Tuesday, March 15, 2011

Before Considering Foreclosure

A few years ago, my father-in-law took the family dog for a routine check-up. When he brought the dog home, the report was that the dog would have to be put down. My mother-in-law was saddened. The kids living at home were devastated. Phone calls were made to all the married kids to come home ASAP and say their tearful goodbyes to the long-time family pet. It was a loooong night.

The next day, my father-in-law called the vet to get an appointment for euthanization; the vet responded with "Why are you going to do that??" It turned out the doctor had only pointed out signs in the dog's mouth that the dog was experiencing illness, and my father-in-law had interpreted that conversation to mean it was time for the golden retriever to meet his Maker. There was a collective sigh of relief when we heard the news, and then we had a good chuckle; I teased my father-in-law that I would make sure to never complain of a toothache when he was around.

Sometimes, a simple misunderstanding can throw emotions into the driver's seat, narrowing our ability to problem-solve or, at least, clarify a situation. For my husband's family dog, it was only the next day, when my father-in-law had composed himself enough to ask more questions of the doctor that he uncovered an alternate possibility for the family dog: medicine and a healthier diet. The dog lived another five happy years.

Do you remember a time when you made a decision in the middle of an emotional moment? Did you later regret it or wondered if there had been some other choice available? I think it happens to all of us at one time or another. Or maybe it has happened to me so many times I have convinced myself it must also be normal for others.

A few months ago, a friend of mine openly discussed on her blog her latest financial difficulties. She asked in reference to her home, which she stated they could no longer afford, whether she should rent it out, short sell it, or let it go into foreclosure. First off, I felt for her. The hardest thing in a situation is to have to make a HUGE decision under the weight of emotions. That aside, I honestly was not expecting the comments that followed.

I was shocked how many people suggested she "just let it go" to foreclosure WITHOUT KNOWING THE FULL STORY! I am not saying there is not a place for a foreclosure, but these helpful people didn't even know her checkbook math! Why would anyone with good intentions EVER recommend such damaging action without first understanding the situation? The dog might not need euthanizing!

This left me pondering: Why have people become so loose with their tongues on the topic of foreclosure? We have heard a lot about foreclosures in the past couple years and the word has been beaten into our everyday vernacular. What we don't hear a lot about, despite their existence, are SOLUTIONS to avoid getting into such a situation and ALTERNATIVES if you find yourself in such a situation. So, of course, when we find ourselves in such a place, the mind immediately recalls that which it has heard a million times: foreclosure. (This type of recall is one of the reasons I am selective about what I spend reading, watching or being entertained by. Spend most of your reading and entertainment in activities that stimulate your mind to finding solutions, not dramatizing problems.)

By no means am I insinuating that friends or neighbors who went this route came to their decisions lightly. I know there was much crying and fretting and arguing. I AM saying that bringing the problem to the light, out of taboo, and into the open to be discussed with knowledgeable people can take the scary out of a dire situation.

Last year, when I was pregnant and largely immobile (emphasis on "large"), I HULU'd a bunch of old call-in television shows hosted by a well-known personal finance expert. I watched around 60 episodes during that phase of my pregnancy. There was a good chunk of people calling because they were about to file bankruptcy or let their homes go into foreclosure. They had found themselves in a rainbow of spectacular situations, but there was one common thread running through each and everyone of those fatalistic calls. After listening to each story, the host effectively responded with "Woah woah woah! You're in a hard financial situation, but you're not bankrupt!"

Noticing this trend was eye-opening. If bankruptcy and foreclosure were avoidable in these scenarios, then why were the callers SURE that's where they were headed? Why do you think they would have thought that their only option?

After the host removed the emotion out of the situation, each of the callers ended the call feeling relieved and with a new plan of action. When fear, panic, guilt and shame color your vision, it is nearly impossible to see the picture objectively. This is why the friend I mentioned above wanted more heads to look at her situation, though she may not have counted on people speaking from their own emotional situations. I think this friend is quite smart and lucky; she asked for help BEFORE making a drastic decision and heard other ideas she had not considered. I've had far more friends call me AFTER they made life-changing financial decisions that I knew could have been avoided.

Later this week, I will post some alternatives to foreclosure so that "I don't know what else to do" doesn't immediately mean choosing a big, red mark on the credit history. Who knows, you may help a friend save their home!


  1. I worked for a mortgage company working with people in this exact situation. Let me tell you...not a fun job at all! I think the reason why most people just say "let it go" is because it is the easy way out. I don't mean that to be harsh...but in talking to people, they want results now and not later. Short sales (depending on the mortgage company) can take up to 6 months just to get an approval. Loan modifications are not always what they seem and may not even be approved after your three month trial...so packing up and leaving is just "easier."

    I agree that if you know things are going bad or you are not going to be able to afford a mortgage you need to make the steps now before it gets to the point of Foreclosure or Bankruptcy. Ask for help NOW!

    From my experience at the mortgage company, people wanted a lower payment (loan modification), but were willing to cut their expenses so they could afford the higher payment that they already had.

  2. Thank you so much for posting this. I'm really looking forward to your follow up posts on the subject. Let's get on that shall we?