The Subprime Mortgage Market Mess and what it Means to you

Explain Foreclosure to my Five-Year Old/Putting a Face on the Sub Prime Mortgage Crisis

It was the summer of 2005 in Phoenix, Arizona. Hot, by my standards and most people I know. The real estate market was hot too. So hot that houses were selling for $20,000.00 more than their estimated market value. Although houses were pricey, our small business was doing well and our family was growing, so my husband and I made the crazy decision to purchase our first home.

We met a Realtor through a business connection and we were on our way. The market was so hot we couldn’t touch the houses. Literally, we would find a house on the MLS, call the Realtor and there was a bidding war going on for the property before we ever had a chance to look at it. The Realtor finally convinced us that we needed to consider ourselves in the market for a fixer upper’. This was hard to stomach considering the price we were going to have to pay for a modest three-bedroom home, but being that we were in the remodeling business it didn’t seem to worry us. We figured we would just buy a house and make the best of it. We couldn’t touch the fix up market either. So a seemingly well-meaning customer that we had at the time convinced us that we needed more money, and that her husband who, was a mortgage broker, could help us.

He helped us all right, right into a sub prime loan! He made it all sound so simple. Even though our credit scores were well into the 680’s, the bank wouldn’t bank on business owners. We would only qualify for a stated income loan. He put us in an A.R.M. because he knew that interest rates would go down and we didn’t want to be locked in. We just needed to sit on our house for three years and come back to him to refinance the loan then.

It has been two and a half years, and our loan has been sold four times! Our business has slowed down because of the failing economy, and we can’t make our $1900.00 mortgage payment. Yes, $1900.00 on a 1475 square foot house. No one will refinance our loan, because the home was over appraised when we bought it. We are being forced into foreclosure. The mortgage company that did this filed chapter seven bankruptcy two months ago. They were only required to have a $25,000.00 bond to begin with. Yes, a company that handles six figure transactions was only required to have a $25,000.00 bond!

This company knew what they were doing. They purposely put us in a loan we could not afford so that they could sell the paper. They didn’t care what I was going to have to tell my five-year-old two years later, or even if I would still own the home. They didn’t even care what it was going to do to the United States’ economy. They got their money fast, and closed the doors.

It’s surprising how foreclosure feels. I am actually a little relieved. Relieved from the payment, relieved from the fix up, after all the property turned out to be a money pit on top of everything else. I’m relieved from the anger that I feel about the whole deal. Surprisingly, I don’t feel a lot of sadness and I am not the least bit worried about being homeless. I know there are better homes out there renting for a lot less.

The hardest thing to deal with is trying to explain to my five year old why she has to give up her princess room. Why she can’t take here pink ceiling fan with her, or the “hidden Mickey” that her daddy tiled into the front entry way. There is a lovely front window box where I pictured my children playing and reading as they grow up. My little boy will never sit in it; he will still be too small when we move. There won’t be scratches on the walls where we tracked our children’s growth. We won’t ever get the chance to build another room in the front or plant a garden in the backyard. That is what hurts. The echoes of the giggles and squeals that I hear in my imagination will never become a reality to my ears. These walls will no longer be the one’s to applaud when my husband finally arrives home from his long workday. When I am old, I will not have the pleasure of living in the house where my memories so warmly reside. This company stole something from me that only God can replace, as I know that He will, for indeed He works all things together for His good.