Wednesday, June 15, 2016

10 Things I've Learned from our Foreclosure

Today I want to write about something that has been nagging me, that in a round about way belongs on this DIY crafty blog. If my family and I hadn't gone through our foreclosure, this blog would most likely not exist. If it wasn't for foreclosure I would have never realized how much I love giving new life to things. If it wasn't for foreclosure I would never have discovered how much happiness and fulfillment I get from creating. So because of one of the most awful things our family has gone through, we have learned some amazing lessons about life, the real estate market, and ourselves. So whether or not you have gone through a foreclosure, or will go through one, I promise there is something for you to learn from this post too...

Lesson #1: If it seems to good to be true, it probably is

We've all heard the above adage before, but tend to forget it when an amazing opportunity comes our way. Back in 2005 when we bought our condo in California, everyone could get a mortgage. We were two recently graduated college students, with only one credit card to our name (no history of credit), little to no savings, small paychecks, and very little work history, yet we could get a loan for over $400k! Very few warnings were advertised (at this point in time) about the risky loan market. Everyone was instead buying homes, vacation homes, rental homes, boats, jetskis, cars, motorcycles, you name it, and everyone felt like they had earned this "wealth." So many people we knew were becoming mortgage brokers because the money was fast, easy and lucrative. There didn't seem to be any risks for anyone, and we were just as naive as everybody else thinking that things were only going to go up.

Lesson #2: Faith over Fear

Everywhere we turned we were hearing things along the lines of, "We made $100k in equity in barely over a year on our house! Get in while you still can!" My husband and I were renting a one bedroom apartment and driving our little 1994 Toyota Tercel amidst Mercedes, BMWs, and even Vipers and Ferraris. People not much older than us were purchasing large, beautiful, Tuscan style homes, and living the high life. We felt incredibly poor and felt like we were quickly being left behind. So we turned to everyone who seemed to have the answers---the one's living the high life. They all told us to buy, buy, BUY! You can't get rich renting, you need to be a homeowner. And buy whatever you can afford now, and sell in two years moving the equity to something bigger and better. 

Everyone meant well, however that wasn't good advice. We learned that you should buy something you would be comfortable living in for 5+ years just in case. 

However, the point to this lesson is that listening to others' advice that solicits fear (such as our sense of urgency or we "would miss out") is not the right source for information. Instead we should have turned to God more in prayer. Faith brings peace and guidance, and forces away fear and the madness that is often associated with it. We turned to those with the loudest, and most bombarding advice, rather than the One who knew what was best for us. 

This is not to say that others cannot give good counsel. However, when the counsel is received, does it cause a feeling of panic or anxiety? Or does it make sense, feel right, and breed other good ideas that promote excitement, peace, and encouragement? We have found that whenever we are left feeling like we are somehow being left behind, or feel a sense of worry and anxiety, the source is not coming from Truth, or from God above, but coming from man and his often false direction/teachings.

Lesson #3: What goes up, must come down

One of my favorite blogs is .
I get daily unbiased updates about all things that affect the national housing market,
which is something I am obsessed with ever since our foreclosure.

Yes, the law of gravity seems to apply to a lot of different financial markets as well (and our pride too). I have learned that health and safety comes from everything in moderation. An extreme diet is never maintainable over the long run. Feeling like you are unconquerable and on top of the world isn't long term either.

In the last 16 years 3 different financial markets have come crashing down as well. In 2000 it was the dot com bubble bursting. I was graduating high school in the heart of Silicon Valley. People I knew personally, who in the last few years had hit it RICH, were now bankrupt and scrambling for a menial pay check. Then in 2008 the real estate bubble burst (although for condo owners like ourselves things turned bad before 2008---another thing we learned: condos are the last to get good and the first to go bad in real estate). All of the equity that everyone's homes had "earned" were now in the negative and all of those amazing mortgage rates were rising and becoming impossible to pay. 

Now the oil and gas industry that seemed untouchable is going through the trenches and laying off tons of workers and cutting budgets so they can stay afloat while there is a surplus of supply. I have learned that nothing (or no one) is "untouchable", and if things get too good to be true, reality checks happen and bring things back to a more healthy, sustainable level.

