"Ok, smile, Mom!"
High Schooler, then a middle-schooler, was standing at street level holding my snazzy new camera phone. I threw up my hands and grinned while standing on the second floor overhang of the house I'd owned for two hours.
The "first time home buyer" surveys online seemed like harmless fun. Stop Paying Rent! Let Your Tenants Pay The Mortgage. I assumed that wasn't possible, but occasionally filled out a survey as though it were a fluffy quiz that would tell me if I were Hermit, Girl Next Door or Party Animal. With my credit card debt, marital history, and low-paying job divided by current number of mouths to feed, I figured all of the houses out there were safe from me.
The calls came fast and furious from callers shouting like combination auctioneers/carnival barkers. "We can get you into a house! We can work with any credit! Your mortgage will be less than your current rent! Of course you can afford it."
I gave it little thought beyond regretting that I'd taken the surveys. Sometimes, I'd give the barkers my "numbers", meaning income to debt and obligation listing, just to make them go away and bother somebody who might actually qualify. Other times, I simply hung up when they mispronounced my last name.
Then my aunt passed away. She was elderly and in miserable health. I was sorry about her suffering, but glad to see her leave the prison of her body. Since all of her siblings are well into their seventies, they decided to sell that house that had been hers.
The phone continued to ring. "We can get you a mortgage! Let us show you how."
I can rent it out, I thought. This could make up for the big hole in my income left by the FAX and his ingenious method of shorting me on child support. I'd make my mother proud. I'd show my ex that the lack of his piddling child support couldn't keep me down.
The next caller was completely surprised when I accepted his offer to come into his office and 'talk'.
His shell game was shiny, but he couldn't help me. My financial portrait was too weak. He suggested I purchase a 1 bedroom condo, let it appreciate, and sell after about three years. Yeah, I could just picture my two hormone-fueled rival teens and me spending the next hundred fifty six weeks crammed into in a one-bedroom in the Town In Which I Hate Living. No, thanks.
I mentioned to a cousin that I had momentarily believed that I could actually buy an investment property. "I know this guy..." he said. "He got me my house." Cousin had purchased a modest three family. The rents he collected paid all of the expenses for his building, leaving him to live rent-free. He applied his earnings to private school for his kids and a time-share in Orlando. "We have lifetime memberships to Walt Disney World!" he said proudly. Well, any mortgage broker that could make Cinderella a permanent part of the family was a friend of mine.
The guy turned out to be with a legitimate mortgage company. They checked out online. They checked out with the state watchdog agencies. I gave him my 'paper' as they called it, and he did what he called working some magic.
Little did I know that one should not need magic to obtain a mortgage.
He was a master with the English language, and I was a first time home buyer. Everything was explained to me so clearly. "Your numbers are fine. To get you the best deal, we'll use a Stated Income plan." he said.
"What is that?" I asked.
"It's a program where no verification of your income is needed. That doesn't really matter here because we've already verified your income...they're just a little more lenient about credit history when a Stated Income plan is used." he said, smiling and meeting my eye.
"Ok". I said, signing. How was I to know that the income that had been verified was not the income being stated? There's a reason these companies sought out first-time home buyers.
One evening he needed me to sign a document stating permission for my credit report to be shared with potential lenders. He was so considerate, he drove thirty three miles to my house rather than inconvenience me by having me come to the office. When he arrived, he had a darling two-year-old boy in his arms. "It's my turn tonight". he told me, an embarrassed little grin on his face.
What a guy. A great dad, and a dedicated professional who was doing everything in his power to turn my dream into reality. He walked me through every step of the process, helped to secure an insurance policy with no money down, recommended a great appraiser, and sent over a home inspection company. He really meant it when he said to leave everything to him.
When I pointed out confusing terms like "owner occupied policy" on the insurance documents, he waved them away, explaining that it meant the property had to be occupied at all times but as the owner, it was up to me who occupied it. Oh, ok.
Boy, this real estate stuff sure is confusing. I was so glad to have a seasoned expert to guide me through the process.
Since I didn't have a dollar to actually invest in this property, my Knight In Shining Sleight Of Hand produced a second mortgage to create a down payment. I grew weary of signing papers, but every signature was bringing me closer to being able to say "I am a real estate investor". He was even able to get me ten grand of operating capitol out of the equity that was just sitting there, doing nothing. Ha! Those amateurs who came before My Knight weren't even able to get me one mortgage...this guy had gotten me three.
After about two months of this, we finally sat down with the attorney that my mortgage broker recommended, and the house became mine. I named it Agnes.
Note to reader: real investors do not name their houses.
