Chris and Marcia Parker took out a home-improvement loan that was split in two parts. Now, they've fallen behind on both loans, and the house in foreclosure -- and they fear they might have to live out of a van.
Updated: May 3, 2013 12:14PM
The problem: The Thornton couple took out a home-improvement loan that was split into two parts. Now, they've fallen behind on both loans, and the house is in foreclosure -- and they fear they might have to live out of their van.
Chris and Marcia Parker live in south suburban Thornton, a village surrounded by deep pit limestone quarries. The economic slowdown is evident there: With the local Citgo closed, you have to get gas at the 7-Eleven -- and even that store has a "For Sale" sign in the window.
They live in a small brick home that Marcia's father built in the 1950s. She grew up there, and the couple moved back home to care for her elderly mother. At the time, they took out a mortgage to pay for a new roof and new furnace. Their mortgage broker split the loan into two parts -- a "piggyback" loan, which is a creative way to avoid paying the extra PMI insurance that protects the lender.
Their story is not one of greed or speculation. They had a small business, which failed, causing them to file bankruptcy. Then both got jobs with the same company, and were laid off at the same time last July. Recently, Chris found an auto sales job -- straight commission. Marcia has sent resumes, scoured the Internet for job postings, but still brings in only part-time earnings.
Bottom line: They fell behind on their mortgages, both the first and second. They've had the house up for sale, and reduced the price -- but no takers. After first making inquiry about a loan modification, they avoided their lender. The inevitable happened: They received a foreclosure notice with the date set for March 30. Today, they are living amid packing boxes, with nowhere to go.
Worst fear: Chris says they've looked to rent another place, but they are turned away by landlords when their credit report reveals a bankruptcy and foreclosure. They're seriously thinking that they'll have to live out of their van.
Ray of hope: Late last week, their primary lender, HSBC, talked with them about a forbearance program after determining the Parkers are serious about saving their home. There's financial counseling to help them create a budget, and monthly payments they can afford. The foreclosure sale was delayed three months, and their situation will be reviewed again later in spring. It's not a solution, but if Marcia can find work to help with the payments, they may retain the home.
Lesson learned: Don't avoid your lender when problems arise, and don't be intimidated by the first rejection. HSBC said, in a statement: "Under our foreclosure avoidance and account modification programs, in 2008, we modified approximately 92,500 loans with a dollar value of $13.5 billion." And that was before the new administration's foreclosure-prevention plan.