Okay I admit it… I used to be an active “chatter” in a local chat room on Yahoo. It was a room where many people from the Dallas area met up to…Chat. Many of us had met outside of the cyber room at local restaurants, clubs and the like.

Yahoo had recently shut down a lot of the member created chat rooms in the wake of all the negativity and sponsor lawsuits. Lets face it…The public opinion of chat rooms was not good. I was a virtual unknown person to most chatters because I stayed away from the “in person” socials but, that all changed one morning. Here is what happened:

A room regular was talking on “voice” and venting about his house early one morning and I was listening a few steps away making my breakfast. This is what “Monte” said, “I got this letter from some attorney who says he is going to sell my house! How does he think he can do that? He doesn’t own MY house so, how can he sell MY house?” My head spun around so fast that I almost gave myself whiplash. I ran to the computer and grabbed the microphone to speak in the room and here is what was said…

Jim: Monte, what is the name of the law firm that sent you that letter?
Monte: Uhmmm, it says ummm.. Barnett, Burke & Associates.
Jim: Would that be BARRETT Burke?
Monte: Yeah, that’s it.
Jim: Monte, email me your number. I need to talk to you NOW.
(That law firm processes nearly 40% of all foreclosures in the state of Texas)

Within a few minutes I was on the phone with him and I told him that I was a local foreclosure expert and taught classes at Foreclosure Listing Service in Addison. I told him I needed to meet with him and his wife right away because, the letter he got was his notice that his house was in foreclosure and he had less than three weeks left before it would go to the auction. He was shocked and claimed he had no idea (I didn’t know how he could be shocked after missing nine payments). Two hours later I was at his house and explained all about the foreclosure process to him and his wife and what options he may have to save his house.

I remember how bad I felt while explaining the situation because his wife just sat there, staring at me with her eyes wide open, not able to say a word. She had no idea the mortgage was past due at all. She had not seen any letters from the lender or taken any call from them. Monte never told her early on and the situation only got worse as the missed payments added up.

After going over all of the possible solutions, I decided that bankruptcy was likely the best option for them and they agreed. I made a call to Hariett Langston, a friend of mine who is a bankruptcy lawyer in Dallas. Monte and his wife were overwhelmed with the situation and asked if I would go with them when they met with the attorney and I told them I would.

We met with Hariett that same week and everything appeared to be set to stop the foreclosure. All Monte needed to do was pay the bankruptcy filing fee.

A week before the foreclosure sale I went to their house and was a bit surprised to learn that he had not paid the filing fee. I asked him when he was going to file and he just shook his head and said he didn’t know. I remember pausing for a few seconds and it dawned on me why he had not filed. I said, “Monte… You don’t have the money to file, do you?” In a very humble manner, he looked down at the floor and shook his head. ($500 was the amount he needed to get the bankruptcy filed)

As I drove home I thought to myself that it would be simple if I just wrote a check for the $500 but, I thought that he really needed to pay something so important himself. I got an idea about that time and sent an email to one of the chat room regulars who organized the chat room socials. I recall stating in that email that online chat rooms have such a negative public image and went on to tell her about Monte, his situation and I asked her if she could set up a fund raising get together. It would be our way of proving that normal, everyday people go to chat rooms and this was a chance to show at least one chat room could do something good. I told her that he only needed $500 and all it would take is $5 here, $10 there and a $20 from a few… $500 could be raised.

She arranged to have a Dallas chat fundraiser social for that coming Saturday night. I called Monte and told him about the fundraiser. He asked me to not do it (his pride was the obstacle) but, I told him that we were going to do it anyway and it would be nice if he attended. He later told me he was so choked up that he couldn’t say anything but, he did finally say he would attend.

I expected a handful of people to show up for the fundraiser but, I was wrong. Much to my surprise… At least 50 to 60 regulars from that chat room showed up and contributed. At the end of the night, ordinary people from a Yahoo chat room donated more than $700 to help save someone from losing their house.

The next day I gave the proceeds to Monte & his wife and they quickly paid the attorney the fee to file their bankruptcy and their house…No…Their “home” was saved.

The story got another interesting twist a few days later. I got a call from a reporter who wrote for a well known local media outlet. They had heard about the fundraiser and thought it was a great community effort story that should be told and asked if I wanted them to write about it.

It took only a few seconds for me to process my answer but, I remember thinking that such publicity would be great for business and my classes would see a boost in attendance. Then I thought about the possibility of other homeowners that would read the story and what would my answer be to them if they contacted me and asked me to do a fundraiser for them as well?

I told the reporter that as wild as the story was, I never expected things to unfold as they did. I told them that I had to pass on their offer because, I had done it to help someone and wouldn’t feel right about profiting off of someone else’s stressful and humbling foreclosure experience. They understood and that was the end of it.

I have to admit . . . Of all the positive experiences I have had in real estate, helping Monte might rank as number one. What stands out in my mind was the fact that so many people pitched in to help save a family from losing their home and they did it for someone most had never met or only knew of by screen name…That’s what made it so great.

