Wednesday, December 7, 2011

Resistance is Futile, You will be a Commodity

Oh Joy, today I came home to a Notice of Trustee's Sale taped to my garage door, cowards didn't even have the courage to knock. I write this as an open letter to GMAC (our current home loan "beneficiary"), MetroCities Mortgage (our loan originator), AZ Congressional Representative Jeff Flake, AZ Senators John McCain and Jon Kyl, President Barack Obama, and the banking industry as a whole. I write this to explain how the current atmosphere of the banking industry and their influence on our government is directly impacting my ability to "live the American dream" and to offer a suggestion on how to best help the still struggling economy by helping people like me. I DO NOT expect that this open letter will make any difference, I DO expect that my home will be foreclosed, that we will be evicted and that we will get to start our quest to find a place to call our own again.

We took a traditional, fixed rate home mortgage loan in order to purchase our home in mid 2007 in the amount of $225,000.00 dollars for a home that appraised at $250,000.00. When approving us for our loan, the lender gave us an upper limit of $400,000 and tried on multiple occasions to suggest loan options other than the traditional fixed rate mortgage, which we did not take, opting instead for the reliable and trusted traditional mortgage. We chose a home based on what we could afford and what would give us some equity as we made our normal payments, we did not "push the limit" or borrow beyond our means at the time.
Due to multiple employment challenges since 2009 our income has almost been cut in half. In that same time our property value has dropped to a mere $70,000-$80,000. Traditionally, we would have been able to sell this home, pay the loan, and buy a new home that is more in line with our "new" income and means. However, due to the banking industries mis-management of their investments and the resulting housing market crash, this "responsible" outcome is impossible. Instead, we are faced with attempting to make payments on a $225,000 loan for a home that will never EVER be worth more than (and I am being generous here) $120,000.

During the life of our loan, GMAC stepped in and purchased our loan from MetroCities Mortgage. I do not know how much they purchased our loan for (first because I believe they bought the loan in bulk and not as a price itemized transaction, and second because GMAC would never be willing to disclose that dollar amount unless forced to do so by court order). My belief is that they purchased that loan for less than $100,000, mainly because if they paid much more than that for our loan they would be out of business (were it not for government bailout money that is).

We have applied for loan modifications three times, twice we have been outright denied, with the reason being that I make too much money to justify adjusting our loan. We received our last decision just last month which according to the documentation reduces our payment by $200 a month and if we stay current would reduce our principle by the amount of the payments (plus $1000) at the end of one year. Essentially, they are offering to reapply our interest at the end of the loan to pay down the principle now. Unfortunately, reducing our payment by 10% does not sufficiently substitute for a loss in salary of 40% nor for a loss in property value of 30%.

If GMAC were interested in anything other than maximizing their profits (which I understand is their primary interest) and if the government was truly interested in keeping people in their houses or "making homes affordable" the focus on assistance would be to reduce principle as a tax-free grant, rather than handing the banks fist-fulls of money and asking them to "please, please, do your best to help people out". Trillions of dollars were given to these mortgage companies to bail out their poor investment strategies. If that money were given directly to homeowners as payments to their principle this crisis would already be over. The banks would have had their liquidity, the homeowners loans would be reduced to an affordable amount (even in the case of lost wages and home value) and I would not have to be writing this blog post. Nor would I be considering if this "American dream" is even worth living.

I believe that GMAC has offered us a loan modification that is only interested in taking as much money as is possible based on their calculations of a percentage of my gross income. I am not unreasonable, and I DO understand that a bank is in the business of making a profit. Therefore, I offer my counter offer, in the most public forum that I can muster: Rather than playing the "Trial Period Plan" game that has been thrown up as a way to maximize profits and meet the minimum requirements of assistance that the government has given them, I suggest the following. Reduce the Principle on my loan immediately to the amount plus 10% that GMAC paid MetroCities Mortgage for the loan, maintain the current interest rate on the existing loan. Recalculate loan payments based on zero down for that loan amount and 30 years starting in the new year. You may look at this and say wow, Jory, you are being generous, that means that GMAC has a built in profit margin of 10% and they are still making the amortized amount of interest in profit as well! You are right, I told you, I am not unreasonable.

Additionally, there are circumstances that make this offer even more tasty for GMAC, you see, this house is never going to sell for even $80,000, send out an appraiser to confirm it. The builder of this home had their contractors license revoked (even before they sold us this home) and their building quality is a direct reflection of this. Of all of the sub-contractors for this home build, only one is still in business. The home warranty is useless, as the contractors business has closed it's doors and re-branded themselves to be a new contracting company.

There is not one piece of this home that we have not had problems with, not one component that had not required additional investment of time, money and/or sweat and the yard is still not finished, the floor is still torn up and the fans still do not work quite right. Why on earth would I want to stay here, I curse this house every moment of every waking hour. I curse our real-estate agent who did not represent us nor provide due diligence in proving the basic information about who was selling the home nor the nuances of the home location. I curse our stupidity at falling in love with the property and seeing the potential of making a life here. That is the reason I would want to stay, even with the long commutes to work and the constant repairs, this place has become home, but, I simply cannot justify continuing to pay nearly half a million dollars (mortgage plus interest) for a home that will never break $100,000 in value and that may be pulled out from under us at any time.

I implore you, GMAC, to make your profit reasonably, and you, Mr. Flake, Mr. McCain, Mr. Kyl, and Mr. Obama, to exercise your political encouragement towards GMAC to modify the principle on my loan to a reasonable amount. My efforts to reach anyone at GMAC who will even consider this proposition have been futile, the people who are outward facing are simply too hand tied to consider anything beyond what has been prescribed by their corporate masters. The lack of our politicians and the banking industry to consider reasonable solutions to the economic and foreclosure crisis that they created and encouraged is the direct reason for the occupy protests. I occupy in spirit as I cannot afford to lose my job. The desire of the wealthy to accumulate wealth at the cost of the working class has clouded their ability to reasonably be able to negotiate win-win situations. It is like playing monopoly with someone who starts the game with all of the property and that game always has the same outcome.

As I stated in the beginning of this letter. I DO NOT expect any type of real action to occur. I might get some lip service, but, short of someone handing me $100,000 to pay down the principle on my loan (which I would gladly accept) I will be looking for a new place to live my dream at the end of January. My only consideration now is which country might offer more opportunity than the one that only seems interested in maximizing my spending to enrich the corporate donors to political office.

Sincerely, Jory Dan Johnson

PS I know it is a long read, but, if you know of ANYONE that can help, please pass along the link, share on G+, Facebook, Twitter or any other platform.
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