Double-Dipping

In my last post I noted that there are some fundamental flaws with buying a house now.  The main one is our immediate comfort (which is short-sighted, I get it).  The second is that the housing market continues to plummet.   The value of homes continue to decline.

One reason to stay in our rental, even if it is being foreclosed on, is if we buy something now, it will continue to lose value.  It is true we are nearer the bottom of the trough than before we sold our other house, but there is no end in sight.  If we buy a house now, chances are the house will be worth 10% less by 2012.  If we buy a house for 200K, it is a loss of $20,000 (I babied you and did the math).  I know that loss is for the short-term, but wouldn't I rather buy that same house for 20K less next year? YES, yes I would!  We are sacrificing housing stability for value.

The way I look at housing and jobs have changed from the way I was raised.  My grandparents and parents all had nearly the same jobs and same houses for all of their adult lives, and certainly all of my life.  I have lived in 4 states, 6 houses, and my husband has had 3 jobs, and we are in our mid-30's (I have had the same job: 2 kids, but even they are growing, and then I'll get a paying job).   Instability is the new normal.  At first all the unsettledness was scary, but you can't really scare me now.  Holding on, when things are unsettled is hard, but not scary.

That brings me to the title of the blog: Double-Dipping.  When I think of this term, I see my 9 year old nephew devouring ranch dip with one carrot.  For some reason I don't think that is what the term means for real-estate.  The news today was bad for people who use their home value as a means of provision.  Prices are going down again, or double-dipping.  Values went down a few years again, and are going down more, which seems more like a steady decline, than dipping, to me, but I don't make up the terms.

The news is good for those of us holding on, and saving money by renting until our credit gets better, or we've saved the cash to buy a house in toto.  My savings account goes up, housing prices go down.  It might not be as long as you might think if things keep going the way they are going.

I'm Part of the Problem

Housing Irony

     Our first house in Sparks, Nevada is again for sale.  We purchased it in 2003 after moving from Ohio.  We purchased it in the $200's and sold it just as the market was peaking/crashing at the end of 2005 in the $300's.  Now it is for sale in the $100's, seven years later.  We used the money we got from the sale of the house in 2005 as a down for the house we just sold short in 2010.

     Look at that house!  It is pretty nifty! I especially like  the color, mostly because I painted it that color (with the help of some of you reading this). I'll admit that I did not like living in Sparks.  Maybe it was the location, maybe it was just a personally rough patch for me, maybe it was this house, or maybe it was because I wanted to be somewhere else.  

     Every few months I look at the real estate in Sparks to see if 'our house' goes back on the market.  Yesterday, I found it.  It has been for sale for a month.  The man who bought it from us was not kind to us, and it was a terrible experience selling and moving out, but we were glad to go.  Knowing how much he paid us for it, and that it is for sale for now, I feel like it is Karma.  I try that feeling on for about 2 seconds and then take it off.  I should feel sad for him, and that it might be adding to his crabby-ness, and I do feel sad.  I actually feel fortunate.  Seeing this house for sale again, makes me disinterested in owning a home.  A useful way to work through painful stuff is to look at it in a new way.  I've re-capture events and details with a new point of view.  Finding this house for sale, reclaimed my memory for the better.

The kids throw laundry down the stairs, instead of going to bed.
 Look how clever they are!

     I keep thinking that I won't contribute to this blog anymore, because our adventure with the real-estate market is seemingly over.  Though it may be over, I'm still figuring it all out.  Looking at the numbers, and looking back, farther than just our last house, we have lost nothing.  Yes, we have had to say goodbye to much, but lost something?  No!  Not really even money, which is the most superficial part of this whole situation.  I still remember nursing my baby in that house, the tomatoes and roses in the garden, snow in the yard, breakfast with my sister, my boy's first day of kindergarden, and killer desert rainbows!  Aren't we always saying goodbye to something, and adjusting to something new, or shouldn't we be?

     Today I am thankful to be where I am.  If proximity matters, then I am happy here.  If the proximity of my heart matters, then I am even more happy to be where I am.

Reproduction vs. Debt Reduction

Last night, a representative from Citi called us at 8:15pm and didn't hang up.  I arrived home to a calm husband, having a rational conversation with someone on the phone.  I thought it was his mom, but no, it was 'Home Owner's Assistance Dept'.  Here is what I heard my husband saying on the phone,

Well, it seems that you guys have the ability to help us figure out a modification, or principle reduction, so what ever happens next, it is up to you.

