Stay tuned for the latest news on Sally, will she lose her home to foreclosure?

“Foreclosure, you say? It’s not really my problem. I pay my mortgage on time every month. It’s my neighbor, she’s the one with a big problem with her lender. In fact, I heard that she’s in foreclosure and that they’re going to take her home away from her and the kids. It’s sweet little Annie and Joey that I feel bad for in all this mess. They don’t deserve to pay for what their mom did. She went into her head with such big mortgage payments , and when they cut her hours at the Supermarket, she couldn’t go on anymore. I’d like to know who my new neighbor will be, I hope they’ll be nice and friendly. I guess I’ll miss Sally, she’s always been a good neighbor for the last seven years.” .

This is disturbing conversation all too common in America’s backyards in the past year. There is hardly a block in our neighborhoods where we have not been negatively affected by the pain and devastation of good, decent people who were literally driven from their homes. Not the vision homeowners had when they bought their little piece of the American Dream. I’m sure Sally saw her grandchildren spend the holidays with her at her house. And there will never be the proms, birthdays, or Christmas parties she almost had planned for her family. Sally is not alone, there are literally millions upon thousands of our neighbors in some stage of foreclosure in America. And it affects more than just this little family, it affects all of us. For each person who slides down the slippery slope toward the loss of their security and home ownership, it has a definite ripple effect on the entire economic outlook. Sally will probably have problems for many years with employment, buying a car, or even finding a good rental for herself and her two young children. We can find Sally crying herself to sleep alone in her bedroom, as she focuses on a very uncertain future. She is scared and mortified.

As a nation we can probably absorb the pain and failure of some Sally’s. But what happens when it becomes more the norm than the exception? We all buckle down, pray a little more, and watch our biggest investment, our house, lose value with each new Sally. And sadly we will see even more in the next four years. Too many more. Unfortunately, we may see over ten million ARMs adjusting to breaking point in the next four years. And that’s not counting those, like Sally, whose hours are reduced, laid off or disabled. There are some experts who put a total of over fifteen million foreclosures in our foreseeable future.

But there are very few good alternatives for someone like Sally. They inform us about loss mitigation with their bank. Call your bank yourself and tell them you want to negotiate your loan. I have yet to speak to anyone who has actually gotten their bank to commit to a workable plan. Then there are the hundreds of new loan modification companies showing off their credentials for success. The truth is that about 5-10% get a good solution in the long run; most of the rest will be back in foreclosure very soon. Why? Because the only way right now that the big banks will accept a lower payment is for hardship reasons. And what most people don’t know, they will go up to about 95% of all your bills like food, car, utilities, and what’s left will be your new affordable house payment. What happens in two months when the car needs repair or a child has medical bills? Where will that money come from if there is no extra cushion for emergencies? Forget about rainy days, start thinking in a little pinch.

But there are some rays of good news. There are attorneys who will take on the big banking industry and sue homeowners to give them a level playing field. They’re looking for predatory lending, truth in credit violations, and getting banks to prove they have the right to foreclose on the “NOTE”: collateral. In our trials of almost 1,800, we have received only 10 notes. Banks have sold the loans, split them up to many corporations, and sometimes just lost them. I believe that most of the time if they brought the note and all the documents, it would positively prove that there is corruption in the loan. Judges in both Florida and Iowa have ruled that without the note, there is no proof of ownership and therefore no right to foreclose.

If Sally had a great lawyer, she and Joey and Annie could stay and enjoy their home. More parties with laughter, instead of tears of despair. Most lawyers are terribly expensive, except for the real heroes in the legal realm. Is that an oxymoron? We’ve all heard the jokes and snide comments about lawyers. Not this time. The heroes sometimes wear costumes, have law degrees, and carry briefcases. If you are lucky enough to find them. Let’s all hope for Sally’s sake and hers two little children of hers, she did.