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Tales From the Boom and Bust
Comments () | Published April 21, 2010

“Can I Walk Away?”

While prices remained stable in certain sought-after neighborhoods, in other parts of the region many people found themselves under water—their house was worth less than they owed on the mortgage.

Some have been able to arrange a “short sale,” in which the lender forgives the difference between the sale price and the balance of the mortgage. But banks have been slow to respond to short-sale requests; the process can take more than a year.

Others have simply stopped paying their mortgages and have left their homes. It takes seven years for their credit scores to recover.

Michael Rucker, homeowner in DC’s Brightwood neighborhood: “I bought my condo in August 2006 for $289,000. I didn’t really worry about losing my job because I thought: The market is going so great, hopefully I can refinance and get a lower mortgage.

“I’m an IT contractor, and I lost my contract. The one I have now pays much less. I don’t do any clothes shopping, can’t really travel, don’t go too many places. I’m stuck.

“I’ve been trying to get a loan modification. If you’re on hold with the bank, they hang up on you. I feel like saying forget it and walking away from the property, but I don’t want to ruin my credit.”

Marty Bryant bought a townhouse in Manassas Park Station, a new development, in late 2005, when she was 26. She lived there just over a year before moving to California for a job: “Both of my parents are in real estate. I’ve had my license since I was 18. I wanted something I could call my own.

“I bought at the peak, unfortunately. I paid $360,000, and now they’re assessing it just over $200,000. I have a tenant and he pays a portion of my mortgage, but I’m in the hole every month about $900. I was hoping to make money on it. At this point, I’d like to break even or maybe just lose $20,000.”

Joey Remondino, a broker with Stone House Realty: “Manassas Park Station was selling fast in 2005 and 2006. I had a client who paid almost $500,000 for a three-bedroom condo there.

“Later, I short-sold his house. At the time you’d have 15 doors, and eight or nine had lockboxes on them. I’d forget which one we were looking at.

“Most of the original owners are gone, which is hard to believe knowing that the community was built in 2006.”

Homeowners in Crisis

Despite programs designed to help people who are behind on their payments or under water, most banks have been slow to make adjustments to loans. Prince George’s County, Charles County, Prince William County, Manassas, and parts of DC have seen the highest rates of foreclosures.

Marian Siegel, Housing Counseling Services: “There was a period when the lenders were doing nothing to help homeowners. No matter how many times we called them, no matter how much contact we made, it was lost paperwork, phone calls not returned. That was the norm.

“Then the programs that supported temporary loan modifications began, and we started seeing lenders willing to do them last June. It was supposed to be a three-month modification. Those started coming due in August, and we could rarely if ever get a client approved for a permanent modification.”

A homeowner in DC’s Petworth: “I bought a low-income condo in Columbia Heights and lived there for about 20 years. Then five years ago, a friend of mine who works at a bank said, ‘You have so much equity. Wouldn’t you like to have a house?’ Well, who wouldn’t want to have a house?

“I bought in Petworth. I was confident I would be able to pay because my daughter was living with me, but now they cut back my hours at work and my daughter is about to move out.

“I spoke with someone who said I was qualified for a loan modification. In September they said I was on a three-month trial and they’d get back with me by the end of December.

“December 20 came, and I had not heard anything. I called and they said, ‘We haven’t come to a decision, so go ahead and send January’s mortgage at the reduced trial amount.’

“At the end of January, my credit-card company said, ‘You have no credit with us. You’re behind on your mortgage, so you’re high-risk.’ I called my bank and tried to explain. I was told, ‘Your loan is no longer under the modification payments. You’ve been denied since December.’

“Every time you call, it’s a different answer. I started this process in April 2009. I’m a nervous wreck.”

Homeowner Graham Marsden: “My wife and I bought a condo in Reston in 2005, right at the peak. Only one person paid more than we did for a unit in our condo building.

“We are part of the lucky few who are able to refinance under Freddie Mac’s HARP [Home Affordable Refinance Program]. Our ARM was scheduled to reset this year, and the Obama plan came just in time. We were hopelessly under water.

“It’s very strange, but we’ll celebrate having a higher monthly payment and higher interest rate on a condo that is worth less. The celebration is about eliminating a big, scary unknown—it’s better than having an adjustable-rate mortgage. We’re going to open up an ironic bottle of Champagne.”

Robert Jenets, Stuart & Maury: “Foreclosures in Bethesda are a dirty little secret. It’s a proud neighborhood. But we do have people who have gotten into bad situations. You can go through the listings and find a decent number of foreclosures and potential short sales. It’s just that you don’t necessarily see it on the sign on the property. Because it’s such a desirable area, they might be sold quietly.”

Tony Sindlinger, first sergeant with the Prince William County Sheriff’s Office: “Our evictions have almost doubled. It’s a stress on all our deputies.

“I’ve been doing this for a little over 20 years. I’ve seen a lot of changes. Fifteen years ago, almost 99.9 percent of people were already aware of the situation when you went to deliver the papers. Now we are finding tenants who are unaware they are being evicted, because they were paying rent to the landlord but the landlord wasn’t paying the mortgage.

“Several months ago, we had a murder-suicide in the town of Dumfries. I can’t speculate whether it had to do with the eviction, but the couple had absolutely no place to go. The night before we arrived to do the eviction, one shot the other and then shot themselves.”

Veronica Roth, director of SERVE, a program of Northern Virginia Family Service that runs a homeless shelter: “In 2009, we had about 160 folks who came to the shelter as a result of foreclosures. We’ve been seeing more people from higher-income types of employment. We’ve had teachers, nurses, electrical engineers, painters, construction workers, retail workers—it’s been the whole gamut. These are families used to being independent, used to making it on their own and not asking others for support. That hits a person’s self-esteem really hard. They are grieving the loss of what they built up over the years. It’s very hard when you’ve done everything you think you’re supposed to do in life—you’ve paid your bills, worked hard—and to end up without any housing. It’s terribly frightening.”

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Posted at 12:00 AM/ET, 04/21/2010 RSS | Print | Permalink | Comments () | Washingtonian.com Articles