What a change, not our calm-ness, but the person on the phone was seemingly helpful.  They did transfer him a few times, but in the end, there were more results when they call you, and not vice versa. If you call them, they can not help you.  If you call them and are paying your mortgage, they really can not help you.  Waiting for them to call you is hard.

We have now submitted a loan modification form that will help us be assigned a 'mortgage counselor', even though the modification they have in mind is useless to us.  This is help from the inside, instead of David cracking the egg of Goliath from the outside. Maybe they will be more helpful if there is one person, who is not haggard from the 4 million stories of despair and suffering from the borrowers.  I can pay my mortgage, so I can be calm and at ease on the phone, but many are jobless, have children dying of cancer, as well as losing their homes.  I can see that the gatekeepers at Citimortgage have to be callused individuals, and continue everyday with gate-keeping.  What a tough job!

The mystery of the mortgage industry, is much like the mystery of reproduction.  It is a learning process that, though shrouded in mystery, can end in understanding (and pain).  Though human reproduction is mysterious and miraculous, the mortgage industry is just expansive and mysterious.  In that way, the similarities end.

When I was very young, I was very confused about sex and reproduction.  I was clueless to its existence.  It was as if my mom just kept bringing home new people to live with us, and I had no idea how it was happening.  As I grew older, I learned more about the world and realized how a baby made its way into the world: it came out of women's belly-buttons (who didn't think that was how it worked for just a minute or two?).

As I grew even older, I became informed via the usual pubescent ways (I won't explain, my mom reads this).  Then I got married, and learned more, culminating at 23 years old,  and the moment my son was born.  At that point, I'd come a long way from the pre-schooler I was 20 years beforehand.

As I have been negotiating with Citimortgage, I have determined my understanding of the situation is nearly like my understanding of human sexuality and reproduction (though less rewarding and fun by a LONG stretch).  It is something to be learned about by experience, and from the inside-out.

I think that I might be age 6 in my development, having just learned that there is such a thing as a mortgage company, and suspicious there is more too it than I thought, just a few years ago.

Beauty and the Beast: The Last Rose Petal

I got a rose as a gift several years ago.  I put it in a pot, and not the ground because I have trouble committing.  It blooms dozens of tiny brilliant roses.  Some summers I can get it to bloom twice.  Early this year I moved it indoors to our garden room.  It pushed out, and then thousands of aphids attacked.  I started killing those little killers with glycerine, and soap, and bodily pulling them off.  There were too many to get rid of, and the photo you see proves it.  They really devastated the whole plant (it is not exactly dead).  I put a lot of time and effort into what was once a beautiful plant.

I have another rose nearby, and it is pest-free, and blooming.  Asking advice from a friend, he said something that I had forgotten in my forceful attempt to kill the pests.  If aphids are only attacking one plant, then the plant is compromised in some other way and the bugs are just responding.  Another example is the lion killing the sick wildebeest, and the  healthy ones escape.  It seems a natural order.  For some reason I thought I was independent from the natural order.

My friend's advice gave me permission to take the rose out of the pot, and put a healthy one in.  My usual way, is to work, and work, and work, even if the results are bad.  Sometimes I can do this ad nauseam.  I also need to point out, that some things are worth working yourself to death for, but most are not.  I am learning the difference.

When I took the rose out and looked carefully, the roots were moldy.  I could have continued on my path, but in the end the pests weren't the problem.  I pruned the rose back to the quick, dug it a new hole, filled it with compost, and put the plant in the readied hole.  It was 5 times easier than picking off the aphids one-by-one.  It still may not survive, but at least it has some chance. 

In relation to my mortgage and housing situation:

If I do nothing but what I'm doing until I'm 60 I'll own this house.  Though things are excellent now, life is dynamic.  If ANYTHING changes for us we will be stuck tending what was once a beautiful thing.  By 'stuck', I  mean trapped.  I doubt  my life will continue on just as it is for the next 30 years.  Let's look at some reasonable scenarios that I am stuck with in case of life altering events, such as moving, job changes, home upkeep and repair,  illness, college tuition, California falling into the Pacific ( I threw that last one in to see if you were paying attention).  If the real-estate market had continued to be a profitable venture after we bought our house, none of these would influence us so radically.  Just imagine:

I might have to move in the next 30 years before I have paid off my house, but alas, I would not be willing.  If we did move we would have to pay for this house, and pay to live in another, because I would NEVER sell this house for a profit.  I would never sell my house and give the lender the difference.  

