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Mortgage Company Pre-Foreclosure Suicide

The New York Times reported that a woman committed suicide after sending a note to her mortgage company by fax. She was about to be foreclosed upon.
A Massachusetts woman fatally shot herself soon after faxing a letter to her mortgage company saying that by the time they foreclosed on her house that day, she would be dead. The police said the woman, Carlene Balderrama, shot herself Tuesday [July 22,2008], after faxing the letter at 2:30 p.m. The mortgage company called the police, who found Ms. Balderrama’s body at 3:30 p.m.

The auction was scheduled to start at 5 p.m. and interested buyers arrived at the property in Taunton, about 35 miles south Boston, while Ms. Balderrama’s body was still inside, said Chief Raymond O’Berg of the Taunton Police Department. Neighbors said Ms. Balderrama, 53, her husband and her son had lived in the house for about four years.
I have a family member who lost his home recently to foreclosure. I'm not blaming his mortgage company exclusively, however the reality is that they extended his family credit well beyond their ability to pay. They mortgaged 107% of their house to cover closing costs. Their mortgage was at 10.5% interest because they had spotty credit. Furthermore, their payments were based on declared income, not tax records.

You see, he worked in the manufactured housing industry and had been averaging 55 hours per week as a foreman. His 15 hours of overtime at double pay meant he often grossed more than 160% of his regular salary. Even though this trend had only occurred for few months, the mortgage company was eager to overlook the downturn in building that was already on the horizon.

They told him he could afford much more house than he expected, and his real estate agent, armed with a pre-qualification letter, showed him every house she could find at the maximum end of his price range. With high interest, his monthly mortgage was $50 more per month than mine, even though our property taxes were triple his, and our home price was $75,000 more.

When his employer cut him back to regular full time when the housing slump began, he couldn't make ends meet, not even close. His mortgage payment was now 65% of his gross pay, and 80% of his take home. Even another job would not have made up the difference because he was relatively highly paid. He would have had to work an additional 50 hours weekly at a $10/hour factory job if he could have gotten one.

He is partially to blame, no doubt. He made some bad decisions. He felt the windfall during the booming housing market would last forever, and that was completely unrealistic.

However, mortgage companies and real estate agents also made a windfall in the booming housing market and they should have known it wouldn't last. In fact, they did know it wouldn't last, and that's why they were trying to squeeze every nickel out of people before the bubble burst.

What they did to my family member, and millions of other Americans, probably wasn't illegal, but certainly wasn't ethical. And now, our federal government is bailing people out. Most of the money, however is being used to bail out poorly managed companies, not poorly managed households.

His home was sold at sheriff sale for $.55 on the dollar. He's in the process of filing for bankruptcy and divorce. Financial matters stress your budget and your marriage.

The sad thing is, how close he had been to the American dream. At 30 years old he'd been working for a decade. He is a hard worker, and with the exception of a broken leg several years ago, had never missed a day of work in his life. He'd been promoted several times because of his exceptional work ethic and dedication. If this is a man who deserved better advice for his family.

Had the real estate agent sold him a house within his budget, he would still be living there, and likely still married. The mortgage company would still be making a profit. The tax collector would have been able to contribute funds to the school budget. He would it still had 60% of his income to spend in the local economy.

As a nation, we exuberantly bought and built houses. Financial services companies lent us more money than we had, or could expect to have in the near future. Real estate agents convinced us that "flipping" was a good idea, while while travel agent suggested we "cash out our equity" for our next vacation. And investment brokers built mutual funds out of real estate, so we could invest without actually owning any of the land, and move our money out when the market got bad regardless of who was living or working on that land.

I hope that Senators McCain and Obama work together to start holding corporate America to the standards that we hope to instill in the American people, regardless of which one of them becomes president. We have too much at stake to allow corporations with questionable ethics to damage the livelihoods of individuals, and the economy as a whole.

I'm paying my mortgage, every month. I'm paying my credit card bills. We just finished paying off our college loans. I pay my taxes on both property and income. I'm a good American and I've made very good financial decisions. Unfortunately, not only am I living the American dream, but I'm financing the American nightmare.

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