Lesson #4: You aren't alone

When going through any trial in life it is easy to feel alone on the sinking ship. Everywhere you look everyone seems to be safely enjoying their island of peace and prosperity, while the waves are capsizing your little boat of doom. However, this is not accurate. Even though others might not be going through the same trial you are, many have before, or can relate, having gone through something similar. We as human beings are often good at hiding what we are going through, and are good at putting on a happy face while in public. However being an open book myself, and going through different trials over the years, many others have opened up about what they have gone through or are going through, and I have found that we are far from alone. Which brings me to my next lesson...

Lesson #5: People are often the answers to prayers

My wonderful friend Heather and I

Earthly angels are all around us, coming into our lives when we need them most. When going through this foreclosure we had so many people bless our lives. After being laid off from work, searching high and low for any job, and not finding any in the hard hit Sacramento area that would pay our bills, out of state family members reached out to us with a simple job that might grow and pay off in the end. In the meantime they offered us room in their home until we could make ends meet. After several months of living with family, another angel came into our life with the perfect rental opportunity for our then family of four. Our landlord became a friend and a grandpa to our little boys as we were far from their grandparents. And then a friend entered my life before I could feel alone, and immediately helped me get acquainted with a new state and area.

When my husband's job grew, and then relocated, we moved to yet another state and had to find another home to live in in an area that seemed un-affordable. Once again we found someone who offered us a simple home to rent within our budget, and was one of the nicest people we have ever met. Both landlords didn't care that we had horrible credit or a foreclosure on our record. They gave us a chance when many wouldn't, and blessed our lives immensely. Rather than charging us much higher rents they could get elsewhere, their benevolence allowed us to save money, repair our credit, and raise our family in peace and safety, around amazing neighbors and friends that blessed our lives in so many ways.

This naturally brings me to the next lesson....

Lesson #6: Miracles come when you're patient

This one is always a hard one because patience is a hard virtue to have. Doubt always creeps in first, and hope is easy to give up when things don't seem to be working out. I can't even begin to name off all of the miracles in this foreclosure saga, many of them I probably don't even recognize; however I wanted to reference the miracles in finding other places to live since a foreclosure hits close to home in that arena (pun intended). 

Being offered a place to stay with family was a huge blessing. However we only wanted to use that option until we could afford our own place. After a month we started looking for places to rent. Nathan was working two jobs, I was taking care of our two little boys and cleaning his office building on the weekends, and we hoped to be able to find a place of our own. However we quickly found that the only places we could afford were in areas that were scary. The feelings of being poor, and being trapped quickly set in. Everything that was ideal was just out of reach, and hope felt fragile. But after so many months of looking, one day we saw the perfect rental listed on Craigslist. We had many questions about it and immediately called.

We went to see the listing that night. As we drove up the street we couldn't believe our eyes. We entered what seemed like an oasis, and wondered if it really was a mirage. After meeting the landlord, and finding that he felt like we were a blessing as well, we realized that we both were answers to each other's prayers. We rented out his walkout basement, which was 1800+ square feet, 3 bd, 1 ba, a little kitchen and great room, with a view of Mount Rainier and the Puyallup valley. Every utility, including phone and cable, was included in the $1000/mo rent. Things were so simplified that it allowed us to not worry about extraneous bills, and deal with the stresses that come with banks not approving short sale offers, creditors coming after us, wondering if debts will be pardoned, as well as finding out how to afford health insurance, groceries, etc., for our family. What a blessing.

After almost two years, my husband's job was being relocated to Colorado. I had always wanted to live in Colorado after visiting my grandma when I was 13, so although I was sad to leave friends and the beautiful state of Washington, I was excited to get to where I  always hoped we would live. But once again we found that finding an affordable place to live wasn't going to be easy. It was 2011 and by now our condo had been foreclosed on and we were on the road to recovery. Still no one wanted to give us a loan. We knew we couldn't buy a home, and so we started searching rental ads. My grandma suggested we call leaders of our church and see if they knew of anyone in their congregations looking to rent their homes. We figured that maybe someone was in our situation, needing to move for whatever reason, but being underwater that they couldn't sell. After many, many phone calls that just went to voicemails, or being told that "nothing existed in our price range in this area," we got a hold of someone who had our answer. Within 30 minutes he had reached out to someone else who knew of a family that had just moved out the week before. They contacted the landlord of the now vacant home and put us in touch with each other. We worked out rental arrangements long distance, and then flew out to see the home and meet him. Everything felt right throughout the entire process, and just fell into place.

