Sara was excited when she purchased this 3 bedroom, 1 bath home on 5 acres for $75,000 in 2001.  Sure, it was a little rough, but she slowly upgraded the kitchen, bedrooms, and living room.

As the interest rate on her ARM rose, she began working longer hours to meet her mortgage payment.  Finally, in late 2007 with the payments nearing $1,400 per month, she started looking for refinancing. (17% interest)

With her late fees, partial mortgage payments, and other fees her mortgage company had added, she needed to borrow MORE than the original price of the house!  She owed $87,463, with all the fees and penalties.  This house needed to appraise for $90,000 in order to secure the new loan.  However, with the market beginning to fall, it appraised for only $80,000.

During the life of the mortgage, the loan changed hands several times.  She contacted the most recent purchaser of her loan to try to refinance or 'work out' a better payment plan.  The company stated, "we do not refinance, we only service the loan as we purchased it".  With the loan company not budging on terms of the loan, Sara reluctantly and broken heartedly went into foreclosure. 

The final letter she received from the foreclosing company stated that she owed well over $90,000 on the original $75,000 loan!  That was July 2008.

The house stood vacant for four months.  The bank hired someone to 'clean' what belongings Sara had left in the house, deck, garage, and outbuildings.  This 'professional', also, helped himself to the kitchen cabinets, sink, heating units, water heater, and anything else of value.

This house was listed with a real estate agent on December 1, 2008-$45,000.  A loss of $30,000 from the original loan! 

This is not an unusual story.  In a 20 mile radius of this home, there are 30 more that have gone through foreclosure and sold for a loss of 50% or more.  Some of these homes are damaged by angry foreclosee's, some are left in 'perfect' condition, some are vandalized and broken into by thieves-especially the homes in rural areas.

I know, the same thing is going through my mind, too: if the lender had only worked with the borrower they wouldn't be taking a loss!  No one said that these companies were smart-just that they needed to be 'bailed out' by our tax dollar.  Now, we know why.