The cost of fighting home foreclosure

As foreclosure filings start to rise again, homeowners must balance the costs -- financial and emotional -- of fighting eviction.

Kai Ryssdal: There was some talk of the housing market at Mr. Bernanke's press conference this morning. Mostly regret on his part that it hasn't come back faster. And for all the recent indicators that we might have bumped up against a housing bottom, hang on just a second.

There was news last week that foreclosure filings look like they're scooting back up again. Given that houses are the biggest purchase most people ever make -- and where possible, we'd like to hold onto 'em -- today's installment of Money Matters, our regular series on consumer finance, explores the costs of fighting foreclosure.

Marketplace's Stacey Vanek Smith has more.

Stacey Vanek Smith: Martha Wright lives in the beach town of Avalon, N.J. Her house is on the bay -- she built it -- in a vintage barn style more than a decade ago.

Martha Wright: Come on in!

Although Wright had a high-paying job as a marketing executive and a strong credit score, she ended up with a subprime mortgage loan for more than $750,000 from Washington Mutual.

Wright: My mortgage was originally a Jumbo No Doc loan. A liar's loan.

When Wright's salary got cut in half four years ago, she refinanced, but still had trouble making payments. Since then, Wright has spent countless hours fighting to stay in her home -- filling out forms, getting documents ready and sending them to the JPMorgan Chase, which now services her loan.

Wright: In terms of faxes, 65 pages at a dollar a page is $65. I've applied five times.

Wright has also retained a lawyer. She hasn't made a monthly mortgage payment in more than two years.

Wright: You're looking at late fees that have compounded on late fees and interest that has compounded on interest.

Homeowners like Wright can also be responsible for the bank's legal fees as well as property inspection fees, says Sara Manaugh, an attorney with South Brooklyn Legal Services in New York.

Sara Manaugh: That charge will be on there for every single month they're in foreclosure. And some of those fees can really add up because in a lot of states foreclosures go on for a really long time.

Nationally, the average distressed homeowner is delinquent for nearly two years before losing their house-that can be longer in states like New Jersey, where foreclosures have to be approved in court. And all that time carries a personal cost, says Wright.

Wright: It's the depression, it's the limbo, it's the ups and the downs. It's the 'I'm making contact with somebody, I'm making progress.' It's two steps forward, you think, and then all of the sudden, it's four steps back.

Chase told Marketplace it is committed to helping homeowners modify their loans.

In Avalon, N.J., I'm Stacey Vanek Smith for Marketplace.

About the author

Stacey Vanek Smith is a senior reporter for Marketplace, where she covers banking, consumer finance, housing and advertising.
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It is somewhat dumbfounding:





I think what's most interesting is that this person isn't exactly "on the line", as it were, given she has a fully paid for second home. She's made a financial decision not to pay her mortgage due to the interest rate, but surely somebody with her savvy must have understood the product she was purchasing? Unfortunately her gamble turned out badly. I think what's most disappointing is that marketplace chose to use this woman, who is clearly trying to use publicity to bring pressure on J.P. Morgan Chase, as an example of the problems in the housing market, without any research into her background, real financial situation or context. The story, as it's presented, doesn't do an adequate job of presenting the truth about this woman's financial situation, did the researchers just swallow her tale "hook, line and sinker"? This isn't the standard we expect from NPR or marketplace.

Really? She's applied 5 times and was stupid enough to pay to fax a 65 page document each time. Has she ever heard of a fax machine? They cost about $40 at Office Depot or on Amazon. Perhaps the real problem is that she is clueless about money all the way around?

She got a liar loan to begin with. Now she stopped paying loan for 2 years and living rent free. How is she a victim.

I am generally supportive of individuals who are in foreclosure and desire that financial institutions, such as banks, do what is right and necessary to try and keep individuals who are acting in good faith to remain in their homes. However, Ms. Wright is clearly not one of them. She has failed to make any payment for two years. Her justification for making no payments is her allegation the jumbo no doc loan she signed and the interest and other charges she has incurred are some how illegal. Even if she isn't barred from raising such an defense by virtue of her being a sophisticated businesswoman at the time of the transaction, she clearly has lost any moral high ground by failing to try and make any payments while she resided at the house for two years. Unfortunately, it is this type of abuse by Ms. Wright which gives the vast majority of individuals in foreclosure who are acting in good faith by at least trying to make payments a bad name. I hope in the future focus will be on those individuals and not Ms. Wright who deserves neither our sympathy nor the right to invalidate her contractual obligations.

Oh man, I hope I wasn't supposed to feel sorry for the woman with the three quarter million liar loan who has lived rent free for the past two years. If so, I totally blew it.

Oh man, I hope I wasn't supposed to feel sorry for the woman with the three quarter million liar loan who has lived rent free for the past two years. If so, I totally blew it.

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