A Nisswa area family had a great life.
A happy marriage, two beautiful, healthy children and a home the family built themselves in 1993. Everything was going well. The couple owned their own contracting business that was located on the lot next to their home and the business was flourishing.
But then came the dip in the housing market and business began to go down. In 2002, the couple refinanced their fixed 30-year mortgage and got into an adjustable-rate mortgage. The mortgage was for an estimated $220,000 and covered the home and the business.
"We wanted to get into a lower interest rate so our payments would be less," said the 37-year-old mother. "We had an 8 percent interest rate and went to a 6.25 percent interest rate. Now our interest rate is 12 percent. It (rate) jumped big time and fast."
The couple's mortgage payment in 2002 was $1,500 a month and today it's $2,400.
Jim Fossum, an attorney in Brainerd who deals with bankruptcy cases, did some research Friday in the law library at the Crow Wing County Judicial Center in Brainerd.
» Purchase reprints of this photo.
Brainerd Dispatch/Steve Kohls
"I wish we would have stayed with our old mortgage," she said.
The Dispatch agreed to withhold the couple's identity in an effort to find out how the mortgage crisis that is making headlines across the world affects people in the Brainerd lakes area.
The couple's financial troubles began about four years ago when the business started slowing down. The couple both worked for the business and when there wasn't enough work the mother didn't work.
In June of 2005, the family's lender filed a notice of pendency on their mortgage to start the process of foreclosure of the home and business. The couple said they were never informed of this notice, but they had several payments that year that they didn't make. They ended up making the payments to catch up, but they mailed in the payments after the deadline.
Then in the fall of 2006, the mother got a part-time job to bring in more income to make payments.
"It was getting tough to put food on the table," she said. "My husband tried to make it with the business. The bank kept telling him to keep going, so we never closed down."
The couple filed Chapter 13 bankruptcy and were given a year to pay it off. They worked with a trustee to reorganize their finances to try to come up with a payment plan. It didn't work. The couple started not making their mortgage payments because they couldn't and then in February of 2007, the family was put on notice again that their properties would be foreclosed.
The family almost lost their properties in April, but at the last minute a relative loaned them $20,000. The couple met with a mortgage consultant who said they could get a new loan with the money.
"She promised us she could get us a new loan, but she couldn't," said the mother. "She said none of the lenders wanted to take any possible bad loans."
In October of 2007, the family filed for Chapter 7 bankruptcy, which gave their lender the right to sell off the property to the business and the right to foreclose the home. All of the business equipment and items have since been auctioned off.
"This has had a huge strain on our marriage and we separated for two months, but we're back together," the mother said. "We expect our home to be foreclosed any day now. It'll be whatever God wants it to be."
The mother, who has one part-time job, is looking for another part-time job and the father went back to school. The husband has another two months left of school and then he'll look for a full-time job.
In the meantime, the family had to get rid of their two vehicles. They bought an old van that needs repairs. They're also receiving assistance for food and heat.
"We had no heat from mid-August to October," said the mother. "When we filed for bankruptcy they turned our heat back on. There were mornings in October when we had no gas or hot water and we woke up in a cold house. I felt so terrible that my kids had to go through that."
The mother said the children have been hanging in there, but they had a hard time when she and her husband separated. She said the children don't know about the possibility of losing their home.
"If he (husband) could just get a good job and we could get a good mortgage we'd be good," said the mother. "I keep praying to God that we won't lose our home. We built this home, it means a lot to us."
The family made it through the holidays and are thankful to the community. The mother said people sent them gift cards for groceries and toys for the children.
"It was just wonderful," she said.
JENNIFER STOCKINGER may be reached at email@example.com or 855-5851.
Brainerd Dispatch ©2013. All Rights Reserved.