We have since lived in this home for going on 5 years now. We moved into this home when I was pregnant with our third boy, and now we have four boys. We didn't think we would live in this home for much more than a couple years, but our rent has stayed the same (seriously miracle), our landlord has been an amazing blessing, and we have become great friends with our neighbors. Although our foreclosure has fallen off of our record, the Colorado real estate market is HOT and we haven't been able to find the right home for us yet. Being patient has been hard, especially when everyone is telling us, "Get in while you still can. We are making so much equity." but those words feel so much like deja vu. Before I finish these thoughts, I would like to move on to the next thing I have learned...

Lesson #7: Necessity Breeds Invention

I'm assuming you have heard the saying, "When the going gets tough, the tough get going." Our going had gotten tough and so we had to figure out what we were made of. My love and respect for my husband grew when he applied to menial jobs just to make a paycheck to support our family. It grew even more when he worked multiple jobs to make ends meet. Because I had our boys to take care of I would work weekend mornings.

We were living tightly and working every odd job we could find, and when Christmas came just a few months later, we knew we had to be creative. I decided to draw a picture of our boys for my husband's gift.

He put the framed drawing on his desk at work and a client came in and asked about it. She in turn asked me to draw a picture of her new baby daughter...

This was the first time I had ever gotten paid doing something that I loved. Out of necessity came invention. I then went on to draw a religious drawing that I ended up selling multiple prints of, that afforded us some much needed side money. These opportunities were just the beginning.

Lesson #8: Your living situation does not define you



After going through this housing/credit trial for nearly a decade, I finally realized I believed in something ridiculous. I never recognized that I associated value to people, (and myself,) based on how they lived or what they lived in. 

I realized that I felt like less of a person because we rented an apartment. And then we lived in a condo. And then we lived with family. And then we rented a basement of a home. And then we rented a basic home. 

I felt embarrassed having people over because I felt like my living arrangement was less than ideal, too small, not fancy enough, etc. etc. At the same time I gave people who had bigger, nicer homes more value and worth. I never thought these things consciously, but when the realization hit me consciously, I couldn't believe how shallow I had been. In the course of my life I have lived in nice homes, and not so nice homes. Did my worth or value change between those living situations? No. 

I have met all kinds of people, those that live in multi-million dollar mansions, and those that live in section 8 rental apartments. There are good and bad people in mansions, and good and bad people in the slums. Where you live, or what you live in, does not determine your value or worth. Who you are and what you stand for determines more of who you are; but in the end we are all children of God, and that means we all have divine worth regardless of everything else.

Lesson #9: Don't become house poor


We learned in 2005 that we were eligible for a mortgage amount that was far above what we could afford to pay. In the end we found a condo that was far less money than we were approved for, however the $325/mo HOA dues sank us (and our ability to sell in the future). 

We have kept a record of everything we have made and spent since we were married in 2003. I looked back at what we were making and spending in 2006, a year after we bought our condo. We lived a very simple life, with very little bells and whistles. My husband was the sole breadwinner since we had just had our first child, and I was now a stay at home mom. In 2006, he was bringing home $3200/mo. Our first and second mortgages, plus our HOA dues came to $1549/mo., which comes to 48% of our income. We had a $194/mo payment for our Toyota Corolla (our only car), and spent around $200/mo for groceries. Add in utilities, gas, and other expenses and we were barely making ends meet. We felt strapped. We were "house poor." says,"A standard rule for lenders is that your monthly housing payment (principal, interest, taxes and insurance) should not take up more than 28 percent of your income before taxes. This debt-to-income ratio is called the "housing ratio" or "front-end ratio."' With insurance we were around 50% DTI. 

In looking at homes to buy recently it has been very tempting to go above this advised ratio. I know much of America probably does, and in some cases there isn't much choice. But my husband and I have found that there is much peace living within our means, and that peace brings more value to us than living in something that looks nicer, that we can't afford.

Lesson #10: "Adversity is like manure--it stinks, but things grow from it."

I have no idea where this funny quote originated from, but a good friend of mine said this once when I was a teenager, and it has stuck with me. 

