The Foreclosure

This is probably the most stressful and irritating thing we had to deal with in the last 2+ years. We lost our house to foreclosure. We became a zero-down, sub-prime statistic. Here is how it happened.

October 2008, Jenny and I bought a decent house with zero-down. Our budget was a little tight, but we felt we had plenty to live on after making the mortgage payment every month. We probably looked a little sub-prime on paper with our student loans and medical bills hanging around, but we were able to close quickly.

We had a great first year, but in late November 2009 we got a notice from the bank that the escrow account was overdrawn by about $2400. A little investigating showed us that we had been charged the wrong tax rate. We should have been charged Homestead Tax for owning and living on the property, but we were instead charged with Non-Homestead Tax which is about double the Homestead rate.

Escrow wanted to recoup this shortfall within 30 days of the notice, but we couldn't make that happen in the time allotted. Escrow's fall back position was charge the shortfall over 12 months (with fees) as part of our mortgage payment. This increased our payments by about 45%. We had hope that contacting the city would correct the rate and provide us with a refund for the over-payment fairly quickly, so we decided to run a deficit on the checking account at the mortgage bank that we set up for automated payments (and a lower APR).

Time marched on, and we made no headway with the city. They wanted proof of residency. We gave them months and months worth of this bill and that bill and they still weren't satisfied. Even after resubmitting whatever form they said was missing initially, our tax rate wasn't adjusted from that point forward.

By the spring of 2010, the computing power behind the checking account decided to close the account. As we were still unable to make the bigger payments, a deficit began to grow directly on the mortgage account. I began to dread every knock and every call. This began to trigger foreclosure proceedings that culminated in a Sheriff's sale in October 2010.

The six month Right to Redemption period wasn't any less stressful. We were still trying to get things straight with the city and the refund we were sure we were due could get us square with the bank. I was hoping that a private buyer at the foreclosure sale would extend an offer to stay on as renters.

In April 2011, the letter finally came announcing we had 7 days to vacate the property. It hurt. I felt like a failure as a husband and a provider. We yelled. We cried. We prayed. It became clear that it was okay to walk away. We found an apartment, and we found a storage unit. We had loads of help from those nearest and dearest to us, who were all shocked by the news. It turns out we had a little more than 7 days to get everything out, but by the time we were served with the court papers, we were at peace with the situation. We handed over the keys with out a fight, and found a little more room in our budget by letting go.

It seems like the deck was stacked against us from the beginning, but we weren't financially ready to be homeowners. That was a very hard lesson to learn.