Job loss puts home on line

As she recalls the struggle that has lasted nearly a year, she settles into a small cushioned chair that rests near a tiny portable TV. It and an outdoor metal-and-mesh chair in the room are among the few pieces remaining in the 1,800-square-foot home.

Networking, cover letters, résumés, cold calls and visits. The 48-year-old, who has spent more than half her life in the banking industry, believes she has done all the right things to get a job, only to come up with the wrong result: "Just rejection letters that all sound like they came from the same computer program."

She said frequent attempts to work out some kind of loan modification with her mortgage lender, until she got back on her feet, received replies of "You don’t qualify" and "We can’t help you."

It didn’t matter, she said, that she had been responsible, rejecting the subprime loans that have resulted in so many foreclosures.

"Mine is a 5.95 percent fixed rate with a 40-year amortization," she said. "I couldn’t beat that deal if I tried hard."

Walker said she burst into tears when Countrywide, the company servicing her mortgage, informed her that her house, her first, would be part of a foreclosure sale in late January.

"I never cried so much in my life," she said. "I had no idea what was going to happen to me or how to stop my life from spiraling out of control. I went through bouts of depression, anger, feeling useless, inadequate, worthless, embarrassed and ashamed of my situation."

But two days before the foreclosure sale, well after she donated almost all her furniture to charity, Walker received a phone call from Geri Martucci, a real estate agent she had hired in late November.

Martucci had succeeded in getting Walker’s house approved for a "short sale," where a lender will agree to take less from a sale than what’s owed on the mortgage.

That means as Martucci tries to sell the property, Walker will have a place to live as she continues her search for work. At least for a while, her plans of living alternately in her car and in a hotel can be postponed.

"I’ll tell you I breathed a sigh of relief," said Walker, whose $7,000 severance from the community bank where she worked ran out long ago.

Her $1,400 a month in unemployment benefits could run out for good in May unless another extension is granted.

With more than 31,000 foreclosures in Clark County last year and 75 homes foreclosed upon in Las Vegas every day, Walker wonders whether many people realize that a short sale can be a preferable alternative to foreclosure.

"I didn’t find out myself until it was almost too late," she said. "Maybe my experience can help save some pain for other people."

Simplified, the short-sale process, which can become complex because of the large number of investors involved in the mortgage industry, goes like this:

You supply your real estate agent with financial records that include bank statements and tax returns, along with a hardship letter that explains why you believe the short-sale process is necessary for you.

Your real estate agent does an appraisal of your property in today’s market and turns over the information to a negotiator for the lender.

The lender then will often do an appraisal of your property as well. The short-sale process is OK’d if both appraisals are in the same ballpark.

"We will not approve a short sale if we think we can get more money for the property through foreclosure," said Rick Simon, a spokesman for Countrywide.

Once the property is approved for a short sale, Martucci said, the process is much like a traditional sale.

"The closing period is about 30 days," Martucci said. "The short sale allows the seller to be more in control of his destiny than a foreclosure, actually allowing some planning and cutting out the threatening collection calls."

A short sale is not as harmful to your credit. Someone who goes that route generally can buy a home in two years, compared with five years after a foreclosure.

And because a lender has agreed to accept proceeds of a short sale as satisfaction of the debt, the risk of a lender suing for the difference between what is owed on the mortgage and what the property commands at a foreclosure sale evaporates.

Martucci said agents representing sellers and lenders in a short sale generally split, at most, a 5 percent commission, about 1 percent less than with a traditional sale.

"To me, it’s a no-brainer for everyone involved," Walker said. "You would think the lender would want it because, with the homeowner still there, you don’t see the run-down, distressed properties that you often find among foreclosures."

Real estate agents believe the number of short sales should jump considerably as more homeowners in distress become familiar with the program.

But Countrywide’s Simon stressed that his company, recently purchased by Bank of America, is more interested in keeping people in their homes through loan modifications rather than working out what can be a time-consuming short sale.

He said that although investors in mortgage pools often give a company such as Countrywide some freedom to negotiate a price they will accept in a short sale, in the absence of strict guidelines "it must be done on a case-by-case basis, and that takes time."

What disturbs Walker is that while Countrywide agreed to allow her to engage in a short sale, there have been no firm offers on her property, even though appraisers for both the lender and her agent agreed to drop the price to $149,000.

She put no money down when purchasing the home.

If there are no firm offers on the property in the next few weeks, Countrywide has set Feb. 28 for the foreclosure sale, meaning Walker could be on the street in early March.

"If there’s no progress, that can happen," Martucci said.

"I wish I knew what to do," Walker said. "My family can’t take me in because the economy has hit them hard, too."

As she deals with her situation, Walker said she recalls the toughness her mother needed to deal with the racism she experienced growing up in West Virginia.

"She grew up in a time when the bathrooms and water fountains were still marked ‘for whites only,’" Walker said. "She actually took us to see them and drank from the white fountain, daring anyone to stop her. … My mom was a serious rebel when she was younger."

Her mother, now 71 and living in Pennsylvania, taught her six children, whom she raised alone, "that life was tough and nobody promised us a rose garden," Walker said.

With that in mind and her faith in God, Walker keeps applying for jobs across the country on the Internet.

"It’s hard to get a position somewhere else when you don’t have any money to get there," she said.

"But I have to believe this will work out. I look at this as God taking me from a very bad situation and putting me in a better one that He has planned for me. I have to believe that, or I will have a nervous breakdown due to stress."

Contact reporter Paul Harasim at pharasim@reviewjournal.com or 702-387-2908.