I needed to do a few repairs before I could get the house rent worthy. No problem. I had that beautiful ten grand sitting in my account like a crown jewel. Ten thousand cash!
My "few repairs" snowballed into well over twenty thousand dollars worth of issues. Plumbing leaks, electrical issues, lead paint...good grief, the inspector had come so well recommended! How could so many serious issues have been called minor...or not even seen?
The church across the street operated an Outreach program...one that also provided the perfect look-out opportunity. It seemed that every time I had materials delivered, there was a break-and-enter incident that made the materials disappear. Of course, the great insurance policy that I was able to get no money down also came with a $5000 deductable, which meant that I bought almost every delivery twice...on credit. Nearly five months (and five mortgage payments) later, I was finally able to start finding tenants.
My aunt had lived in the house for decades and was steadfast in her refusal to budge. Other than Auntie, the only people who would choose to live near an Outreach program were people who needed that very program themselves. The tenants that finally moved in paid sporadically, if at all. It cost more to evict than to swallow the lost rent. I had no experience. I had no idea how to deal with tenants who made a living out of 'beating the rent'.
They delighted in calling health and safety agencies to complain about the bugs they'd brought in or the trash that they'd thrown in the yard or the windows they'd broken. Every trumped-up violation resulted in huge fines or suspension of rent. There were months when both my own rent and the mortgage payments were made using credit cards.
The first year, I racked up almost twenty thousand in credit card debt. I spent more on exterminators than I spent on my children. We did not take a vacation that year, not even a little weekend thing. I changed my own oil and was a bit more careful about meals out and dry cleaning. Instead of fattening the coffers, Agnes was draining every penny.
The tenants were trouble, but their exit without notice was even more trouble. With that, the ability to pay the mortgage disappeared. The broker had been right about the mortgage being less than my rent...what wasn't factored into the equation was the interest, insurance and taxes that actually made the payment twice what the rental payment had been...that utilities and endless repairs would bleed me dry...and that I'd still be paying rent on my own dwelling. "Let your tenants pay the mortgage" doesn't work when there are no tenants.
Jobs began to disappear, including my own. Clientele of the Outreach program tripled, with some of the daily visitors sleeping on the street or sitting toothless after the bag lunches had been distributed, playing cards on overturned milk crates, shouting, drinking openly from brown bags, peeing against my foundation. A few set up tents in the warm weather.
I hired a realtor. She suggested asking half the going rate for rent seeing that it was in a Compromised Area. Even at this rock bottom rate, every prospective tenant says the same thing..."I can't raise kids across the street from that Outreach place."
Unable to find new tenants, utilities are being shut off, and I am being sued by the providers. The house has been vandalized several times and insurance always appraises the damage at just under deductible. I put up Christmas lights in the windows in December to make the place look occupied, but it hasn't been a deterrent. In fact, I'm afraid to go inside to take them down...I fear running into someone who has decided to make his wait for the Outreach to open just a little more comfortable.
Then the mortgage company noticed that I was late in paying the property taxes. They promptly paid the delinquent taxes, the current taxes, and the next quarter's taxes. This amount was added to my expected mortgage payment, along with a new insurance policy. Apparently, all of this was in the very long mortgage contract, the one I thought I understood.
My payment was recalculated. The result tripled the monthly amount due.
I called an attorney. He agreed to attempt a mediation for me, but sounded less-than-optimistic about the outcome.
Wanting Cinderella in the family has left me stranded, barefoot in a rotting pumpkin.
Even if the attorney can untangle this mess, there is still the issue of finding tenants. There are vacant apartments all over town as businesses close and jobs are lost. I've called every local agency that places families into transitional housing. Tenants who are able to pay even a low rent can easily find a much better neighborhood, one without a soup kitchen in the front yard.
My mother, the one I wanted to make proud, is disgusted and annoyed. She, like so many others, accuses me of "being irresponsible", whatever that means. I suppose it means that once again, I have proven that I am not good enough.
I'm not looking forward to the day my ex hears about this. He always was quick to say that I'd fall flat on my face without him.
I haven't yet evolved to the point of not caring what anybody thinks. If I lose this house, I will be losing something that has been in my family for sixty years. As it is, it sits looking ramshackle and abandoned, an eyesore instead of the neat little place it was when I took possession. It is the first house my grandparents owned. I will be the source of the only foreclosure anyone in our immediate or extended family has ever experienced.
Worse, I will lose part of me. I will not be able to say to my children, "I did it!".
Tomorrow should have been the court date, but the hearing has been postponed due to inclement weather. I guess I'll find out next week just how expensive and humiliating this will all turn out to be.
Foreclosure? You know, people really ought to know better than to get in over their heads, shouldn't they?