Inching Forward

As many of you know our household has been struggling with housing concerns. It all started with an illness at age 62. Managed to continuing working as a consultant but productivity was down considerably and planning for future contracts was hobbled quite a bit. Revenues declined and self employment risks became quite evident!

Anyway just as soon as one illness was well in hand, another popped up. This one affected the lungs with a serious infection. Oxygen was prescribed 24/7 and that went on for several months. Traveled with tanks and tubes and face-masks to consulting assignments. Even vacation traveled with all the contraptions. Slowed me down but made it through.

When that illness was finally under control, a cardiac issue emerged. This medical travail lasted 18 months or so and I finally decided to retire in order to gain access to Social Security benefits. I still had a year to wait for Medicare but things began to sort out once the retirement income began.

When I realized this status was for the long term I did the logical thing and began downsizing my balance sheet. Reduce all debts so smaller income would cover living expenses under a more restricted regime. My primary convertible asset was my SEP-IRA fund. So I began living off of those funds and also paying down significant debt items.

By the time SEP-IRA dollars were exhausted I had two primary debts – home mortgage and auto loan. I swapped out my expensive car for a much less costly one and used at that!  It worked just fine and controlled transportation costs beautifully. I had to borrow $5000 from my son to pay down the old auto loan in order to make the car swap work. Five years later I paid off the $5000 and things by then were much more manageable.

Meanwhile I negotiated a lower mortgage payment with Fannie Mae. The affordable terms allowed me to live in my home for 2.5 years with much more financial ease.

Problem was medical costs, premiums and prescription drugs kept rising significantly year after year. So did food. The result was cheating the pills for food or vice versa. Finally I returned to the mortgage holder and Fannie Mae for more assistance. This time I asked for permission to arrange a short sale of the home so we could move to lower cost housing. They insisted I apply for the Affordable Housing Program, something I did the first time the mortgage was renegotiated. With a significantly different set of circumstances I felt certain I was ineligible for further mortgage reductions. As it turned out I was correct but the bureaucracy muddled along for several months, then agreed to a short sale listing on the market. Nearly a year later we received our one and only offer on the home.

It must be mentioned that to acquire assistance for the mortgage monthly payments had to stop. Only in pre-foreclosure status does the program jump into action. Well, jump is not very accurate but you get the drift! So my mortgage became delinquent for nearly 18 months before the short sale machinery had an effect.

Foreclosure processing advanced slowly through the courts in case a short sale was not acquired. At this very point today, the foreclosure time-clock is on suspension while the short sale continues to work its way through the system. If it fails, a foreclosure sale will follow in 90 days or less. So far the short sale looks like it will succeed.

Step back a moment to the use of SEP-IRA funds to cover living expenses while I was on a limited disability status and finally unemployed/pre-retirement status.  A few years later I contacted the IRS to straighten out my tax payments. They informed me that I owed them a substantial tax on use of the SEP-IRA funds. Trouble was I didn't have any money to cover that tax liability. No matter, they set up a payment agreement. Further problem: the monthly payment didn't cover the accrual of fresh new interest and penalties on the liability.

Although I agreed to pay $50 per month for the rest of my life, they are accruing nearly a $1000 more debt load each year. The liability is growing steadily. And so they placed a lien on my home, car and all financial accounts.

I thought, that’s OK. I’ll never earn enough money to pay off what they feel I owe. I can live with that if they can! 

My conscience is clear: I self funded a period of disability and unemployment all caused by medical reasons without asking for federal benefits from Social Security Disability or unemployment insurance. I also paid off most of my debts while maintaining the rest on a current basis. No one lost a dime. Well, no one unless you count Uncle Sam.

In his case I felt no guilt. After all the recession was a serious impediment to my financial recovery as well as the decline and collapse of the housing market. Had my home remained a valuable asset, I could have sold it and realized an equity settlement sufficient for a down payment on the next home as well as paying off the IRS lien. Such was not the case as all are now aware. My home had built a value to nearly $280,000 and handily covered a mortgage balance of $182,000.

The short sale offer working on the home at this date is $139,900. You readily see the problem!

So here we are with no assets, all debts current (including IRS) and living in a foreclosed home until the short sale is settled. Under these circumstances mortgages are not possible. So we looked for family help in financing a double wide trailer home (failed attempt), apartment rental (too costly in Chicago region on our income) and friends to finance a low priced condo.  The latter option worked!  Two gentlemen cadged together a loan to finance our $75,000 condo purchase. Housing costs will amount to $1100 per month including utilities, HOA fees and property taxes. That’s a small amount above one third of our income from Social Security. With care this will work.

Thanks to the Affordable Care Act our medical programs and insurance will improve at lower cost to senior citizens so we are protected on that front.

We await closing on the condo, then family help to paint and replace a small section of carpeting, and finally help to make the move to the new place. The old home continues toward short sale heaven and we should be free of that obligation by year-end.

This has been a nightmare of complexity and conflicting demands from the IRS, state revenue department, mortgage holder and Fannie Mae. Meanwhile we continued the routines of life paying bills, undergoing medical procedures and building a meaningful interaction with friends, family and community. If it weren't for the latter three we would have been in a world of hurt much worse than all of the above suggests.

It has been suggested I write a book about this experience. I've been tempted. But in truth I’m just praying for the end of the long nightmare and hope I don’t have to revisit it ever again.

The moral of the story: Do the right thing; but check the bureaucracies! Do not tempt those gods. Their nit-picky ways will quickly assume the shape of Satan! Don’t even think of it.

Now you don’t need a book to make you appreciate that, do you? No, I thought so! Just a friendly reminder. 

Don’t!

November 6, 2013