THE BLOG

Up From the Ashes: On the Front Lines of the Mortgage Mess

11/30/2012 12:09 pm ET | Updated Jan 30, 2013
  • Gini Graham Scott Author, "Scammed," Allworth Press, and "Lies and Liars" Skyhorse Publishing

I never thought I'd become a casualty of the mortgage mess, as a successful writer of over 50 books and many writing clients, including a thriving business I sold connecting writers to publishers and agents and the film industry. Then, suddenly, everything began to dry up at the end of 2010 through 2011. Still, I felt I had a solid credit nest egg to supplement what I wasn't earning until things picked up again. Wrong!

In January 2012, though I had regularly been making my credit payments, Wells Fargo and the Bank of America pulled $30,000 in credit from me in two days because they thought my loan to value was too high, and that triggered the housing crash for me, though I ultimately managed to pull through it all -- the default, the loan mod frustrations, the sale of my house, the potential bankruptcy, the con artists, the rental in San Francisco, and more. Eventually, I turned my story and the strategies I learned along the way which can help others facing their own housing crisis into a book: Living in Limbo: From the End to New Beginnings. Plus I developed a series of spin-off creative projects from a script about a man losing it all to some mini-docs and music videos telling my story in song.

Now, I want to share my story, along with tips on what you can do if you are facing problems with housing, banks, credit card companies, or even contemplating bankruptcy.

But first a little context of how this housing crisis has enveloped so many people and still threatens our national and the world economy. As the Living in Limbo intro begins:

The Mortgage Mess

I call it the mortgage mess, and the numbers are daunting. Over 12 million homes are in foreclosure or underwater, the vast majority owned by middle class homeowners, commonly due to loss of jobs or business. These defaults have triggered short-sales and bankruptcies, with most homeowners remaining in their homes for six months to two years, sometimes more, since the banks are so overwhelmed by the crisis and their efforts to avoid the losses from selling an underwater home. Still, about four million homeowners have lost their homes in the last four years.

In California, the hardest hit of the states with one in every five foreclosures in the U.S., there have been 1.2 million foreclosures since 2008. The number is expected to nearly double to over two million by the end of 2012. A key reason for so many foreclosures is that two million homes -- about 30 percent of all mortgages -- are underwater. In my former hometown of Oakland where I owned and sold a house, homeowners have lost $12.3 billion of home values due to the foreclosure crisis, and about 27,000 or 1/3 of all homeowners are underwater.

Aside from the collapse of the housing bubble, other key reasons for this crisis are the loss of jobs, business declines and failures, and the tightening of credit, since the banks have reduced credit or are not extending it. Meanwhile, many government and local programs have sprouted up to help the homeowners deal with the crisis and perhaps get a loan modification, home transition assistance, or other support. Armies of bank representatives are now going around the country meeting with homeowners and getting documents to possibly provide help.

For homeowners caught up in this upheaval, as they wait for the final verdict that they have to move after a trustee sale, it's like living in limbo. One doesn't know how long one can stay in one's house, whether one can increase one's income enough to stay, where to go, and what to do next.

The Crisis Begins

I first began to be affected by this crisis in March 2008, when one of my publishers AMACOM downsized just before releasing my new book -- ironically entitled: Want It, See It, Get It! Despite an initial shock, I thought everything would be smooth sailing after I sold my business, which connected writers and others to book publishers and agents, the film industry, the media, and other industries, in September 2008. The sale closed in October and suddenly I felt flush with money. I even invested half of my sale proceeds in producing one of my scripts so I would become a produced writer which, I thought, would open up doors to scriptwriting in Hollywood, while I wrote my own books and books for clients.

Then the big 2008 crash began, and in November 2010, my own writing business began to dry up and by 2011 became a disaster. However, while I earned less than half what I did in the two previous years, at least I had accumulated a lot of credit to tide me over -- or so I thought.

Before these experiences, I hadn't thought much about the housing and foreclosure crisis. It was something that happened to other people who I occasionally read or heard about in the news.

So I never thought I would be affected by the mortgage meltdown, since despite a business turndown for 15 months, which halve my earnings in 2011 and began 2012 with a bust, I thought I had plenty of credit to see me through. After all, I figured I had about $40,000 in credit left, and I had been paying my cards, mortgage, and equity line promptly and completely for over 20 years. Though recently I had drawn on my credit to pay the difference between what I made and what I had to pay -- a few thousand each month, I estimated at that rate the balance would last a at least a year or two. I also figured that after 30 years as a successful writer of books for myself and others, I could ride out the economic storm and get book sales and clients once again.

But around November 2011, everything began to change. As I looked at my dwindling credit line, I began wondering what someone would do if they were in a situation where they had run out of money and might lose their home and everything they held dear.

The result was Suicide Party, a script about a middle-class guy who has been a very successful salesman, can't find work, and is facing an eviction in 30 days if he can't come up with the money. So with the help of a friend, he decides to have a suicide party, and if he raises enough money he'll live; if not, he'll end it all. Once announced, the party unleashes the response of people with different agendas, creates a media frenzy, and ends with a dramatic twist after the party. Besides being entertaining, the film raises issues about contemporary life, including attitudes towards suicide, the housing crisis, inequality, celebrity culture, the media, and more.

The script also led to a documentary video series on middle class people losing their homes: Middle Class Homeless: Families in Trouble; Middle Class Homeless: The Crisis; and a trailer for the series, which is being pitched for a full length feature. You can see these documentaries on YouTube at our changemakersprod channel.

But in developing these projects, I was still just an interested outsider with a problem that might occur in the future. That is until January 2012 when my credit collapsed like when air is siphoned out of a tire and you have a flat. Then, everything began spiraling downhill before I was able to turn everything around after nearly six months in mortgage mess purgatory. My next blog continues my story.

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