to come out of retirement and get a job. A menial job. No executive position for him. He had had enough of that during his career in Washington, D.C. Despite his executive level job back in D.C., John had always loved boats and even worked for a while in 1990 as a deck hand at a yacht club in D.C. I admired him - a man earning $27.00 hourly as a professional, wanting to work at a menial job just because of his love of the water and boating Unfortunately, realities set in (the weather was difficult to contend with, for one. He resigned after about eight months.
But what to do about his extravagant purchase of a pickup truck? John ended up with a $10.00 an hour job in a nursing home. In the meantime, I looked into a second mortgage. After three weeks at his nursing home job, he came down with a severe cold and had to be off work. When it was time for him to return to work, he wouldn't. So I proceeded with our first refinance. If he was going to get $25,000 for himself, then I wanted $25,000 to put into further remodeling of our home. So we received our second mortgage in the amount of $50,000. That was the first of four times we were forced to borrow money on our home over the next six years.
In 2001, John had relapsed. He tried hard for several years to control his alcoholism, but could no longer sustain sobriety. There were multiple hospitalizations as well as trouble with the law. For a while, we were forced to pay $625.00 a week for a breathalyzer and camera while he was on probation for a DUI (one of several). It was either come up with the money or go to jail. My limited income and his small pension and social security payments weren't enough to pay for these expenses. But the economy was growing, real estate prices were on the rise, we had equity in our home, and we felt we could handle the larger payments, especially if I returned to work - which I had planned to do in the summer of 2003, when I had my BA degree.
In July of 2005, John's gastroenterologist informed us that with the three symptoms he was exhibiting, he would probably die within three years. He suffered from esophageal varicies, ascites, and mild encephalopathy due to his chronic alcoholism. He also had contracted cirrhosis of the liver.
John died on July 5, 2008. By then the house was negatively amortized and I set out to refinance it to get out from under the negative amortization. I received only $16,000 from John's life insurance policy (he had made arrangements to reduce it by 75 percent when he turned 65). I had to pay $10,000 in "closing costs" - the third time I had paid that amount during other re-financings. This last re-fi meant an additional increase of $500 a month in mortgage payments. This meant that two thirds of the mortgage payments went toward interest, and the other third toward principal. It was a financial strain, and the following year I asked my mortgage company for a modification of the loan under the Making Home Affordable Program. Around that time I filed for bankruptcy protection. This all came about in 2009. I ended up signing a contract that specified the interest would be 2-1/2 percent for two yeas, and would increase to 4.5 percent for the remainder of the 30-mortgage.
I struggled along for another year, continuing to seek employment and bearing witness to the economic freefall. Then on my 67th birthday, I met Rolf, a retired physician who lived half an hour away. After dating for a while, we agreed that I would rent out my house and move in with him while applying for a mortgage re-modification a second time. Within a short period of time, CitiMortgage employees told me my income was too low, that if I could get a job or acquire some other means of income, I would probably qualify for a re-modification. [I had hoped for some loan "forgiveness" because 1) my income was comparatively low, and 2) $30,000 of the mortgage represented closing costs related to three separate re-financings. But that wasn't even considered.] That's when I decided to place an ad in the local newspaper to rent out the house for at least a year at $1800 monthly. Maybe then Citi would lower the interest rate, at least for a while longer.
After only two responses from the ad, I decided to rent to Gary B. despite red flags waving all around. He signed a lease agreement and I mailed a copy to CitiMortgage. They then informed me my income was too high! I'm still angry at the way I was jerked around by them.
It looked I could never get ahead of the game. And I think it was a game for the bankers; something like "Lets see if we can wear him/her down."
The tenant stopped paying rent after a few months, and I filed eviction papers. At the last minute he came up with $8,000 in back rent and begged me to let him and his family stay. Reluctantly, I said yes. A few months later, he stopped making payments again, and I filed for eviction a second time. It took four months, a lot of stress, and money I didn't have to get him and his family out of the house. I couldn't afford a lawyer and had to do all the legal work myself - filing the initial complaint and subsequent motions and orders. My legal secretarial background helped as well as my knowledge (albeit somewhat limited) of the court system. I found out later Gary had been in prison for possession of stolen property - and other crimes.
On April 4, 2012, the county deputy sheriffs and I entered my house. Everyone was gone and so was a lot of my furniture, including all five of my beds. I was surprised he didn't take the light fixtures. The place was a mess!