My sub-prime story

You've all seen the headlines -- people are losing their houses like crazy. I was nearly one of them.

When I got my mortgage two years ago, the only way I could get one was to accept a sub-prime mortgage with a two-year ARM -- oh, and my interest rate was 11 percent. I said, "I'll bring my credit score up and refinance before the ARM expires."

Well, famous last words. As soon as I bought my house, my free-lance job, which was bringing in $300-$400 a month, told me they no longer needed my services. Ouch! I couldn't get a second job because I am a single parent of a child with autism. He really couldn't be left alone for long periods of time.

Also, one month after I closed on the house, my mother died suddenly. That didn't affect me financially, but it did send me into a low-lying depression, even with medication.

I struggled for more than a year, barely making ends meet. Sometime last summer, I got later and later on my mortgage payments and started getting calls and letters from the mortgage company. Soon that turned into court documents and default notices. I didn't pay close attention to my checking account, and I had tons of overdraft charges. I just couldn't get ahead and I couldn't make myself do better.

Because I had focused all my monetary attention to my mortgage, I stopped paying the credit cards and barely kept the lights and water on at my house. I called my mortgage broker and asked him for help. He said the only solution was a new program through Fannie Mae (pushed into place by Bush) that helps people with sub-prime loans re-finance. Well, yeah, if you have perfect credit. So, if you're going into foreclosure, chances are you've stopped paying everything else to try to keep a roof over your head, so who has perfect credit?

I called my mortgage company, and they offered to modify my loan -- but I'd have to pay $300 a month more than my actual payment! Not possible.

When things like this happen, my "solution" is that I retreat into myself and ignore the problem, hoping some miracle will happen and it will go away.

I only told a couple of really close friends, and I still managed to make them think I was OK. The one person I absolutely couldn't tell is my dad. I still haven't. My dad is the best at managing money, and he just doesn't understand why I'm not. I've borrowed lots of money from him, and I owe him a small fortune. I just couldn't ask for more (he's certainly not rich) and I couldn't stand his disappointment. I already felt like a complete and utter failure. I couldn't stand for my dad to see it, too.

I was desperately trying to find a job that paid more, and I was seriously considering getting a second job despite the consequences to my family. My son was in legal trouble and going in and out of a mental hospital. I was so depressed I couldn't sleep. My ex-husband wasn't paying even enough child support to feed a teen-age boy.

One day I went to a friend's house with a bottle of wine and told her everything. She is a non-practicing lawyer and we sat up all night drinking wine and talking. She helped me draft a response to the foreclosure proceedings, which we knew wouldn't really work but it might buy some time to find a solution.

So one day in December, I tried to talk to my mortgage company again. This time they offered a reduced payment plan. I could pay about $100 less a month for six months and then they would revisit and modify my loan. It was a struggle at first, but I got into a groove and managed to do it for four months. But I wondered what kind of modification it would be. Would I get that big payment again? Would my percentage rage jump at the end of my ARM?

During that time, my sister got a job as a financial adviser and she helped me apply for refinancing through her company. They said no, but I was on the fence. If I made payments on time for six months, they'd reconsider! Sweet! I can do that.

Then I got a letter in the mail that said my ARM had expired and my rate would stay the same for the next six months. Well, OK. It said it would have been reduced to 9 percent, but my loan was written in such a way that the rate could not go down, only up. This is one thing my lawyer friend had noticed in my mortgage that she said didn't sound legal and would qualify as predatory lending. That's OK, in a few months I was going to refinance with my sister anyway.

On Wednesday night, I got a letter via UPS from my mortgage company. It was a loan modification. I was suspicious, but I sat down and read through all the fine print.

The first thing I noticed was that my mortgage company is owned by BEAR STEARNS! Yikes! Turns out, this is a good thing: They offered me a fixed rate of 5 percent for the next four and a half years!

I called my lawyer friend and read off the legalese to her, and she and I began to realize that this is about the best deal I could hope for! Now, I can definitely pay off my other debts, and when the rates start to rise a little, I can refinance and lock a good rate in for 30 years.

The best part: My mortgage payment dropped from $633 to $397 -- a difference of $237 a month!

I called today and asked a couple of questions. Does this mean I'm totally out of foreclosure and I'll be absolutely current? Yes! Can I start paying via your Web site instead of paying for stupid Western Union? Yes!

I also said that I don't understand why they did this. "Well, you've been doing a great job with your payments!" Uh huh. Mortgage companies don't do stuff like this out of the kindness of their hearts.

I checked their Web site, and I noticed on the first page, in bright blue letters, "EMC Mortgage Corporation is committed to helping customers keep their homes, if you can continue some means to make payments and are committed to working with us. "

Somebody's sweating a federal investigation, it seems.

I told one of my friends about it and she said, "You know, you might be the only person who is benefiting from this whole sub-prime crisis."

I signed the papers and sent them back today. There was another minor problem where they seem to think I didn't pay last year's taxes, even though I did, but I have a paper trail with which to dispute it.

I've since gotten another free-lance job that pays even more than before, and my son is moving in with his dad. This also means I'm getting a roommate, who will pay me rent. Life is looking pretty darn good.

The word "Foreclosure" still makes me sick to my stomach. I get sad when I think of all those people losing their homes, families of five moving into two-bedroom apartments, pets landing in shelters, neighborhoods declining with empty homes, broken dreams. It could have so easily been me.