Last summer in 2007, I announced during a conversation at a dinner party "that the 150 foreclosures per day in Los Angeles were about to rise to four times that level." My surprised dinner partners accused me of having "one-too-many" during the cocktail hour-but I was stone sober and most of the other successful business guests thought my doom and gloom remarks were intended to get them to list their property with me as a Realtor. They were too smug with their success to realize I was giving them sound warning of things to come.
I live in one of the most affluent zip codes in Los Angeles and when I look over my daily foreclosure list it is shocking that I am surrounded by dozens of foreclosures and properties with major tax liens in some of the most luxurious high-rise property in Southern California. The mortgage meltdown was believed to only affect the financial ignorant and irresponsible homeowners. But this crisis is proving to be an "equal opportunity" destroyer of lives and families. No one is immune to bad business investing and poor judgment, or worse, mortgage schemes.
If you believe that we have an oil shortage then you have succumb to the dumbing-down in America. There is enough oil in Alaska and off shore in the United States to last 250 years. Equally abhorrent is how fast our government came up with $30 billion to rescue Bear Stearns but not $25 billion to save strapped homeowners. This betrayal of U.S. taxpayers revealed that our political leaders were more interested in saving Wall Street than Main Street.
If you are in an UpSideDown Mortgage in which you now owe far more than the property is worth then walk away! Yes, you read me right. If your lender or Loss Mitigation department will not honestly negotiate a resolution to your problem mortgage, walk away! And tell them you will walk. We read in the newspapers that "lenders do not want your property;" it costs them an average of $60,000 to dispose of an empty house. What they do not tell you is that most of those houses have been stripped of their sinks, bathtubs, toilets and anything that can be removed and sold from the structure. The really ugly aspect of any foreclosure transaction is that the unsuspecting buyer at a foreclosed sale usually never sees the inside of these houses and is left to rebuild the property at their expense. The foreclosed deal turns out to be a financial albatross to the new owner that can be financially pushed into yet another foreclosure in the immediate future.
In the past the laws allowed a lender to send you a 1099 for the difference between what you owed on the property and what they received in the foreclosure process. That law changed in December, 2007 and "Phanton income," as it was called, is no longer a yoke around a foreclosed homeowner's neck. However, if you still owe the IRS they will someday force you to pay back those taxes.
Too many shortsighted lenders threaten homeowners and pretend they win in foreclosure but it usually cost them more to foreclose then to negotiate a reduction in the balance of your mortgage. Therefore, instead of begging and pleading you might consider threatening to walk away... it might bring about honest negotiating.
If your interest rate is going to continue to escalate through the ceiling... walk away! If your financial circumstances are going to be further complicated with late fees, and various penalties, then walk away. Irresponsible advice, maybe, but if I were in this position I would run, not walk to my local court house and file a "Quit-Claim" deed giving title back to the lender. Then, I would mail the lender the keys. It might take the lender weeks or months to evict you but at least you will spend what little money you have left to get your life in order and stop playing the part of victim. Lenders cannot foreclose on something they now own.
If tens of thousands of homeowners start walking, the problem will be solved quickly as Wall Street and corporate criminals cannot survive if you start out-smarting them and their mortgage schemes that were used to victimize you and your family in the first place-especially when these mortgage brokers knew full well that you did not qualify for the loan on which you would eventually default.
When tens of thousands of homeowners walk away from their mortgages and their credit card debt maybe our irresponsible government officials will start to uphold consumer laws already on the books that truly protect the consumers instead of giving lip service to the hoodlums in corporate America and Wall Street who continue to charge illegal "usury rates" of interest that suck the life-blood out of this economy and American consumers.
William Dorich has 25 years in commercial printing and book publishing experience. After authoring five of his own books on Balkan history and music he established his own publishng firm, GMBooks.com in 1985. Since then he has designed, produced, and published over 125 titles including Witness to War for the Los Angeles Times which won a Pulitzer. His current book is, Defeat Foreclosure, See: www.eraseforeclosures.com.
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