Foreclosure Crisis – “I Wouldn’t Have Bought the House”

CoupleBarbara MacGregor and her husband are a lot like a lot of other people. They had never owned a home. Barbara would look through the newspaper occasionally dreaming about some day owning a home with her husband, but she new they couldn’t really afford one in high priced Southern California real estate.

At the grocery store she would pick-up real estate magazines filled with home listings, and show the Buying the American Dreambright pictures to her husband, who would always say that someday they would buy their first home. While she worked at her job Barbara would occasionally be drawn to search for homes on the Internet and she’d always find a few to gaze at.

Then a co-worker of Barbara’s purchased a home. Knowing the couple’s credit was poor; Barbara was amazed and stirred with excitement for her friend. The conversations between Barbara and her husband increased over buying their first home. But it seemed like a long time off until one day over a cup of morning coffee at work Barbara’s friend said those some how now infamous words, “You know you could do it too.”

There are hundreds of thousands of couples like the MacGregor’s throughout the nation, facing the possibility of foreclosure or already moving out of their homes, which are being foreclosed in what has turned into America’s Foreclosure Crisis.

Barbara told her friend it wouldn’t be possible that she had run their credit reports a few months earlier, and because of outstanding debts, late payments on credit cards and other credit blemishes she understood they couldn’t buy a home until things were straightened out, and their credit improved. Her friend asked what her credit score was and Barbara was too embarrassed to say, at least at first. Then later that day she struck up a conversation again with her friend on what would lead to the start of a disastrous journey.

The couple both had credit scores below 600, and Barbara’s friend was happy to tell her there was this mortgage broker they had gotten their loan through with credit scores even worse than that of Barbara and her husband. She gave her the phone number to the mortgage broker and a couple of days later Barbara nearly dragged her husband to meet with the broker. They came away from the conversation excited about buying their first home. The broker told them, “Not to worry about a thing. We would get a mortgage for a home up to $380,000.”

That Saturday they went out with a real estate agent to look at homes, knowing they were fully pre-qualified for a mortgage. But how would they be able to buy this home, Barbara’s husband asked himself, knowing that they only had $4,200 in savings. Something, he thought, must be amiss. But trying to keep his wife of nearly nine years happy Tom went along with the plan, thinking they could afford the mortgage.

Barbara and her husband realized later that they were victimized by a mortgage broker, who was willing to get a mortgage for the couple at any cost. The couple signed a loan application prepared by him that greatly exaggerated their income in order to qualify for the mortgage. The mortgage broker didn’t care. He was paid when the loan closed, and at that moment in time the MacGregor’s were caught up in the spirit of buying their first piece of the American dream.

What Tom didn’t realize was that the mortgage they were getting would cost more than $31,000 in closing costs, which would be compounded into the mortgage, and that the payment on their new home would go up nearly $700 a month after just two years.

Housing Predictor forecasts that more than 2-million homes, condos and townhouses will be foreclosed in the next two and a half years. The tsunami of foreclosures comes on the heels of the nation’s fastest appreciating real estate market since the 1980’s blanketed in reports of mortgage fraud and loan abuse.

A survey taken by Housing Predictor indicates that 76% of those surveyed believe the national real estate market came to a slow down as a result of mortgage fraud.

The mortgage the MacGregor’s took out was heaped in paper work, including documents for a second mortgage that the couple concedes they barely understood. The couple was anxious to move into their new home, which was appraised at above the selling price to cover the closing costs. If she had only realized what the repercussions would be Barbara said, “I wouldn’t have bought the house.”

Living the American dream of home ownership is all the couple wanted. Three years later their dream has shattered and after the mortgage payments became unmanageable they had no choice other than to lose the house in foreclosure.

The couple lived through a nightmare. They hope to some day buy a home again, but next time through a conventional bank or savings and loan. The MacGregor’s were forced to move back into an apartment, their credit destroyed.

Editor’s Note: The names of the couple in this story have been changed to protect their identities in exchange for telling their story. We publish this story because it best illustrates the pain quietly being suffered by hundreds of thousands of people under going foreclosure.

Editor’s Note: In a survey conducted by Housing Predictor homeowners were almost evenly divided on whether they believe mortgage agents were ethical in their dealings or not. Some 53% said they were not ethical or didn’t know whether their lenders were ethical. The remaining 47% said loan agents they dealt with were ethical. This is the story of one couple who went through the nightmare of foreclosure.