EEEVIL Real Estate/Homeowner Shit

[Greg B]

This story is proof positive why I real estate and home ownership is so dicey. The odds are so against you nowadays. Just look at these problems outlined. I don't know how anyone with kids making under 100k per year can handle it. If you're lucky and can work remote on computer you can make out like a champ. But if you're stuck in an area where you make $100k but it costs you that much to live you're fucked.
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Wednesday, June 7, 2006
Homeowners feel fiscal pinch
Debt, foreclosures rise as fuel costs and taxes take toll


By Larry Fisher-Hertz
Poughkeepsie Journal



The house in Hyde Park where Edward and Laura Burns raised their three children hardly rivals the "McMansions" that have sprung up in many parts of Dutchess County.

But for the Burns family, the modest, two-story house on Honeywell Lane was home. And seeing the legal notice in the newspaper last spring ? announcing the mortgage and been foreclosed and the house was about to be auctioned off ? was almost as devastating for Laura as the cancer that had stricken her two years earlier.

"It was horrible," she recalled as she recounted her family's financial troubles. "You can't sleep or eat. You feel like you're drowning, and you feel like it's all your fault."

Thanks to her improving health and the timely services of a financial adviser, Ed and Laura Burns were able to stave off their creditors and keep their house. But the financial expert who helped them said other families in the region haven't been as lucky, and a growing number are struggling with serious debt.

"The clients I'm seeing typically have $30,000 or $40,000 in debts, not including their mortgage payments," said Pam Rodelli, owner of Settled for Less, a City of Poughkeepsie firm that provides financial services and counseling. "And a lot of them are losing their homes. Right now, I'm seeing more families in trouble than I've seen since IBM bombed here in the early 1990s."

Rodelli said a number of factors are contributing to most families' fiscal troubles: assuming a mortgage they can barely afford, combined with skyrocketing fuel costs and property taxes that inevitably rise when a host of new families invade a school district. She said insurance costs have also risen much faster than the rate of inflation since the terrorist attacks of Sept. 11, 2001.

No room for setbacks

Any change in job status ? an accident or illness, or even a pregnancy ? that reduces family income or adds expenses, can be devastating, Rodelli said.

For the Burns family, the debts began to pile up in 2003 after Laura Burns was diagnosed with cancer.

"We were never wealthy ? I worked in manufacturing and Ed drives an oil truck ? but we always made enough to pay our bills," Laura Burns said.

Then she became ill and had to stop work. As her medical bills rose by $400 to $500 a month, the family fell behind on mortgage and car payments. Laura said when she wasn't undergoing treatment for her cancer, she spent much of her time answering phone calls from bill collectors.

"The American Cancer Society helped us with a couple of mortgage payments," she said, "and I have to say Central Hudson [Gas and Electric Corp.] was very understanding, as long as we made partial payments every month."

The bank that held the mortgage wasn't as magnanimous.

"I'd send in a partial mortgage payment, and the bank would send it back," she said.

Rodelli's firm was able to find a private investor to take over the Burns' mortgage until Laura's health improved. The couple eventually refinanced their mortgage and avoided foreclosure.

Rodelli said her worries about the local economy are based on information beyond what she sees in her own business. She keeps tabs on statistics kept by the Dutchess County clerk, particularly a legal action called lis pendens.

Latin for "suit pending," a lis pendens is a written notice that a lawsuit has been filed in which someone is seeking title to someone else's real property. In laymen's terms, it's the document that puts property owners on notice their creditors are coming after them.

Rodelli said the number of lis pendens filed in Dutchess County hovered around 500 a year in the late 1990s and early in the current decade.

Last year, that number increased to 645. And in the first three months of 2006, the total was 281, meaning more than 1,100 would be issued by the end of the year if the rate of filing remains constant.

According to Rodelli, these financial troubles aren't just hitting families earning less than the county's median family income, about $55,000 last year.

"People I'm seeing in the $100,000-a-year bracket are hurting too," she said.

A Pleasant Valley woman who asked her name not be made public said she and her husband were "in denial" about their financial crisis until Rodelli set them straight.

"Pam told us, 'You've got to sell your house,' " the woman said. "My husband didn't want to do it ? he saw it as a sign of failure.

"But by that time, I was happy to do it. I was tired of being chased by bill collectors, and you reach the point where you realize you're still a family without the house. There's nothing wrong with starting over," she said.

Familiar pitfall

The woman said the family's problems began after she became pregnant and quit her high-paying job to take care of the baby. She said she soon realized she had fallen into a trap facing many young families.

"You take on a big mortgage thinking, 'We're young; we'll be able to afford it.' But five years later, you have kids, you have more expenses, and one of you might have to stay home at least part of the time, so your income is coming down," she said.

Such scenarios are familiar to Simon Haysom, a Goshen lawyer who is president of the Mid-Hudson Bankruptcy Bar Association, an organization of about 100 attorneys who specialize in bankruptcy law.

Haysom said it had been his experience that most people ? "even Donald Trump" ? live slightly beyond their means. So it only takes a few bumps in the road, such as rising fuel costs or higher-than-average tax hikes, to push many families into serious trouble.

Haysom said recent changes in banking and bankruptcy laws had also contributed to the jump in lis pendens filings and other troubling economic indicators.

Bankruptcy made tougher

Last year, Congress amended the bankruptcy laws, effectively barring most homeowners from filing a "Chapter 7" bankruptcy that would shield them from much of their debt and allow them to start over. Instead, these families must now file "Chapter 13" bankruptcies, which allow them to keep their homes only if they can refinance their debt and keep making the payments.

Haysom said many families can't do this because they are saddled with credit card debt that is rising faster these days because of other changes in the banking law. Prior to 2005, he said, debtors who had "maxed out" a credit card were permitted to pay as little as 2 percent of the outstanding balance each month without being declared delinquent. Now the minimum payment on most cards is 4 percent.

"That may not seem like much of a difference," he said. "But if you were paying your 2 percent on two or three cards, suddenly your credit card payments have doubled."

Haysom said credit card companies have raised interest rates to as high as 35 or 40 percent for those with shaky credit ratings, and they typically tack on substantial penalties for late payments.

"This is an appalling form of lending, and debtors are essentially defenseless," he said.

Haysom, Rodelli and her clients all agree the only way out of trouble is to find ways to curb spending.

"You learn what's really important when you go through something like this," the woman from Pleasant Valley said. "We don't have our home any more, but we have all the basics. We don't have a new car, but we have a 1997 minivan that runs well ? and we don't have any car payments. Money means more to you the second time around."

Laura Burns said she and her husband were grateful they had been able to weather their financial storm without losing their house. But she said the experience had left her somewhat bitter.

"I have no faith in the American dream anymore," she said. "You bust your hump year after year, going to work and paying your taxes. Then you get in a hole, and there's no one there to help you out of it. The government doesn't help you, the bank doesn't care.

"If someone legitimately can't pay their bills ? not won't, but can't ? there should be some type of help for you. We found out there wasn't."

[Greg B]

bump, because this is important