DeaneBarker.net

Could It Be That the Best Chance to Save a Young Family From Foreclosure is a 28-Year-Old Pakistani American Playright-slash-Attorney who Learned Bankruptcy Law on the Internet?: This is an admittedly entertaining story of a rookie lawyer who sets out to save a family from foreclosure.  It details his months-long fight with Wells Fargo to get their mortgage loan modified.

He has a running metaphor in the article about wrestling with a sh*t-covered bear, and even throws in some references to Rocky along the way.  He’s writes it as the classic underdog story.

But there’s a problem – the homeowners admittedly bought a house they couldn’t afford, by filing a fraudulent loan application.

Adjustable interest rates were initially low, thereby enticing borrowers with a promise of low monthly payments. When asked what would happen if the rate "adjusted" and the payments increased, borrowers like the Lipkins were told, "Oh, don’t worry, by that time your property will have significantly appreciated. You can always refinance the loan and take money from the growing equity."

"We just did what the bank said to do," explained Natalie. "Our broker said, ‘Here, sign this paper and you’ll get the loan.’ So we did. We wouldn’t have qualified otherwise."

That same broker was the one who referred them to me to save their home from foreclosure.

On the stated-income loan, the bank claimed Carl was making $25,000 a month. In reality, Carl was netting a salary of $26,000—a year.

Now, loan fraud aside, I just have trouble with the resolution here.  In the end, the valiant attorney saves the family from foreclosure by getting their loan modified, but they’re still living in a house they can’t afford.  It was purchased at $585,000, then had its value reduced to $270,000.’

The Lipkins eventually have their loan payments reduced to – I think – reflect the new value of the house, but based on the income figures I see in the article, they still can’t afford it.  Even a $270,000 mortgage at prevailing interest rates is a really big monthly payment.

Early in the article, the wife says:

"I partially blame ourselves for this," Natalie added. "But then again, I also blame the economy. And I also blame the banks. Ever since we got in trouble, we’ve been trying to work with them! I want to keep my home. I want to stay in my home. I’ve tried to keep my home! I want to raise my children in my home."

It’s hard not to be sympathetic, but I think they’re fundamentally trying to keep something they can’t afford.  In the end, it seems like the lawyer gets them into a two-year loan modification program…but then what?  Aren’t they just delaying the inevitable?

I know that people desperately want to keep their homes, but you also have to take a step back and ask yourself if you can afford the home you’re in, even under the best of circumstances.

Update: an article was published the next day which completely reinforces my point: The Lipkins Are Not Alone.