Face to Face With Insolvency

When our lights were cut off for non-payment, we coped using candles. When the gas was interrupted, we ate cereal. But when the telephone was turned off, that really hurt.


As a teenager in the late 1950s - early 1960s, I had been taught by a proud family of working class people to be protective of our image at all costs. So when I arrived at school on a given morning, after the final warning call from the telephone company had come in and my single-at-the-time Mom did not produce the payment, one friend or another would announce, loudly most often, that she had tried to call me last night but the phone was turned off. The humiliation I felt was so profound that I can still conjure up the feeling, just thinking about it.

From the moment I received my Bachelor's degree, I have fiercely guarded my financial status, accidentally bouncing a check or two and being late on a handful of payments due to vacation or some other extenuating circumstance, but steadfastly building and protecting the excellent credit score that I have carried into my 60s. More than anything else life served up over the years, nothing frightened me more than being unable to pay my bills and make my own way.

My Catholic upbringing taught me that pride is a sin -- not just any old everyday sin, but a cardinal or deadly infraction. Well, color me a sinner, because I am proud of that stupid FICO designation that deems me responsible, reliable, low-risk, high-value, and worthy of going into serious debt for just about anything. Or at least I was.

Enter the Great Recession/Depression of 2008.

Although I retired with full benefits from a huge corporation when I was only 55, it didn't take long for me to figure out that, while I had done the best I could at saving for retirement --put as much as was allowed into my 401K and built up a respectable nest egg -- I was not going to be able to maintain the standard of living to which I had become accustomed/addicted unless I went back to work. So, after struggling with my own consulting business for four years, I joined a small sales training company and eventually became their Marketing and Communications Director.

I was feeling so secure about everything at that point, that I refinanced my mortgage in the first quarter of 2006, taking out quite a chunk of equity to finance a new roof, a fancy exterior paint job, and a brand new kitchen. I had also done a much smaller refinance in 2000 to set up my company and my superbly equipped home office. In the back of my mind I was preparing to sell the house, which is much too big for me and my dog, now that my son is long gone out on his own, for sale. But I live in one of the coolest neighborhoods around, with great friends and a pretty stable support system, so I kept procrastinating. I had so much equity in my home, even after the refinances, that I knew I would be able to count on that to augment my retirement funds.

Well, we all know what happened next. The equity that I had counted on is not only gone, but my home is no longer worth even as much as the mortgage owed. A year ago I was laid off from my job. At 65, the job offers are not materializing, and my unemployment benefits will end in a matter of weeks.

When President Obama announced the Making Home Affordable Program, he vowed that the loan modification feature was designed to help all of us who had been responsible and keeping our payments current, but who have suffered a financial setback due to the economic crisis. Finally, I thought, after bailing out the crackheads on Wall Street and the morons in Detroit they will finally get around to bailing out those of us who kept all that going as long as it did.

I decided that the smart thing to do was to notify Wachovia Mortgage that I was headed for trouble as soon as I learned I was losing my job. I believed the advice I'd heard from TV economists and financial experts and I just knew I would qualify for a MHAP loan modification.

After stringing me along for an entire year, Wachovia Mortgage has decided that I would have to spend every penny of what's left of my retirement account AND be much worse off in terms of my debt ratio before they would modify my loan. That, I will not do.

In a crisis, preservation of self has to come before pride. I can no longer have that Excellent credit rating, because I have not paid my mortgage in three months. I am having withdrawal symptoms when I check my credit report and watch my score plunge. But my great grandmother lived to be 89, my grandmother to 98 and my own mother is 85. Statistically, I should have quite a few more years left to support myself, so sue me for not being willing to invest my last dime into a house that is no longer worth anything to me. It is difficult to believe that "the bank" would rather foreclose than modify my loan, but they would.

I have faced my greatest fear in life, I have tried to do the right thing and I have failed. This past year has been a living hell because I was mired in fear. Not today, though. Today, I read the riot act to the poor guy in the automated call center of Wachovia who called to let me know that if I miss one more payment I will go into pre-foreclosure. I said, "Fine, go for it." For a brief moment I was tempted to send this month's payment, just to prolong the inevitable, but I won't. Instead I will save that money in order to sustain my own existence, and let the bankers worry about theirs.