This happened in 2005 and two days ago I got a phone call from Monte. He just wanted to give me an update and I was happy to hear they still have their home.

During the call I told him about the reporter. He was surprised I hadn’t told him and more surprised that I turned them down. At the end of the call, Monte told me that three years was long enough and he encouraged me to tell the story of how a bunch of chatters from a Yahoo chat room, came together and did something good.

Thanks Monte.

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Tags: bankruptcy, chat room, foreclosure, foreclosure rescue, home owner, NOD

Is the United States going broke?

Many would roll their eyes at this notion; they would tell you that the country has never defaulted on its debt that its long-term interest rates are historically low; that the dollar is the world’s reserve currency; and that China, Japan, and other countries have an insatiable demand for U.S. Treasuries.

Others would argue that the official debt reflects taxonomy, not fiscal essentials; that the total of official and unofficial liabilities is enormous (The costs of hurricanes Katrina and Rita alone could easily total $200 billion over the next few years); that federal spending and medical expenditures are exploding, and that the United States has a history of defaulting on its official debt by means of inflation.

On the other side of the coin is China; China is saving and growing at such astonishingly high rates that it can potentially provide the United States, the European Union, and Japan with huge quantities of capital. Some would suggest that China could serve as America’s savior provided China is permitted to invest massive sums in our country (assuming they would want to).

The massive debt looming over the country has ominous implications for our children and grandchildren. Leaving our $65.9 trillion bill for today and tomorrow’s children to pay will roughly double their average lifetime net tax rates (defined as the present value of taxes paid net of transfer payments received divided by the present value of lifetime earnings). [Gokhale, Kotlikoff, and Sluchynsky 2003].

Times are bleak for the U.S. consumer. The average household owes 20 percent more than it makes each year. The personal savings rate is in negative territory. Record numbers of Americans are losing their homes to foreclosure, and millions more are struggling to keep up with their monthly bills and obligations.

The House and Senate have passed economic stimulus packages that include rebates to taxpayers, which the government is encouraging them to spend, which seems like an irresponsible message for taxpayers who have debt or no savings.

Bankruptcy, once regarded as a shameful and humiliating failure, has become an everyday fact of life: More Americans filed for bankruptcy last year in the United States than in the entire 1960’s.

Speaking just hours after the Federal Reserve helped to engineer a rescue loan for investment bank Bear Stearns, Bush said that, although times are tough, the economy is resilient. The country has endured tough times before, he said. “Every time, this economy has bounced back better and stronger than before,” Bush said, expressing his optimism in the future of the country.

Bush rejected several proposals being offered in Congress, including the purchase of boarded-up homes by cities and states, changes in the bankruptcy code to allow mortgages to be discharged in bankruptcy, and extending federal loan guarantees to more homes once lenders have accepted their losses. Markets need time to correct, he said. “Delaying that correction would only prolong the correction.”

So as a Realtor, Investor, and an American, I do hope the correction comes, and comes soon.

Tags: America, bankruptcy, budget, deficit, Economy, foreclosure, katrina, national debt, president bush

This is a story–don’t worry, it will be a short story–about how the current subprime mortgage/credit crisis has actually shot down an entire airline and how this may just be the canary in the coal mine.

The all-business class airline, Maxjet Airways, based in Dulles, gave an extraordinary Christmas gift to its loyal customers: It filed for bankruptcy, ceased to fly and left its customers virtually stranded in London,New York,Las Vegas and Los Angeles. That’s the holiday spirit for you.

Maxjet, mind you, was no American or United Airlines–it actually served food!!–and has been struggling since its inception in 2005.

In my professional role as news reporter, I went out to LAX this afternoon to check things out only to find that Maxjet literally vanished into thin air…well, in L.A. I guess it’s more like thick air.

What was its ticket counter at the Bradley International Terminal was no more; not even a sign telling of its demise. Strangely, the departure sign overhead still listed its 4:50pm flight to England as being “on time.”

Now by this time, you may be thinking, What does all this have to do with the subprime mortgage crisis and why am I reading about an airline on a real estate investing website?

Here’s why:

The company blamed two things as the main reasons the airline folded its wings: the rising cost of jet fuel, and the inability to get more credit to keep its planes flying.

Bingo!

The “credit crunch” as Maxjet put it, is the direct result of the now global, U.S. caused subprime mortgage disaster. The ripple effects from the housing crisis are fast becoming large,crashing waves.

The world’s economy is so interconnected nowadays, that if you drop your ATM card by accident in Chicago, a bank customer in Laos will get hit with the bill for the replacement card.

The credit crisis–which is pretty much what the mortgage debacle has become–is now sapping the strength from businesses entirely unrelated to real estate.

It’s not money, in the 21st century, that makes the world go round, it’s credit. And, as credit stops flowing, the world’s economy –the ENTIRE economy suffers. That is what we are seeing here with the end of Maxjet Airways. A victim of our time and a victim of someone’s unpaid mortgage in Kansas City.

Tags: bankruptcy, christmas, credit crisis, kansas city, maxjet, subprime mortgage