Philosophy of a home, Part I

I try not to be an all-or-nothing person, which is why I chose our house despite it not being even close to my dreams. I was practical. I was not in love with the house. A house I love would have had the charm of built-in antique cabinets and shelving in the dining room and living room, a fireplace, large bedrooms; a finished attic playroom, nooks and crannies, arched doorways and French doors. Or if I’d lived in a city: My dream was the decrepit but rambling turn-of-the-century apartments of Budapest before they were subdivided during Communism. My friend Emma had rented one of those; my ancestors had had one near Keleti station that boasted art nouveau details inside and out from the closets and balconies (alas they didn’t have the money to last there long, either). Or in New York, something like my former Washington Heights apartment, with its art deco shelving and trim and its huge sunken-floor living room. Or the [rent controlled] “Woody Allen” Central Park West duplex with servants quarters my friend Ariel grew up in. Even my first husband’s 5-story Amsterdam house was not charming enough for me; at one time it probably had 19th century details, but at one point it had been gutted and soullessly rebuilt into a Ronald McDonald House; the only antique beauty remaining in the marble steps and stained glass of the entryway.

The house we ended up buying had none of those; although it did have wood floors and trim, and a rare laundry chute, a deck and front porch, and a two-room addition that transformed it from too small to good enough. For an old house (about 1920) it was in pristine condition. There were houses with better size, charm and more antique detail in my town, but they were beyond our price range and often needed renovation.

What the house we bought had was enough space for a family of three, which we had hoped to expand to four.

That did not happen. The price range my husband said we could afford turned out to be a mirage on his part. The adjustable rate, high interest mortgage my husband insisted we take out because of his poor credit (“Don’t worry, we can refinance in six months” also a mirage) made our mortgage barely affordable on two incomes. Then after we split up it became only my income supporting that mortgage and property taxes; my husband refused to pay his half. Still lulled by the not-so-long-ago days when there were bidding wars over homes in our town, and one could easily “sell by owner,” my husband and I put the house on the market ourselves; over the summer we had half a dozen viewers but no bites.

By August my husband revealed to me that not only had his business fallen apart (as if it were ever viable); he had been diagnosed with diabetes in June. He could not work, he said; yet he was paying another accountant to hold the business up rather than pay his half of the mortgage. He would not, he said, go on disability until he got better; he would not give up running his own biz and work for someone else. Horrified not only by the news but the fact that he had withheld that information for at least two months, I made a final decision to divorce him, went to my realtor and put the house on the market.

At the same time, the international mortgage crisis/housing crash was hitting: Our house was significantly devalued; our mortgage lender and others were playing hardball with defaulting homeowners like us and potential buyers. My once high credit rating began to sink; after one missed mortgage payment my credit card company chopped my credit limit in half.

By the time I officially put the house on the market in late August, my realtor and the lender, HomeEq, said I would have to attempt what is called a “short sale.” The appraised value of the house was now well below what we owed HomeEq, and we would have broker and legal fees to pay as well upon the sale. A short sale agreement, from what I was told, would mean that if a buyer made an offer, the bank might agree to take the offer minus the fees, and let us go without us owing the balance of the mortgage.

In real numbers, we had bought the house in two years previously at $393,000 and put down a down payment of $40,000. Its market value was now $360,000. We still owed the bank over $350,000 because the loan was young and the interest high. Because we had to sell fast, we had to put it on the market for even lower than its appraised value, which had dropped to $360,000 from $440,000 two years ago. By October it was listed at $339,000. This time we had a offer: $305,000. Minus the fees, all the bank would get was about $285,000. We would be short the mortgage about 75,000, but the point of a short sale, I was told, was that the bank would forgive it and take what they could get rather than risk losing all through foreclosure.

My realtor began the paperwork process. I was hopeful. Then my father passed on New York Times article describing how even with short sales, banks were forcing sellers to pay off the balances. I nearly freaked out. It was bad enough I was losing my down payment and being forced to sell my home; I also did not want to be in debt the rest of my life.

By October I had stopped paying the mortgage, knowing that ultimately I could not keep the house and sink my entire paycheck into it.

But after half a lifetime on relying on the man to examine and handle the finances, I was finally doing the research. I found out that the “bank” which held our mortgage, HomeEq, was not actually a bank—it was a “loan servicing company.” I sourly nicknamed it “the shyster bank” although frankly the real banks like Citi weren’t behaving in any less a predatory manner. HomeEq was based where the mortgage crisis was at its worst: California. Getting anyone on the phone was hard; and there was no “one” person handling our mortgage. I also did the research that I should have done before marrying again. It was a hard lesson to learn. I know what I earn; I spend within my means. The irony is is that I could have afforded a small but adequately charming house on my own, even at the height of the market. But it was what it was. It was time to cut my losses and move on.

Despite my newfound knowledge of how real estate worked, I had no idea what would happen next. People would throw all sorts of absurd advice at me: “declare bankruptcy” (which does not forgive mortgage payments); “take in a boarder” (rent would not even begin to cover the mortgage at the rate it was by then); “rent the house” (and then where do we live?). I had more important things than living in thrall to the mortgage lender; my daughter, my job, my health, the ups, downs and in betweens of daily life.


Finally, however, the economic crash which exacerbated the problem began to actually solve it.

In August when I put the house officially on the market, the banks were still playing hardball. By the weeks leading up the Presidential election, Obama and McCain were debating over what to do to help homeowners and the government was beginning its corporate bailouts. I was hopeful; if the government hadn’t shot the predatory lenders yet; it was at least aiming its guns. I no longer felt fearful about not paying my mortgage; it was now a cat-and-mouse game with the lender. It was my turn to play hardball. I waited. HomEq kept sitting on the paperwork, needing a signature here, and signature there.

Finally, a few days ago, they acquiesced. They would take the short sale AND WE WOULD NOT OWE THEM THE BALANCE OF THE MORTGAGE. I would be free.

At the moment, my realtor and I are still performing bureaucratic somersaults with HomeEq, which insists that we close in 3 weeks. Theoretically, I can move out in three weeks; I have a place to rent already. The buyers, understandably, would like another six weeks. So while I am starting a Herculean packing job, I don’t have a moving date yet or the papers signed.