Today is May 5th, 2010 and my Mortgage payment is 4 days overdue. Oh I can pay it; I have the money but I'm not going to pay it.
Unlike many other people in this financial crisis, I've got a good job, a good start on my retirement account and no credit card debt. I live in one of the nicer neighborhoods in a beautiful suburb with good schools. I've acheived the American Dream... except that it turned into a nightmare.
I bought my first home 16 years ago. If I had known then what I know now and had some sense about me I might have gotten a 15 year mortgage and perhaps owned the home free and clear. But that was 3 homes, 2 states and about 7 mortgages ago.
I remember a time when the equity in my home was increasing at an astounding rate. Nearly $10,000 a month was being added to my wealth, or so I thought, and I decided to cash it out. Why not? After all - the conventional wisdom was that you should let that equity work for you and not just sit there.
Finally in 2004 I took the leap for the brand new McMansion. I knew I couldn't afford it and even told my wife that there was no way we would qualify. But somehow the mortgage people found a way. A 100% loan with a low intro teaser rate, fixed for 5 years and next thing you know we were sucked in.
In 2006 nervous about the rising rates I decided to refinance to a "low fixed rate" of 6.875% with an interest only payment of nearly $4,000 a month. That's right I'm paying nearly 40K a year in interest and have been doing so for nearly 6 years. I've handed over $200K in interest to rent my lovely home from the bank.
I didn't mind it when the value was increasing but today I have a home that is upside down $200K so I'm doing something I thought I would never do. I'm not paying another cent.
I'm not a flaky guy. I have nearly perfect credit. I always pay my bills on time or early. But today I'm going to ruin my credit - after all my other choice is to pay $40K a year to preserve it.
Oh I know... you think I have other choices don't you.
Refinance? Not a chance. The mortgage value exceeds the limits on all the programs I've heard about.
Loan Modification? You kidding? I can make the payment. I don't have any other debt and I have money in savings. The bank is perfectly happy to take 40%-50% of our monthly income for the "interest only" payment and there is no way there are going to let that go.
Short Sale? Maybe - as long as I agree to pick up $100K-$200K of the deficit. Remember I'm not a hardship case.
Foreclosure? You bet. In my state, the law says all the bank can do is ruin my credit and take the house. I'll gladly give them the house. I want my life back.
2 weeks ago I called the bank and asked them to stop my auto-payment. Just to hear their reaction I told them I was not going to pay any more.
After a brief pause, the lady told me about the portion of the website with their programs for short sale etc. She didn't sound too surprised.
Soon the calls will come. Automated systems will remind me about payments and offer to help and perhaps even make subtle threats. After that humans will get involved - probably not until August. They will try to be compassionate and understanding as they seek to help me by making me an offer to modify the loan (as required by law in my state). Of course after looking over my financial statements they will make me a ridiculous offer which I will refuse.
Then begins the foreclosure process. By the end of the year the paper work filed I will receive a notice to leave within 20 days. When that day comes I will leave the ranks of "homeowner" and become a "renter" once again.
There was a time when I believed that "homeowner" meant winner... meant succesful... today it just feels like stupid...
I could remain a homeowner upside down $200K and paying $40K a year in interest to "own" my home and preserve my perfect credit rating or I could give up this house and get my life back.
In 1861 Mexico decided to stop making interest payments on their debt to France. France invaded and on May 5 1862 the Mexican's won at the battle of Puebla. Today this is celebrated as Cinco de Mayo.
So Mr/Mrs Banker - do your worst. You can have the house... You can destroy my credit... today is May 5 2010 - my liberation day.