I would be so opposed to selling short or foreclosing that I would pay no matter what.  I would be so opposed to paying for 2 houses, that I would never move, and I would pressure my husband to make a huge salary, or find a bad job at high pay, even if he is miserable, so that I would not have to sell short or move.  

I could lay awake at night and worry about my young handsome husband dying early.  Not because I love him dearly and would miss his pun-ny jokes, but because without his salary, I could not live in this house.  Because of when we bought our house, we have to live in this house.  

I could imagine myself getting a job teaching school to make the mortgage at all costs, and then I think of more that 20,000 more qualified teachers than myself, being laid off by the state of California just this month.  Every one of those teachers has a story just like mine, they have a family, and a mortgage too!  Even if I did get a teaching job, and I have this modest house, a teacher salary would not pay the mortgage.  I could get a job in another field, but I have no skills, as I have been tending to my children for the last 10 years, so I would have to go to a University.  We don't have a university in our town (which I HAVE to live in) and I have maxed out my community college credit limit, so I would have to drive to Sacramento, or do classes on line.  That is do-able, but not when the first of the month just keeps coming, my husband is miserable, my kids are nearing high school graduation and college tuition themselves.

I have had to change.  I have had to stop pushing ahead without results.  I have had to stop feeling under the influence of hard economic times, as a victim.  I have had to stop actually caring about what everyone thinks.  I've stopped worrying (for the most part) that people will see my 'pests', and in the end the plant will die regardless of my actions.  I have had to stop being distracted by the symptoms of the problem, and reviewed the cause.  As it turns out, I have little influence on both.

I guess I have decided not to do that to myself, and my family.  I choose not to be trapped when I can, not to be afraid, and not wait for that last petal to fall off a dying rosebush.  I choose to love my husband for who he is, not for what he can do for me.  I know that terrible things will happen to me in-which I have no choice.  I choose for my house not to be one of them.  I think now is the time for damage control.

Mortgage Weight Gain

Talking about your mortgage is in an area of taboo topics. The others include bathroom and bedroom habits, personal salaries and weight.  The World Wide Web is rife with taboo topics, so this post fits perfectly.  I know banking and real estate are big business, but my house is personal.  I'll pick the lesser personal topic as an analogy of my mortgage.

We need to eat, just as we need shelter.  Could you imagine if you sat down to an average, everyday breakfast, nothing fancy, just fuel to keep yourself going during the day, but there was something amiss?

It looks like a piece of toast and and egg, but you have this nagging feeling.  You have been eating this breakfast everyday for 4 years.  It is healthy, it has whole grains, protein, and you need it.  It is high in fiber, just enough fat, and seemingly, the right amount to get you to lunch.

Contributing to your doubts are 50lbs you have gained in the last 4 years.  Though this reasonable meal seem perfect, what should have 350 calories, really has 2,000 calories.  You don't feel any fuller, but the scale, and your waistline tell you differently.  The toast and egg people are telling you to eat it anyway saying you can lose the weight in 40 years.

This is a perfect analogy of me and my mortgage.  I am a sensible and reasonable person in most areas of my life, especially those 'unmentionable' areas.  Paying for this house, is thinking you are eating diet food, and actually eating everything on the McMenu.

Though the 7-8 groups of potential buyers that walked through my house this weekend made me grieve the loss of this house, I also want to get my diet back in check so that I am not a 70 year old, sick homeowner.

Rhetorical Mediocrity

I've read mediocre books where at some point in the story, the author or editor spoon feeds the reader, rather than just tell a great story.  The main character starts to ask rhetorical questions of himself such as, "Does she really love me?  How long is it going to last this time?  Should I buy a loaf of bread?" so that the reader can get into the head of the character.  It is a cheap trick, or at least I think it is, I'm not an author.  Needless to say, at this point in any book I'm frustrated!

Today as I scrubbed my kitchen for potential buyers, mopped, dusted, folded, and de-cluttered for the 30th time in as many days, I find myself asking silly questions to keep the story going, or to keep the house clean enough for perfect strangers to tromp their muddy shoes through.

"Why am I cleaning my house so much when no one really cares?  Why do I care what anyone thinks of how I keep my house, or me for that matter?  Why can't I just relax all the way about this house thing?  How did Malt-O-Meal get here?"

