Sick to Our Stomachs

It's like the past 6 months we've been running around with our eyes closed shouting I can't see you! I can't see you! And if I can't see you...you're not there.

Wednesday, someone opened our eyes.

We met with a HUD approved mortgage counselor on Wednesday. I found them on the HUD website for AZ and contacted them, maybe 6 weeks ago. I was hoping to get help getting a loan modification. I'm pretty sure I've stated this before - but since Mr. Man lost his job and took the new one at less than half his old income - we can't afford our bills. We're in the hole roughly $700 every month. How have we been surviving? By taking out student loans, and closing our eyes to the insanity.

So, shortly after contacting the HUD agency and filling out their initial paperwork, I got word from my bank that they were (finally!) starting us down the path for a Making Home Affordable Modification. This is a fun story...(but this post is already too long, so I'll sum it up - basically, the bank keeps dicking with me. Yay!) The major points are these:

Starting from when I lost MY job in September 2008 I've been contacting our lender to see if we can get some sort of refinance or something (I had no idea about loan modification yet). At the time, there was nothing. I quickly found other employment and then went back to school in January of 2009. While not ideal financially, it put us back to roughly where we were when we first purchased the home. I make about $2k less per year than I did, but $2k per year is a very manageable deficit, so we were fine. And I stopped worrying over a refinance or modification.

Then, in May Mr. Man lost his job. So starting May 2009 I've been calling our lender at least once a week trying to get some work out. By then, I'd heard of Making Home Affordable and had been on the website and determined we were eligible! Great! Well, the Bank kept saying that they didn't know anything about the program. And because we continued to pay our mortgage, because that's what you're supposed to do, they really had no options for us.

Which brought us to August 2009, where I took out a LOT of student loans and Mr. Man got his new job. Our new combined income is less than his old income was. We're now making about 2/3's combined what we had when we purchased the house. And, are in the hole each month. So what do we do?

Normally, I'd sell the house. But the house is worth about $95k and we owe $182. Can't really sell when can't break even.

In September/October we decided, we'll just take out the loans and make it work until I graduate. I mean, at least we have that option, so we should take it. I'm pretty sure I wrote a post stating that. By doing that, we keep our credit in tact, our pride unharmed, and our heads held high.

Which brings us to November 2009. When we met with the HUD counselor. Who pointed out that our plan of taking out what will ultimately be about $80k in loans by the time I graduate, to stay in a house that we owe $182k on, that is only worth $95k, is not a financially sound plan. Further, we will need to move in 3-4 years for me to get a job upon graduation. Not, I will want to we will have to if I want to be a professor and to use my PhD (I do). This complicates things because he said that, conservatively, we're looking at 15 years in the house before the value goes back to what we owe. Just to break even. But that's the $182k. Not counting the additional $80k. I feel like most people say houses are always a good idea because they always have equity. NO THEY DO NOT!

So, what do we do? Do we "transition" now? Which means attempting a short sale. That's risky, because if we can't find a buyer or the bank doesn't agree to it, then our next option is a deed-in-lieu, and if they won't accept that, then we've backed ourselves into a corner and have to foreclose. We both have excellent credit. Are we willing to accept foreclosure?

If we choose to continue to attempt a modification - hoping that this HUD agency will actually accomplish it since I've been unable to on my own for over a year - then we have to hope and pray that something happens so that in four years we can actually sell the house. I mean, if it's not worth what we owe in four years, we'll be in the exact same situation of looking at a short sale. But without the government legislation that is around right now to help people in our shoes.

Truthfully, I want a short sell. It's the least harmful to our credit, we can feel "good" about ourselves trying to do the best thing for ourselves and not just "walking away". But, if we attempt it, it's not guaranteed. It's up to the bank.

And then after making up my mind on that I look at friends and family. I know everyone's lives seem perfect from the outside...but some of our friends and family really have great things going on. I'm happy for them, but then feel jealous and sad for me. Lame, I know. They're settled in their careers and making their houses into homes that they will live in for a long time. We're not in that position, but I kind of want to be. The truth is, we should never have bought the house in the first place. But when we bought it, we as people were very different. And the direction we had planned for our lives was very different. Shit happens. Plans change. So what do we do now?

I don't know what we'll do yet. Mr. Man is really stressed out by all of this. I think he's taking it harder than I am. Probably because this is coming at the same time that he's feeling dissatisfied with his new job and feeling like he needs a "career". But he's not sure what career interests him. He doesn't feel a passion for anything but police work - and the departments are not hiring right now. So what do we do?

I might add - that we feel 100% ridiculous that we bought a new car in September, and we're going to Rome in December. And then talking about possibly foreclosing. The fact of the matter is neither of those purchases (foolish as they may or may not be) are why we're considering a foreclosure. It is not that we made these purchases and now find ourselves without recourse. It's that we realized we may be sinking ourselves for the rest of our lives for a house. When instead, we could transition now, take advantage of the legislation set up to help us, and repair our credit over the next 3-4 years, so that when we do move for my job, and want to buy again, we'll be able to. Instead of delaying what seems inevitable, taking out a butt-load of more debt, and winding up in the exact same situation, but worse off, because the legislation won't be there, and we'll have to wait 3-4 years from THAT time, which will delay us from when we'd want to purchase. It seems like the best financial plan is to "transition" now. It's just crappy that everyone (friends & family) will probably assume it's because we're idiots and went to Rome. Even if we hadn't had that trip, we'd be in the exact same position right now.

So what do we do?

It sounds to me like we attempt the short sale and hope it works. And accept the possibility we may foreclose. And hope that that's the right decision...