Published Thursday, August 12, 2010 @ 10:22 am

If you’re reading this, odds are you may be suffering through  a tough financial time. Yet, what might make you feel a bit better about your current ordeal is the knowledge that you’re not alone. Millions of average Americans just like you are facing a shared financial circumstance as they struggle to stay afloat in the wake of this decade’s Great Recession—facing foreclosure, job insecurity, and, in some cases, insolvency.

In the series, Our Great Recession 2.0, we’ll delve into some of the more unique stories of this decade’s unprecedented economic downturn, allowing you to see familiar faces and dire places people are going in order to handle our collective financial meltdown head-on.

In part four of this ongoing series, we meet the LaRochelles, an average American couple bearing witness to what some are calling an end to the middle class.

A couple of years back, David and Debbie LaRochelle owned a couple of houses: one home in Southern Florida and a mobile home in Georgia, near Debbie’s parents. They both worked full-time with a combined income of $100,000 a year. Things were great. And they were living the middle class dream.

According to The Huffington Post, today times have certainly changed for the LaRochelles. “Two years and a recession later, the 60-year-old couple are both unemployed, have drained their savings and 401Ks, are depending on Social Security, unemployment benefits and COBRA health insurance to stay afloat and are in the process of losing their Florida house in a devastating short sale. Their dilemma is an increasingly common one: they can no longer afford to make their mortgage payments without an income, but they can’t sell their house because they now owe more on it than it’s worth….The LaRochelles are two of the nearly 2.4 million Americans who are seriously delinquent on their mortgage payments, thanks to plummeting property values and lingering unemployment. And according to the Center for Responsible Lending, a nonprofit research and policy group, as many as 9 million homeowners could go into foreclosure in the next two years.”

It turns out the LaRochelles didn’t know their property had dropped in value from 139K to 49K. “It’s been such a nightmare,” David LaRochelle told HuffPost. “I tried to work something out with Wells Fargo, but they wouldn’t even talk to me until I was 30 days past due. We tried a deed in lieu three times because they ‘lost the paperwork’ twice, and then they turned it down because they said we hadn’t advertised our property at fair market value.”

This very type of lender indifference, mortgage delinquency and underwater living is a situation tailor-made for bankruptcy.  If you’re like the LaRochelles: having trouble making your mortgage, living in a home that will never accrue equity, and/or residing in an area that is currently devalued and an eyesore for the foreseeable future, bankruptcy can help get you back on the right side of the tracks.  A Chapter 7 bankruptcy will allow you to surrender your underwater home, negate your personal and financial liability, and move forward financially. Or, if you so choose, keep your home while using Chapter 13 to catch up your delinquency and pay your mortgage through a Chapter 13 plan.

Because it’s all about using all of the tools at your disposal during our own Great Recession.

Bankruptcy could have worked for the LaRochelles. It could work for you too. If you’ve been affected by the economy and are wondering how to get back on track, knowing a qualified bankruptcy attorney can also help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond our own “Great Recession.”  The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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Published Monday, February 1, 2010 @ 10:23 am

If A Wealthy Developer Can Walk Away From The Mother Of All Underwater Mortgages, Why Can’t You?

Rachel Beck, national business columnist for The Associated Press, asked this very question in a recent article upon finding that heavily capitalized developer Tishman Speyer Properties was able to simply “walk away” from 11,232 Manhattan apartments because it couldn’t pay its mortgage, under the guise of “good business,” while at the same time, in the same country, Rick Gilson, a college custodial supervisor in South Dakota, resists walking away from the mortgage on his mobile home, fearing he’ll be considered “a deadbeat.”

As Beck found, “Those two borrowers face the same financial dilemma: Their mortgages far exceed the values of their properties. Yet one gets to walk away without guilt, while the other can’t. Mr. Gilson is scared to dump the mortgage on his mobile home. He owes $31,973, but the home is only worth about $14,000.” “I have 12 years of money put into this property that I will never get out,” said the 50-year-old Gilson. “But I am still paying because this is what I have been told to do. That’s what I think is right.”

As Beck illustrates, up to this point, the focus of the real estate crisis has been on individual Americans facing their own personal mortgage meltdowns. Today, one in four U.S. homeowners (nearly 11 million Americans) are underwater on their mortgages.  While some experts believe it makes sense to walk away if you’re deeply underwater as it’s not necessarily worth it to keep paying a mortgage when they can find comparable rental housing for less, the argument against walkaways is not only a dropping credit score, but that they will wreak economic havoc. Banks will have made more bad loans, will then make fewer loans and home prices will continue to plunge.

Obviously the rules are different, though, for what Beck calls “the walk away of all walk aways.”

That title goes to the 56-building Stuyvesant Town and Peter Cooper Village complex, the largest single-owned residential area in the city. Commercial real-estate firm Tishman and its partner, investment, paid $5.4 billion for the property, hoping to make money by converting rent-regulated apartments into high-priced luxury condos.

Enter the current housing crash and now the property’s value sits squarely at $1.8 billion: a difference not simply underwater, but drowning.  While Tishman has said that it was turning the property back over to creditors to avoid filing for bankruptcy protection, Tishman has failed to restructure $4.4 billion in debt, unable to find another buyer. So, Tishman exits the deal with a mark on its reputation, and yet a conciliatory $33 billion in assets.

Residential homeowners like Rick Gilson don’t have it so easy. With a mobile home that started depreciating the minute he moved in over a decade ago, he rents out the property just to make the payments, living in another home with his wife.

“I get so stressed over this,” Gilson told Beck. “It’s like the elephant in the room and there is nothing you can do about it.”

While the unfair truth is that real-estate tycoons can default on a $4.4 billion mortgage, but dis-similarly-situated individuals can’t walk away from a $31,000 loan, average Americans do have choices.  As homeowners languish waiting for more immediate mortgage help, many are turning to bankruptcy to stop foreclosure and other creditor actions. For reliable bankruptcy advice that you can trust, contact The Law Firm of John T. Orcutt. And to find out more about your bankruptcy options, visit The Law Offices of John T. Orcutt’s “Things to See and Hear” information.

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