Life After Foreclosure

After losing their homes, these families thought they'd never recover. They've found it difficult to rent and their credit is wrecked, but life is looking up.

September 03, 2009

Stephanie Thomson

City: Chicago

Price paid: $245,000

Current value: 175,000

Lesson: "My only regret is that … we signed a contract and then we couldn't fulfill that contract."

Stephanie Thomson's troubles began when her husband Rich, a highly regarded hair designer, became disabled with neuropathy and could no longer work.

The income loss made it impossible for the couple to sustain the payments on their home in a Chicago suburb.

Stephanie and husband, Rich, with their eldest son, Mason, and the twins, Emily and Evan.

When they bought the house, they took out a hybrid ARM mortgage. The original bill was $1,400 a month. But it went to $1,900 after three years and more than $2,000 after the second reset six months later.

"With my husband unable to work, we could have paid the mortgage without the ARM reset but nothing more," says Stephanie, who tried for months to get help from her lender.

"They told me they would pray for me. That's an exact quote," she says.

The Thomsons decided to stop paying their mortgage last July — their first time missing a payment. They didn't pay for 10 months, during which time helped guide them through the foreclosure process.

In April, having saved what they would have paid in mortgage, they relocated to Elyria, Ohio, where Stephanie has relatives. Unfortunately, their credit scores had dropped so low that it was difficult to rent — much less buy — a new place. So Stephanie's mom bought a house and rents it to them.

"It's less expensive here; we were able to get a larger house in a wonderful neighborhood," she says. "My only regret is that I'm a proud person. We signed a contract and then we couldn't fulfill that contract because of my husband's illness. It was very difficult."

Lori DiBacco

Lori and Bill DiBacco

City: Oceanside, Calif.

Price paid: $610,000

Current value: $550,000

Lesson: "It was so horrible, the worst stress we'd ever been under."

Apparel sales rep Lori DiBacco and her musician husband, Bill, were living a dream life in their five-bed, three-bath home with pool in beautiful Oceanside, Calif. They bought the place in 1994, and they lived well, but not wisely.

"We took great vacations, if we saw something we wanted we bought it," says Lori.

The couple was childless by choice, as they both traveled for work. Then, five years ago, their goddaughter came to live with them. That radically altered everything.

Bill stopped working so someone would be home, which halved the couple's income. Then, there were big expenses for taking care of the child.

"She needed a lot of extra care," Lori says. "We put a lot of money into her education, dropping $50,000 the first year into Sylvan Learning Center for remedial work."

The coup-de-grace happened when Lori injured her back and couldn't work.

They burned through their savings and took out a second loan on the house. Their monthly mortgage bill, about $1,400 when they first bought the house, ballooned to $4,400. They started missing payments; they simply didn't have the money. They went nine months without paying.

"Oh my God, it was so horrible, the worst stress we'd ever been under," Lori says. "It sent my husband over the edge to a nervous breakdown."

By the time they were done, they owed $610,000 on a property that was worth just $550,000 when they did a short sale last year.

Things are much better now. Bill runs a business restoring classic Mustangs, and Lori started a pet concierge business, which arranges everything for the pampered pet. She calls working with animals her dream job.

Their finances are still tattered. They were turned down for several places they tried to rent. They're living in a condo owned by Bill's mom, paying a small rent but fixing the place up. Lori loves the new place; it's in a quiet 55-plus community with very nice neighbors, most of whom have pets.

"We almost divorced many times over the stress of the financial burden and all that entailed," Lori says.


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