With the feather duster in hand this morning, I decided just to tell the story (and keep cleaning).

Also, a huge thank you to my talented friend PR Frank http://prfrank.com/ for making me a banner, so I can feel like a real blogger.

Escrow Account

I can't think of anyway to embellish the details of our escrow account.   Tax laws, interest rates and escrow are technical details that I have trouble bringing to life with words.  Let me give it a try anyway.

I called to get the money out of our escrow account the day I also turned off the not-so-easy-pay for our mortgage payment.  An escrow account is a holding tank for money that gets used for things other than paying for the house, such as insurance and taxes.  We have to keep a lot of money in the account, as our house is very expensive.

I wanted the money in the escrow account so that I could pay my taxes and insurance, in fear that the lender would use the money to pay my mortgage, or as 1/1000 of a bonus for Vikram Pandit, the CEO of Citigroup. 

Here is the deal on getting money out of escrow accounts at Citi:  If you are current on your payment, then you can get the money out.  At the time I called, I was current, but we all know how that turned out.  You can also get the money out of escrow if your house is worth 75% of what you owe on the house (loan to value ratio).  Clearly they are worried that folks like me, whose loan to value ration is 63% are a risk.

A person with a loan to value ratio of 63% might decide it is silly to pay the mortgage and want the cash out of her account.  They offered to snail-mail me some forms within 10 business days (which is really 2 weeks).  The form did arrive 2 weeks later, and it had more information on it than the lady on the phone told me, that bit about the loan to value ratio, she forgot to mention, or at least I'm letting her 'forget'.

Can I interest you in some tax law tomorrow?

Two Camps

Since I started writing this blog last Monday, it has stirred up some conversation/controversy.  I opened myself up for the conversation, and am having them at the park, in the pick-up line at school, at the grocery, on the phone, on Facebook, and at the dinner table.  There are basically two camps of folks.  

The first group are unsure of our plan.  I hope this is out of concern for our welfare and safety, as well as not knowing the preparation we put into our decision.  

The second group are curious, or have already gone through something similar.  I have heard dozens of stories about all the trouble people have gone through on behalf of their houses.

Let me assure the unsure.  We have sussed out the details as best as anyone can.  We've considered the taxes, the lender, the relator, our financial well-being, our children's college accounts, the law, our consciences.  When we do the numbers, and consider our options, we are sleeping well at night.

For those of you who have gone before us, I welcome your stories.  I can only learn from anything that you have already experienced.

Here is a book that Silas and I read, that really helped us, in an all-around kinda way.  

http://www.amazon.com/gp/product/159627042X/ref=pd_lpo_k2_dp_sr_1?pf_rd_p=486539851&pf_rd_s=lpo-top-stripe-1&pf_rd_t=201&pf_rd_i=B0006RG56U&pf_rd_m=ATVPDKIKX0DER&pf_rd_r=0ZV2NMPPT166JVG2JMQ4

Mortgage Crisis Veggie Garden

These are Glacier Tomatoes.  In a bit more than 3 months, they will be huge plants full of healthy food!!

Should I plant them in my garden?  Will I live here for the summer?

I started them anyway, trying to beat back the Dark Side, and live in the moment.

Planting these and paying my mortgage is more of a sure thing than planting these and not paying my mortgage, and yet, nothing is a sure thing.

If our house sells soon, we may/possibly/might be out in June or July.  I'm not packing yet.

Nothing New Under the Sun

Here is a famous story.  The names have been changed, but use the key below to figure it out!

Change the name servant #1 to 'Citi', and the amounts to $45 billion ($45,000,000,000).
Change the name of servant # 2 to "Average Nevada County Homeowner", and the amount to $350,000 
(Citi owes the feds 128,571 times more than the average homeowner owes Citi.)

"A king decided to square accounts with his servants. As he got under way, one servant was brought before him who had run up a debt of a hundred thousand dollars. He couldn't pay up, so the king ordered the man, along with his wife, children, and goods, to be auctioned off at the slave market.

"The poor wretch threw himself at the king's feet and begged, 'Give me a chance and I'll pay it all back.' Touched by his plea, the king let him off, erasing the debt.

"The servant was no sooner out of the room when he came upon one of his fellow servants who owed him ten dollars. He seized him by the throat and demanded, 'Pay up. Now!'

"The poor wretch threw himself down and begged, 'Give me a chance and I'll pay it all back.' But he wouldn't do it. He had him arrested and put in jail until the debt was paid. When the other servants saw this going on, they were outraged and brought a detailed report to the king.

