Magnanimity

Another distraction from my problems was volleyball at church. They run an annual league and I had signed up for that year. It was another activity that helped keep my useless worry at bay (at least temporarily). But it was also there that some very real help arrived.

I ran into the guy from my accountability group who had warned me against getting into real estate in the first place. His wife was playing volleyball and he had come to watch. He had heard about my misfortunes so I was chagrined to run into him. I said,

  “So I guess you owe me an I told you so.”

This guy works in a very well-paying profession but he is one of the most financially disciplined, generous people I know - and I’m sure I only know an inkling of it. What he said next revealed his magnanimity of spirit and soul.

“Absolutely not, Stephen. We just want help you guys in any way that we can.”

I had been able to sell a few of the lots out in the country but the bulk of the properties were going to end up in foreclosure as the months of non-payment continued to add up. In the meantime, the dent work continued to lag so much that I could see that I wasn’t even going to be able to pay my regular bills.

Despite the debt I had incurred on the 0% credit cards, our primary house had risen in value by enough that the equity could cover that and more. I saw the credit cards as using that equity without having to pay the interest of a home equity loan. The problem was that the 0% rate had an expiration date and I didn’t have a way to pay them off when they came due.

I thought about taking out a home equity loan but with the reality of my present income, I certainly would not have been able to afford the extra payments. I was struggling to even pay my regular mortgage as it was. Of course, that would have precluded me even getting a home equity loan in the first place.

On top of that, I had refinanced the house into an ARM (Adjustable Rate Mortgage), which started out at a low rate but went up after the initial period. It wasn’t too far from the end of that initial period, which would make my mortgage payments a lot higher. Again, I couldn’t refinance out of it with the state of my income.

I thought about selling our primary home. The problem with that was, with the ARM, my payments were significantly low. We would still need a place to live and a rent payment would be higher than my mortgage. We would make some extra money off the sale but it wouldn’t last too long. I also thought about renting out our house while we rented something else but I already knew the hassles of that road. We would probably still only break even at best and it would still only be a temporary solution until the ARM ran out.

I discussed all these things with my generous friend and he came up with a solution that made my head spin. He offered to pay my primary mortgage for as long as I needed it. This was the guy who had warned me against getting into real estate in the first place. This couple had been in the Care Group I had been leading and he saw the spiritual leadership that I had given as just as, if not more significant than any financial contribution that he could provide. I was astounded.

It took a while for banks to start foreclosing on the properties, especially with the plethora of people behind on their mortgages at the time. But inevitably, it began. When a bank forecloses on a property, they sell it at auction but if they get less than what you owed, they can come after you for the difference. If you declare bankruptcy, they can’t.

I met with the lawyer from my church that I had been using for the real estate deals to discuss everything. My financial partner was also with me to see how he could minimize his losses. There were still a couple of houses that were tied up with his cash since I hadn’t been able to finance them. If I declared bankruptcy, they would seize those properties to help pay the other creditors.

The lawyer didn’t do bankruptcies but he offered to help transfer the two properties with my partner’s cash from my name into his for free. But he advised us that if I declared bankruptcy, they would look back at any transactions I had done in the past two years. This one would look like I was trying to hide those assets and they would still seize the properties. We did the transfers and my partner pleaded with me to not declare bankruptcy for at least two years.

Meanwhile, things at work actually began to improve. My company had picked up a large account about two hours away that I got to service. We even got to a point where I could tell the people who were supporting us that we no longer needed them to pay our mortgage. Then our company lost the big account and it was back to the anguish. Amazingly, our friend re-upped his offer and I desperately started to look around for some other kind of work.