Rebuilding after a foreclosure

Marketplace Staff Apr 20, 2007

Rebuilding after a foreclosure

Marketplace Staff Apr 20, 2007

TESS VIGELAND: Here in California, we learned this week that foreclosures jumped 800 percent in the first three months of this year. Every week, almost 900 people lose their house. Today, we meet one of them.

MONIQUE PARKER: We had a swing here, a barbecue grill . . .

VIGELAND: Monique Parker walked away from her home several months ago. She’s a listener to this show. Back in July 2003, she got a $400,000 mortgage on a house in Long Beach, just south of LA. Monique had spotty credit and ended up with a subprime, adjustable-rate, interest-only loan. She couldn’t make her payments, so two years ago, she refinanced. But that only made her payments higher, and she lost the house.

I joined her in front of her former home to talk about why she bought something she couldn’t afford.

PARKER: My whole dream was to buy a house. I felt like if I have a house, I don’t need anything else in life. I’m just done. That’s just been my dream. But there was no discussion about what’s gonna happen in two years, because what they tell you is that you get the interest-only loan for two years. You’re gonna have all this interest to write off. So what you do is when you get your taxes back, you use that tax-return money to pay for your mortgage. They don’t tell you is that it’s really not that much, depending on what income bracket you are.

VIGELAND: Did you think that you should have qualified for a $400,000 mortgage?

PARKER: Prior to the subprime mortgages being a big deal, no — ’cause we were really shocked. You know, when you go to these housing-planning workshops and programs and they tell you you really need to have so much money, they mean it. But when you go the lenders and they tell you you can qualify, that’s the big thing. You feel like if you get in . . . once you get in, you’re OK. Because you think, well in two years, we’ll be making more money.

VIGELAND: So at what point did you kind of decide, “We need go get out of the house?”

PARKER: Well, when we refinance, I really at that point wanted to, but my partner convinced me, “Come on, let’s refinance, I’ll get another job.” And by April of the next year, I said, “We gotta call the real estate agent that sold us the house,” and we put the house on the market. And that’s when it just went crazy. I mean, when we set out to buy a house, people were buying houses without even seeing them. When we went in sellville two years later, there were so many signs and so many houses for sale. And the prices had been reduced. Our house stayed on the market from April until October.

VIGELAND: What’s it like to go through this process?

PARKER: It was horrible, horrible, horrible. Because I have a degree in history from UCLA and half of two masters degrees. And I have a good job. I mean, our income was very good, it was just that almost-year period of being laid off. And I just felt embarrassed, just really embarrassed. I mean, I was really depressed at work, until my boss called her minister, who met me one day for coffee and talked to me . . . and essentially told me that he had gone through the same thing, and I wasn’t the scum of the Earth, or you know, this derelict or something.

VIGELAND: Who do you blame for this situation?

PARKER: I feel like it’s . . . I played my part in it, because, you know, I’m at work, I tell people you have to know your rights, you have to know what you’re responsible for. But it’s a combination, because before the subprime loans, it was really needing 20 percent. It was such a . . . even for me, with the income I made, I mean by myself I make $80,000. So you would think someone who is college-educated, makes $80,000 a year, they would be able to afford a home. Alone with my income, I couldn’t afford to qualify for a town home. And so with the subprime loans, it gave me an opportunity to get in. So for those who can get in and manage it, I think it’s great, but buyer beware. I would say, get a lawyer and have someone explain it to you. Find someone, go through a housing program. Even if you don’t qualify, it’s not getting in, it’s staying.

VIGELAND: I have to ask you what you think of this “For Sale” sign out here citing “American Dream Realty.”

PARKER: Oh my God . . . it is an American dream to own a home, and it was a dream that I always had. But it turned out to be a nightmare. And a lot of people, I realize now, are going through that. And I don’t feel alone anymore, I don’t feel so bad about it, but it . . . I’m better about it now. Before, I was just really, really down. I felt like a failure. And then I had the thing about it and I realized that I made bad choices. Because, you konw, if someone tells you you can’t have something for so long, and then they finally tell you you can have it, you qualify, you don’t ask a lot of questions. You’ve made it, it’s like, “Welcome to the club.”

VIGELAND: So what do you do now?

PARKER: My biggest problem now is trying to rent. Because not only do I have the foreclosure, but I have the eviction for not being here. And so finding someone . . . I can go say, “Yeah, I make $80,000 a year and I just got a promotion, I have good kids who are honor students, rent to me,” they’re not going to. So I’m just not sure where to start.

VIGELAND: So what would be the questions that you would have?

PARKER: I want to know, how do I mitigate the foreclosure? Is there anything that I can do to help my credit? What’s the best thing to do with the money I have now? I mean, I have a 15-year-old . . . do I try to pay the foreclosure off? Do I invest in a 529 college fund? I have defer . . . what do I do with my money with the fact that I have a foreclosure on my credit?

VIGELAND: Well Monique, we’ll try to get some answers for you, and thanks for letting us visit you here at your old home.

PARKER: Thank you.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.