"The king summoned the man and said, 'You evil servant! I forgave your entire debt when you begged me for mercy. Shouldn't you be compelled to be merciful to your fellow servant who asked for mercy?' The king was furious and put the screws to the man until he paid back his entire debt."

Planner's Daughter

I am the first born child in a row of three.  My dad spent his career as a planner for the county of Nevada, in California.  I think it is my lot in life to be a planner.  Sadly, I plan out of fear, and have terrible attention to detail and terrible follow through.   This is why I have Silas.  Silas has silly ideas like inventions that don't do anything useful: a compost taker-outer is a good example (to his credit, he can be imaginative, I am just more-so).  Together, we seem to be yin and yang. I have better ideas, he has the ability to make better ideas work.

Here is the timeline, in terms of planning, thus far:

2006:  Move to Nevada City, buy a modest house which we can afford, even though they are really expensive and sparse.

2008:  Replace the roof with steel, build an addition, put in a wood stove and woodshed with savings.

2009:  Pay the mortgage as housing prices drop.  We start to question the safety of our real estate investment.  We start asking questions and having ideas/hesitations.  We call our lender and ask for a modification.

Dec 2009:  Try to refinance to get a better interest rate on our home loan.  We discover in the process that we are so underwater that we can not refi without bringing more money than we have saved in our lifetime to the table. We called our lender to ask for a modification but alas, they could not help. 

Jan 2010:  Research!!  We met with our realtor, we paid for a visit with a real estate lawyer, called the lender asking again for a modification, worked the numbers on a spreadsheet for every scenario we could think of, called the lender asking for a modification, talked to folks who had dealt with modifications, talked to our parents, talked to each other, talked to friends, talked to God, talked to the lender, made check-lists, and thought about it.

Feb 2010:  Called Citi Mortgage to ask them to stop the auto pay on our mortgage account.  As it turns out, auto-pay at Citi Mortgage is like Hotel California, you can check out anytime you like, but you can never leave.  I had to get my bank to refuse the draft from my account, as Citi Mortgage does not let you stop paying your mortgage automatically in the same month as your payment is due.  It worked and we missed our first payment.

There are many things that could happen to us because of our choice to short sale our house.  We may not be able to short sale the house, and have to foreclose.  All of the outcomes are somewhat negative, even if we stay in our house.  We have been thoughtful and careful so far in our lives, and this seems more risky to some, but to us, it seems sensible.  All the numbers, for the short term and the long term, point to renting, and buying another home when our credit is good again.

We have been very open to the mortgage company being the hero in the story, we call and ask for help often.  I don't think "mortgage company" and "help" can be in the same sentence (their choice).

I know it may seem, if you started reading this blog on Monday, that we just thought of this idea this week, though we have been working on it a while.

While We Still Have Today

This simple lesson repeats itself for me:

Enjoy what you are doing, where you are, and who you are with, right now.  

I don't mean, "at this time in your life",  but even as you are reading this.  I must need to learn it more than I realize.  It is helping me make informed choices in regards to home ownership (as well as more touching and personal things).

I love my house, because it is my home.  I do not want to make any choices about my house, and mistake the choice for a decision about my home.  My family, and my memories, are what make this place, my home.  The structure is temporary.  This has freed me from a bit of fear I have about leaving this place, when I realize what I am leaving is a thing.

I also am enjoying my things in the moment.  This is a sunny corner of a room many folks contributed to, including myself.  I want to remember how it felt to work and love and play in this corner, and take that with me when we leave.

Coming out of the Closet

I keep a more family oriented blog, and this has to do with my family, we live in this house, but I'm using this forum to chronicle the impact of the real estate boom and subsequent crash on us!

This is our house as we found it circa 2006.

The real fact is that talking about one's mortgage is a bit taboo. Greater still, not paying your mortgage. In this way, I feel that this posting is a declaration, of sorts. Coming out of the closet to the world. The more I spend time here, the more confusing what is right and wrong can be, or why something is necessarily wrong or right.

Silas and I have moved beyond talking and thinking about not paying our mortgage. We are not paying our mortgage. We are fully prepared for the ramifications of our actions, and are camping on boldness and fearlessness.

This is a hard place to find ourselves, and yet, liberating.  I hope this blog will ignite something in you, good, bad or otherwise.  I'll keep each entry short, though I could type volumes.  More on this later....