18 Soul Searching Foreclosure Questions

• What do I actually want from life?
  
  Money? Balance? Freedom? Flexibility? Stability? Security? Excitement? Contentment? Neverending learning? Peace? A Large House (with the associated maintenance)? A small maintenance free apartment? No responsibilities? All of the above?
  
  Strange though it may seem, this is probably the most important of all the foreclosure questions.
  
  
• What am I willing to sacrifice to achieve my life goals?
  
  "It's easy to want more money. And I guess that's what I like about it. It's easy. Just sitting there, rocking back and forth, wanting that money" - Jack Handy.
  
  Remember everything in life is a trade-off. So you have to face reality (no matter how hard it is) and ask yourself just how far you are willing to go to achieve your goals. Then you have to decide whether those goals are really worth it. And if not, go back to the drawing board and re-think what you want from your life.



• How emotionally attached am I to my home?
  
  In my case, since I come from a family of builders, and my dad has been integral in helping me with the design and construction of my house, I am extremely attached to my home. It is an extension of my own identity, which makes looking at it as a pure investment (whether good or bad) extremely difficult.



• How much spare time will I have to devote to avoiding foreclosure?
  / How much mental resilience and strength of purpose do I have available to devote to this?
  
  Be very realistic here. If you haven't got the time available to take the necessary steps then accept this fact now. In my case the issue was more about the mental resilience I needed to avoid foreclosure. I pushed myself to a point where I very nearly couldn't cope any more. It was, at the time, a thankless and seemingly never ending task.



• How many months leeway do I have before the *&^ hits the fan at the bank?
  
  This will define how many options and degrees of freedom you have. If you have left the foreclosure crisis to the last minute, or suddenly had it thrust upon you through loss of a job, then you have fewer options than if you have many months to do something about it, before foreclosure becomes a reality.



• Do I have enough available spare time to devote to stopping foreclosure?
  
  If there is too little time available, then you need to re-think your strategy. Foreclosure avoidance can be extremely frustrating and time consuming.



• How risk averse am I?
  
  Are you someone who values stability and security above excitement? If you are, then you should think hard about your approach. Some approaches are more predictable than others. Can you live with unknowns in your life and still sleep at night?
  
  
• Am I willing to spend my time in this way?
  
  What is important in your life? Can you give up your time like I did last year?
  
  I stopped going to the gym, I stopped seeing friends, I canceled my summer holiday so that I could administer holiday rentals of my home, I stopped training for marathons.
  
  In the end, I decided that enough was enough. I gave myself a four month deadline, and told myself that I was not going to give up my life beyong those four months. Fate would have to take it's course after that.
  
  
• How much money do I stand to lose if I don't put in effort to avoid foreclosure?
  
  This is a serious consideration. Work out how much it will impact on your life down the line in the longer term.
  
  As an example, in my case, I had some extra complexities that made foreclosure avoidance the best strategy for me. The foreclosure threat was on a house I co-own with my father. If the banks foreclosed, my parents would lose their home, and would become dependent on me.
  
  I would have had to support them financially.
  
  The house luckily wasn't (and isn't) under water, but it was in our best interest to keep the house until such time as when the market improves, because my parents' pension is more or less the equity in the house.
  
  Up until last year, my life plan had involved the prospect of giving up formal employment around December 2009, and living off a rental income.
  
  Suddenly I was now not only faced with having to continue working literally forever, but also having to spend every last spare dollar supporting two new dependents!
  
  It was increasingly clear that it was very important for me to avoid foreclosure even at extreme mental and lifestyle cost in the short term.
  
  For someone else however, it might be better to walk away from foreclosure (eg perhaps a young person, who is at the start of their working life). In this case it may be easier to walk away or short sell or consider bankruptcy, as the consequences may not be as dire financially in the long term.
  
  
• What will my genuine financial impact and lifestyle impact be on a day to day basis if the bank forecloses my home?
  
  Think this through carefully. Will it really change your comfort level if you move to a cheaper area and rent a home for a few years? Or will the impact be greater than that?
  
  
• How long will I be a slave to this mortgage and to my financial obligations if I do avoid foreclosure?
  
  If you do find a way to meet your mortgage payments, will it be at great personal sacrifice? Will you literally be a mortgage slave putting all the pleasures of life on hold indefinitely? Do you want this from your life? Can you change this in the medium term by finding a way to earn more?



• Is there any other scenario than foreclosure avoidance that will make me better off in the long term if I look at the entire bigger picture?
  
  Instead of devoting my life to this, could I be doing something more constructive? For instance, I spent 800 hours in the last 12 months trying to stop foreclosure of my dad's home. Roughly it broke down like this:
  
  - First 200 hours - doing my dad's finances and accounting, and then preparing a mortgage refinance application for the bank. The application failed.
  
  - Next 100 hours - redoing the finances and re-applying. This failed.
  
  - Next 100 hours - applying for refinance on my own home. Initially failed. After shopping around and getting an offer from another bank, my bank suddenly approved the application at the best rate ever. This bought me time to find new income streams.
  
  - Remaining time - learning sales/marketing, learning about running a business, getting additional part time work for my dad and myself.
  
  Could I instead have spent this time improving my technical skills in my industry to get a better job that would have paid the financial shortfall each month?
  
  In my case, no. I had to find a dramatic way to get more money.
  
  Effectively I needed more than double my net income per month to sort the situation out.
  
  We (dad and I) have succeeded.
  
  Now that I have done this, I can probably consider improving my professional skill set, and in a one year time frame go and find a job that pays 20% more or something like that. Each extra dollar helps.
  
  But in the beginning the main focus was to buy time (refinance), so as to be able to find a way to dramatically increase income in the short term. Prioritizing your foreclosure avoidance activity is paramount.
  
  I didn't open a scrap of post for six months. I just didn't have the time or energy. I reckoned I would just deal with any problem that might occur when it arose.
  
  Given my limited time, It was far more important to focus on the big things, than on the trivia. I simply didn't have that extra 2% capacity to deal with post.
  
  When I finally opened post, there was a parking fine that I needed to sort out. That was all.



• What can I do to mitigate my financial losses? (Think short term and long term here).
  
  Is there someone in your family that you really trust? A partner/spouse? Could they get a mortgage for the two of you so that you could buy a new more affordable home straight away if you get foreclosed or go bankrupt?



• What can I do to maximise my financial situation, and what am I willing to do?
  
  eg Study further, start a business, move to somewhere where the cost of living is lower...



• How much can I recoup if I don't avoid foreclosure?



• By when will I be able to recoup my losses?



• Will I still be liable for debt if I don't avoid foreclosure?
  
  This is an important consideration in recourse states, as it can dramatically change your long term finances.



• How far am I willing to go to create the best possible outcome?
  
  Really brainstorm here .... extreme considerations would be emigrate, form a business, do something illegal :-). Remember, the bank is not your friend. They will only do what make financial sense for them in the bigger picture. Look after yourself first.
  
  Do whatever you can within the law, but frankly, when dealing with the banks, ignore ethics, morals, and the spirit of the law. Just do what is the legal minimum. Beyond that only do what is in your own interest and no more.

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