Tuesday, May 26, 2009

Just Don't Understand

There are a lot of foreclosures in the Dallas area now and everyone is saying this is the best time for us to buy a home, but I am hesitant to do so. Listening to Dave Ramsey, I know it is the best time to buy if you have the money and I do not have the money right now. Felicia and I want to make sure our house is a blessing and not a burden.

Currently, my job is to help people who are 5 to 6 months behind on their mortgage. Right now, the modifications are being pushed to lower interest rates and/or reduce principle balances so homeowners can get lower payments. I always try to be sympathetic to everyone's situation but for a lot of people I cannot put myself in their shoes. I understand having hardships because loss of income, medical bills, divorces, deaths in family, and things like this. But what gets me is when you start to go over their budgets, you start to see misplaced priorities. I tried to understand and help every client by putting myself in their shoes, I understand paying for food and utilities first and then your mortgage. To me that make sense, you need money for these basic needs. However, more often than not, I get clients who have $700-800 mortgages and car payments for two cars that are $1000.00. They pay more for their cars then their mortgage. When you question them about it, the answer is always the same: I need a car to get to work. Two separate clients are the reason for this post, one client that I could help and the other that I wanted to help.

The first client started our conversation by telling me that he was having to decide between feeding his family and paying his mortgage. I prepared myself for this conversation; in these times that is a choice a lot of families are having to make. One of the first things that I always try to find out is the reason for the hardship and if there was a decrease in their income from when the loan was originated to now. In this case, the answer was no and in fact, after probing the income slightly increased. Secondly, I go over the income and expenses over the phone and to determine the debt to income ratio. Also, this info allows for me to numerically see the hardship the client is going through. I took all this info over the phone with him and started to review the account and noticed that his 1st and 2nd mortgage payment equaled $800 and his gross income was around $2,100. In calculating assistance, this difference was slightly high (but still affordable) and warranted assistance according to modification guidelines. After reviewing the rest of the expenses, I noticed he also had a $700.00 car payment for one car. I questioned him about it and he told me the payment was for his 2007 Denali. When I pressed him on the seemingly high car payment for his income, he admitted that this was when he started to have trouble making his mortgage payment. To me, it makes no sense to get yourself in a car payment that high on that income. What is wrong with waiting to buy the car you want when you can afford it?! Let's be honest, he was choosing between driving a nice car and feeding his family.

Why would you look at your finances and see that when you bought the car you started having money problems and blame the mortgage payment? I am not perfect in anyway and I have my own personal finance problems, but I am not paying my car note before paying my mortgage. But of course, he qualified and I had to submit for a modification that is probably going to include at least a 25% principle reduction.

The second client was a man who lost his job six months ago and has been trying desperately to find another. He had been working odd jobs for friends and neighbors as a handy man to make money to pay the utilities and buy food. A real case where the choice between food and mortgage was made, and not once during the entire conversation did he seek pity. In fact, he was optimistic about getting back on his feet and just needing a little help to get by. Unfortunately, in his case he did not have verifiable income. The money he was making to feed his family did not come with a pay stub that he could fax in and it was not stable enough for me to count as income. This guy really need the help and he did not qualify and when I told him that he did not qualify, he thanked me for helping him and he said he would call me back when he got a job. This is the frustrating part of my job, turning down people who could use the help and approving people who have their priorities wrong.

I wish there was a way I could help the people who need help all the time.

1 comment:

D said...

Hey! I found you through climbingout.net and followed you over here. Hope you don't mind. I've been reading your story. My husband and I are also following the Dave Ramsey play and have just a little bit less than $10,000 left to pay off. We're hoping to have that knocked out by August 1st. If you want to check us out, we're at http://thehatcherfam-debtfree.blogspot.com

Anyhow, my point of this comment is this post you've written. I would love to pick your brain about loss mitigation and loan modificiations. My husband and I would desperately love to get a loan mod but since we're not behind on our payments everyone keeps telling us that we can't.

Anyhow, feel free to stop by our blog and if you can, leave me your email address so I can pick your brain!! =)

Keep on going! You guys will get there!