Life Does Go On After Foreclosure

I got a couple of questions from friends last week about the house and the repercussions of having the house go into foreclosure, along with hearing the radio report up in the title there. I figured it was time to address the details for those interested.

Look, there's this popular misconception that people are just walking away from homes like it's nothing, but I tell you--it's not true. The financial devastation is so bad that you'd either be incredibly stupid or very desperate to do this. I haven't had the nerve to check my FICO score or credit rating, but from what I've heard it is as bad as bankruptcy. I can tell you that my credit card limits were slashed and the interest rates raised. I'll be at this apartment complex for a couple of years until I improve all that and can rent a better apartment without a cosigner. I start working on improving my credit in October after I've managed to get my furniture out of Cookbook's garage. And I'm lucky that I've wound up in a fairly stable job that is more lucrative than what I was expecting.

I wound up handling losing the house in a fairly efficient way out of dumb luck. I had a firm idea of what I wanted--to be out of Cleveland and free of the house. Putting the house on the market below the price I bought it at in 2001 as a first step worked out because it showed that I had tried--it's just that the market was against me, and later that I had already exhausted that option, as well as having 2 years of underemployment and tax records that showed it. When I contacted the agency the PMI company contracted to work with me on this, I was very clear on that I wanted to surrender the deed in liu of foreclosure.

That the new mortgage relief plans look to be difficult and lengthy to maneuver and that employers are now running credit checks on applicants makes me nervous about my future, but happy that I choose the solution I did. I don't mind spending the next 7-10 years cleaning up my life. Frankly I'd rather have it in shape by my early 40s than deal with this dragging on forever.

It drives me nuts that some people think that avoiding foreclosure is somehow tied to personal honor. The banks that loan money are doing it based on calculated risk--that's why I had PMI. If that we both got caught in the subprime fueled decline of the Rust Belt, so be it, but my worth as a person is not tied to the fact that I defaulted on my mortgage. And as for the people in the story in the title who are criticized for trying to save their house and afford that over their health--look, when you're short of money, you prioritize. They prioritized poorly, because their home meant a lot to them emotionally. To somehow think that they shouldn't feel ambivalent about the huge weight that's gone, or spend their newly spare money on things they need--as what, penance?--is unrealistic and cruel.

I figured out what the differential was between the rent I would have paid and the cost of improvements I made on the house, and I'm frankly down $65,000 over the years. It's amazing to me--I never thought I would even have so much money, and I thought for so long that I was actually improving my long terms financial prospects when I could have gone traveling or bought a monkey. I'm not the only one; it looks like single women in general got completely snowed by the idea that we were being sensible and thinking long-term buying property. It's a feminist issue no one's talking about much now that it's gone wrong, the fact that a lot of women who bought homes as a place to live and for long term security are now screwed financially.

Any questions? I don't mind talking about this and answering questions based on my experience.