This article first appeared in the St. Louis Beacon, Jan. 27, 2009 - In the grand scheme of the U.S. mortgage meltdown, Stacy Haynes of St. Louis is just one in 2.3 million.
That's the number of U.S. property owners who received foreclosure notices of some type in 2008, according to RealtyTrac.com, a Website that has become the trusted source of statistics on American Dreams gone bad.
But even as she picks herself up, dusts herself off and begins to remake her life, Haynes has a question: "How could so many of us be so wrong?"
She seems willing to accept her share of responsibility but believes there is plenty more blame to go around.
"Are we responsible for what happened on Wall Street?" Haynes said. "Are we responsible for what happened to the banks? Are we responsible for the housing market falling through the bottom? Is that the fault of people like me? Am I responsible for decisions that were made in the White House?"
And, she has this warning:
"If I could give anybody advice I would say, 'Put those credit cards away. Cut them up. Pay them off.' Call your credit card companies while you still have a good job, and say, 'Let's make a deal.' Call your mortgage company while you still have a job."
A Decade of Remodeled Dreams
The story of how Haynes lost her two-bedroom, 1,193-square-foot brick house to foreclosure has a familiar bottom line: an oversized monthly mortgage payment that she could manage only as long as she was healthy and working.
Haynes didn't get into financial trouble overnight. She says she made a $20,000 down payment on her home, which she knew needed some TLC, and financed it with a conventional mortgage.
She moved in on the Fourth of July in 1999, with the help of her daughter and friends.
"It was an exciting time," she said. "I think it was 100 degrees that day."
Only later did she discover that her house had once had a fire and had been condemned -– and needed more work than she thought. She would eventually replace windows, plumbing and wiring. She renovated the kitchen and both bathrooms. And she gardened, turning her backyard into a lovely retreat.
"It was a project, but it was fun," Haynes said. "It was a labor of love."
She estimates that she spent $100,000 on remodeling. The balances on her credit card accounts grew, particularly those for home remodeling stores. She also refinanced the home several times. But as her debt rose, Haynes watched the value of her little home on Hawthorne Place more than double -- to more than $300,000, she believed.
"I had a good job and thought that the world was fine. The world felt safe,'' she said. "At the end of 2007, it started getting tight for me because the credit cards had upped my interest rate, not because I was late with payments or anything. They said it was because I had too much on my credit cards."
At the time, Haynes was facing about $20,000 in credit card debt at interest rates that had crept up to nearly 30 percent.
"It was very difficult to make the payments," she said.
In addition, Haynes' last mortgage, financed by GMAC, was a budget-buster with terms she didn't understand: She owed $216,000, and was making interest-only monthly payments of $1,642.
The ramifications of such an interest-only loan is reflected on her IRS 1098 form for 2007, which reported her mortgage interest: She paid $18,067.50 in interest that year, not a dime of which went to decrease her debt. She still owed $216,000.
Health and Hardship
In February 2008, Haynes, who is diabetic, was hospitalized with a critical case of pancreatitis. Although she had a good job with a company that advises physicians, Haynes said she worked as a consultant and had no health insurance. As a diabetic, she couldn't afford to buy insurance on her own.
Then, several weeks after her illness, Haynes lost her job because of the economic downtown. Not only was she deeply in debt, but the housing market had gone south and the equity she thought she had in her home had gone with it.
GMAC foreclosed on Haynes' home in October; the papers were filed at the St. Louis County Courthouse on Halloween.
Haynes had put up a fight, though, even selling her possessions on eBay and Craigslist just to make her mortgage payments. In September, when she had fallen three months behind, she managed to scrape together another month's payment on the deadline day to avoid foreclosure.
"I called up to make the payment over the phone, and the person on the phone said, 'I'm sorry, Ms. Haynes, but we've added on this extra fee,' " she recalls.
A friend loaned her several hundred dollars to make up the difference, but Haynes said by the time she called back that same day, she was told it was too late.
In November, less than a month after GMAC foreclosed on Haynes, the financial institution asked the U.S. Treasury Department for assistance. GMAC was granted $6 billion from the $700 billion Troubled Asset Relief Program in December. The irony isn't lost on Haynes.
"That makes me feel terrible," Haynes said. "I think it's so unethical that the government is bailing out the banks and not the citizens. If they bailed out the citizens, it would help the banks."
Caught by the Housing Bubble
Haynes' financial turmoil was intensified by the steep decline in the value of her home: She had tried to sell the house last summer, asking $280,000 in the belief that it was worth more than $300,000. She eventually dropped the price to $240,000 but had no takers. She still owed $216,000.
The home was sold at foreclosure for $153,000 and then marketed by a property management company at $144,900. The price was eventually lowered to $129,900.
Haynes said she has come to grips with the foreclosure and agreed to participate in KETC Channel 9's "Facing the Financial Crisis" project because she hopes telling her experience will help other people.
"It was very painful," she said. "If it weren't for my friends and my daughter I don't know what I would have done."
Haynes said she is fortunate because her daughter insisted that she move in with her, but she feels for people who don't have that kind of support.
"Where are they going?" she said. "The families with children, what are they doing? As painful as it was for me, I know it must be more painful for other people."
Haynes said she has learned a lot and will be a wiser consumer in the future. She believes that credit card and mortgage companies not only entice consumers into spending but use financial jargon that few outside the industry understand. Still, she accepts a share of the responsibility.
"Yes, I had some credit card debt," Haynes said. "Every month I would look at that statement and see that available balance and think, 'Yes, I have more money to spend,' not realizing that I'm borrowing money, and the interest rate is horrible."
On the advice of her attorney, Haynes filed for bankruptcy – something she says she never dreamed she would have to do.
Haynes' attorney, Bernhardt Klippel of Clayton, said she had no choice because of the size of her debt.
Haynes, who has a graduate degree in business and extensive experience in computers, has found part-time work and continues to look for a job, although she worries that her age will be a factor.
"I haven't thrown in the towel," she said.
She said it is important for people to understand that they are not alone in these turbulent times.
"You've just got to pull yourself up and not blame yourself – that was the hard part," Haynes said. "What's happening is not you. Keep smiling. Keep caring. Depend on the people who care about you. We all need to be really kind to each other right now."
