My housing bust redemption
My greedy investments left me homeless. A dear friend saved me.
It was the spring of 2005 and the housing market was in a frenzy. Against my better instincts, I let my realtor convince me to join the fray. Although that decision cost me much of my life savings, it taught me a lesson that years of graduate school never did – believe it or not, life's not about the money.
Less than 15 years ago I was still living paycheck to paycheck. Then I got a position as a tenure-track assistant professor. I relocated with my three kids to California and continued to work hard, save, and invest conservatively. Within a year, I'd accumulated enough savings to put a down payment on a house. I continued to max out on my 403 (b) every year after and I was content.
Throughout the next few years, I sat back and watched the value of my home soar. That was when my broker strongly suggested I use some home equity to purchase an investment property though my instincts suggested otherwise.
I didn't need my PhD in economics to tell me that what goes up must eventually come down. But my broker reassured me that the market wasn't at its peak yet. So I bought on spec, hoping to flip the house in a few years.
I moved into the investment house and when the house next door went on the market a few months later, I called my broker. He couldn't get me approved based on my financial status. Neither could the next broker. The third broker was more creative. He secured a loan for me that I didn't understand the terms of and shouldn't have qualified for.
With the monthly mortgage expenses, I was barely making ends meet. Nevertheless, I was a landlady twice over and a proud "owner" of three homes. I fully expected to become a millionaire in a matter of years.
But, almost immediately, the housing market turned. The loans reset and my payments escalated. Eventually, I stopped making payments on my residence.
The bank sent a Notice of Trustee Sale; my home would be auctioned off. I had to find a place that would accept my 16-year-old son, his 100-pound puppy, and my ruined credit profile. There weren't any willing landlords.
So I ran to church and wailed my grief. Ask and you shall receive, I thought. "All I ask is a roof over my shoulders," I cried. Then I felt a certain peace – a calm that I hadn't felt in the past several months. A few minutes later, I left, hopeful, though still uncertain what the next step was supposed to be.