Going through a foreclosure has so many "stinky" aspects, way too many to name, but so do so many other adversities. In our 13 years of marriage we have faced many trials that seemed insurmountable at the time, but "time heals all wounds." If we allow ourselves to look at the bright side of those trials, we learn valuable lessons and character traits from going through those adversities. As I mentioned above, going through this trial has allowed us to meet some of the best people, learn what we are made of, see that blessings come after lots of patience, hope and prayer, see what truly gives us our worth, and has in the end helped me realize that creating brings me fulfillment and happiness.

Note on why we Foreclosed: We bought our first home, a condo in Cameron Park, CA, because we had always been told that you shouldn't throw your money away renting, and this condo was the cheapest in our area ($205,000). We planned on living in it for 2 years and then selling and using the profit for our next home, one that would be bigger than 700 sq ft, and thus be able to fit our growing family. Unfortunately 2 years later the condo was worth less than we bought it for, which we had financed 100% of the mortgage through two loans. We had two kids now and things were tight, but we planned on riding out the real estate market storm. Then the recession hit, my husband lost his job when the company he worked for was sold to another company, and he couldn't find any work in the hard hit Sacramento area (Petsmart wouldn't even hire him because he was overqualified). After looking for work, he was offered a job in Washington state. Our monthly payments (plus the high HOA dues) were way more than we could charge for rent, so we tried to short sale our condo. Several reasonable offers came in, but working with two mortgage companies to approve those offers was very hard, and most offers went away before anything was approved by the mortgage companies. Little did we know that our primary mortgage, through IndyMac Bank, was about to collapse as well, which made things even more complicated. In the end our condo sold for $45,000. Those condos are only selling for around $70-90k today, when the Sacramento real estate market is hot again. We learned that good people, who try to do the right thing, make bad choices. We felt horrible foreclosing on our agreement with our lenders. We also learned to research a homeowners association, and the complex you are buying into, so that you know the state of repairs and financials. Lastly we learned to buy something that works for your family, and will work for your family for years. We didn't have kids when we bought, but we knew we would, and a family of 6 would be hard to fit in a 700 sq ft condo. Even though I now try to guess what the market is going to do next, I heard good advice once that went something like this: "If it fits with what your family needs and can afford, and you can plan on being there for 5 years or more, then the home takes care of that need and shouldn't be looked at as a financial investment, but a place for your family." Hope our lessons learned can help someone else not make the same mistakes we did.

There are so many other things I have learned from foreclosing on our first home, but I tried to limit the major lessons to 10. 

Please comment below on what you have learned from some of your biggest life challenges, because I find that the human experience is pretty universal and we can all gain from each other's lessons. 


  1. Hi Mimi! I love this! You are a talented writer in addition to your many other creative gifts! Thank you for sharing these lessons learned! I've no doubt that many will benefit from your experience :-)!

    1. Thank you so much Karista! I really do hope that this helps others in some way. Best of luck in your new area. We will miss your family!

  2. First of all I love you so much. You have been an answer to so many of my prayers and our unique friendship is so precious to me.
    And second of all. You are amazing. Full of such grace and resilience. You have been a sounding board for me as I have gone through my own trials and what I have learned from you is to try to see the positive in all things. And to put yourself out there. You won't know unless you try.
    Love you.

    1. I sure do miss living in Washington because it was so fun getting together all the time. I miss the beauty of the state, but more so I miss one of my bestest friends. Thank you for your incredibly meaningful comment, and for always being there when I need you.

  3. Love this. We haven't had an experience exactly like this but have come through some difficult times of our own, but some of the lessons we learned are similar. Our personal value has nothing to do with where we live or what we have. Loved your post.

    1. Thank you for sharing Stacey. I do feel like the lessons are more universal rather than limited to foreclosures. Trials are hard but they sure do teach invaluable life lessons that are huge blessings.

  4. Thanks for all your thoughts. We bought at condo in CA in 2005 and foreclosed in 2012 (after going through all the steps to do the "right" thing) so we've been through a lot of the same feelings. We're still renting, too, and were a lot more thoughtful about where we rented based on our lack of insight when we bought. Sometimes I wish we owned again, and at the same time I'm happy I'm not in a rush to buy something in this crazy current market. Know you're not alone!

    1. I had no idea you went through the same thing Janet! Totally agree with you on being more thoughtful on location and the love hate relationship of renting vs owning. Thank you for sharing!


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