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Tips for Coping With the Housing Crisis

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Commonly a crisis is filled with opposing winds and counter-currents, making it unclear the best thing to do. It is like being in a raging storm when a sudden calm leads one to think the battle is over or suggests that one follow one path to a safe harbor; but then new gusts from that direction lead to uncertainty and danger all over again.

That's a little how I felt in dealing with the maze of bureaucratic hoops involved in the foreclosure process, when the fate of my house in Oakland was up in the air, a story described in Living in Limbo: From the End to New Beginnings, I would speak to one bank rep who would tell me to get him the documents and he would smooth everything through, only to find after several days of redoing paperwork that he had to submit everything to someone else, but then that person was soon replaced by still another person. The foreclosure experience was like pushing through an ever changing hall of mirrors in a fun house, except this wasn't fun at all. Yet, one has to continually get back on track, learn from past mistakes, and plan what to do next when one finally gets out.

Along the way, I learned a lot of about staying calm and rational in a time of crisis and working out alternative future scenarios to better know what to do in the future. These scenarios are based in part on rationally thinking what the future possibilities might be and in part on intuitively imagining what is the best choice to make now, when you don't -- and can't -- have all the information you need. But you still need to as best you can make that hope for the best decision intuitive leap. It's like what a master chef does -- taking a recipe which anyone can follow, but then bringing in a bit of that culinary magic -- to come up with that ideal exquisite dish. My life was a little like that for about six months, as I had to figure out what ingredients to include and how to combine them as I made decisions about what to do about the foreclosure crisis -- and ended up somehow creating the right mix to come through successfully.

Thus, here I want to share other strategies I used to steer through the storm and come up with just the right recipe, which others might find helpful, too, in creating their own strategic plans to deal with any difficult situation they might face.

• Although a bankruptcy has traditionally been considered a badge of shame and something to not talk about in polite society, I discovered that attitudes toward it had changed because so many millions of people had gone through the process, and now it might be considered just another strategic chip to use in the foreclosure process. In fact, it could be used a little like a trump card in hearts or poker to top the hands currently on the table. In this case, what playing the bankruptcy card meant was that one could walk away from one's debts and slow down the foreclosure process by filing for bankruptcy just before the foreclosure sale by the bank. Then, one would gain about six months more time to stay put while the slow-churning foreclosure process churned on. I learned about this strategy from a real estate broker who had placed a pumpkin at my house each fall, who told me he had a client in the neighborhood who had been in his house under this arrangement for over two years -- and was still there.

• Despite feeling frustrated at having to repeatedly file documents with different people, I continued to be cooperative, and filed still more documents, which resulted in delays for me, too, which was a good thing for a "stay in your house and don't pay as long as you can" strategy.

• I took additional steps to show I was acting in good faith by putting my house on the market while I was seeking a loan modification. And in doing so, I looked to my past connections in old address books by calling a woman who had been in two of my film projects as an actress and also a real estate agent, Debbi De Maggio. Though by now several real estate brokers had turned me down, on the grounds the house needed too much work to go on the market, I wasn't willing to give up, nor was Debbi. She looked at the house and was willing to put it on the market "as is" and ask for my bottom line to sell the house, so I could clear out my debts and end up with $10,000.

• Though I originally thought I had to both clear out my mortgage and credit card debts in a house sale, I was ready to change my thinking, when Debbi the real estate agent told me that selling the house and going bankrupt were two different things -- the house sale would just clear out the mortgage and equity line. I didn't have to pay off my credit card debts, and after I sold the house, I could do what I wanted with any proceeds from the sale.

• I developed a plan for what to do if I sold the house, which meant deciding where to go based on renting or obtaining a lease option, since I wouldn't have the funds to buy another house. This also meant deciding on priorities -- setting the criteria for what was most important in making a decision -- of where to go. It was critical, since it would determine virtually everything about this future. It would affect lifestyle, work possibilities, networking contacts, and more. It was like being offered the opportunity to select my future DNA for this new location, although part of the confusion was determining what DNA strands and genes to select. At first, I thought about moving to a more bucolic country environment in Lafayette, since this was half-way between Oakland, where I now lived, and Walnut Creek, which I thought of as a charming suburban city. I was drawn by the ideal of a peaceful leafy future. But then, thinking more realistically, I realized that as much as I might enjoy the calm and peace as a kind of respite after the crisis, it was better for my type of business that involved continually finding new clients for publishing and writing and putting together film productions to be in San Francisco, with its active writing, publishing, film, and business communities. So I decided to look for rentals there.

• I looked on the positive side of what was happening, so I began to think of the need to move as a good thing which offered many benefits rather than focusing on the losses. In particular, I thought of the advantages of being in another city, where I could start afresh, and I thought of San Francisco as a particularly good place to be now, because of the excitement of the new high tech boom in the city. I felt San Francisco would be better for my business in finding new clients. Conversely, I thought of the negatives of staying where I was in Oakland, such as the rising crime rate in my old neighborhood, due to the growing number of burglars, thieves, and robbers coming to this area due to the economic crisis, the concentration of police in high crime areas, and the reduced police force in Oakland due to hard economic times. I also thought about the many things needed to fix up my house which I couldn't afford, such as a much needed paint job and driveway repairs, and the high monthly bills to maintain my house, such as a gardener, high gas and electric, and water bills, which I wouldn't have to pay anymore in a rental. Thus, though I might be forced to move, I began to see the upside of moving.

• I was flexible and ready to move quickly when my house sold in record time. Though I had put it on the market as a good faith gesture to help get a loan modification or delay a foreclosure, when the bank found I had unsuccessfully tried to sell my house, it sold in five days after my broker put it on the market.

• I was willing to stand up for my bottom line. Although I knew the house needed a lot of work, I was unwilling to back down when the buyer who made a better offer on the house wanted me to deduct $10,000 from his offer towards repairs. But knowing my backup plan was staying in the house for a year or two rent-free while the foreclosure-bankruptcy process went on, I said no. I came back with a counter offer of him paying me $5,000 less, plus I could stay in the house rent-free for a month, which would be worth about $4000 and give me more time to find another place. But rather than lose the house, the buyer agreed to my original offer, which was $13,000 above my bottom line.

• I developed a clear path to where I wanted to go after I moved. Having decided on moving to San Francisco, I decided I wanted to live by the ocean or in the Presidio Heights area, where I had once lived before, and I concentrated my search on only these two areas. I liked being by the ocean, because it was like being in San Francisco but not of it, and I thought living in Presidio Heights was a good place for meeting clients in a nice upscale neighborhood near a few nice parks. For a time I was torn between the more expensive apartment good for meeting clients in Presidio Heights and my personal preference for living by the ocean, but ultimately decided to live where I wanted to be. And that's exactly where I found the house where I rent now.

Gini Graham Scott, Ph.D. is the author of over 50 books with major publishers and has published 30 books through her own company Changemakers Publishing and Writing. She writes books and proposals for clients, and has written and produced over 50 short videos through her company Changemakers Productions. Besides LIVING IN LIMBO, her latest books include: THE COMPLETE GUIDE TO WRITING, PRODUCING, AND DIRECTING A LOW-BUDGET SHORT FILM and WORKING WITH PEOPLE WITH DISABILITIES.