SHELTER FROM STORM CLOUDS

Out of the housing crisis that has wreaked havoc with so many Americans during the last several years have emerged a growing number of families and individuals who are in need of rentals. The growing number of rental seekers is likely to meet head on with a growing number of homeowners who have been on the fence as to whether to sell now or wait “until the market comes back”.

Before the wave of bad loans, falling home values, unemployment, short sales, and foreclosures began washing over our families, friends and neighbors, there were few single family homes for rent. If a family entered into a landlord/tenant relationship, it was most likely with a landlord who owned the home as an investment property. He bought low and chose to rent until he would sell high in a strong market. Typically, the landlord required that the tenant applicant have a strong credit history before he would enter into an agreement for rental. The tenants were often folks who were not in a position to purchase, but could demonstrate income flow and who had good credit.

Difficult times often produce changes in attitude that precede changes in practice. These days are really tough for those who own shelters from the storm and for those who need to be sheltered. Here is who you all are and to the extent that you meet and help each other, I offer the following information:

Tom and Judy have 2 small children. They purchased their second home at the height of the market with a loan that their lender said they could refinance within about six months. It was a choker of a loan and when the market fell down around the high price they paid for their home, they were not able to refinance. The rising interest rate came due and they struggled to keep current as their home quickly became worth far less than what they owed the bank. After two more devastating years, they sought counsel with an accountant and lawyer. On advice of counsel, they filed for bankruptcy. What they did not know was that the attorney had the mortgage discharged despite the fact that it was never the couples’ intent to discharge their mortgage as part of the bankruptcy.

After another year went by, Tom and Judy continued to pay their bank every month on time. When they read about “loan modification” programs, they began to inquire of their bank if they would be eligible. It was during this dialogue with the bank that they learned that there was no mortgage to modify. It had been discharged. As such, not one of their hard met timely payments had been reported to the credit bureaus. They in fact, had no credit history building. When they called their lawyer he said “Just keep paying the monthly bill on time. The bank probably won’t evict as long as you pay them.”

That night the couple stared at the ceiling. The next morning they stared at their children.

If this family like so many hard working Americans knocks on your door knows that they make good money, they respect the property of others and they pay their bills on time. The old standard “credit report” will no longer reflect the whole story in this challenging market.

If you are a homeowner whose home no longer meets your needs, it may very well meet the needs of the Toms and Judy’s out here. We have every reason to believe that home prices will increase again but not for several years. If you are on the fence about what to do with your own home, you may have options that are well worth exploring. We have a number of worthy families who are waiting to meet you. You may need Tom and Judy just as much as they need you until the storm clouds clear.