Prang works out of his house for Carteret Mortgage; he says his mortgage consulting is geared toward the Christian community and home schoolers, which is what his wife does with their three children.
“I try to do things above-board,” says Prang.
Their original loan was with American Home Mortgage, the once high-flying firm that flamed out last August with a sudden bankruptcy and put about 7,000 Americans out of work. Then things went bad for the Prangs after they used their equity– or what they thought was their equity– to finance another business venture: buying houses and fixing them up.
“I had another foreclosure,” Prang admits. “I had perfect credit until recently.”
He advises homeowners in over their heads to avoid late payments, but he admits that’s easier said than done. He suggests that people unable to keep up with their payments try something called a “deed in lieu of foreclosure,” in which, with approval, they simply give the house back to the bank.
“It’s not as harmful to your credit as a foreclosure,” he says, but concedes, “I’m in the business, and I didn’t know about it.”
Prang is mortgage savvy, and yet he says, “There was nothing else I could have done.”
He and his wife bought their house for $650,000 in 2005 and converted the garage to boost it to 5,000 square feet, the biggest house in the neighborhood. They listed it a year ago for $800,000, then $775,000, and finally, $699,000 a few weeks ago, less than what they owe on the three mortgages.
“I could have come current,” confesses Prang. “I have the money. But that meant dumping a lot of money in a house losing value.”
And he says if he had sufficient funds, he wouldn’t pour them into buying a house now. “Why take the chance to buy something that a year from now could be worth a lot less?”
Prang isn’t in favor of current plans for the government to bail people out of bad investments. He personally didn’t want government help in avoiding foreclosure.
“In the long run, I’m going to be okay,” he says. “I know my credit has been dinged, but I know how to repair it.”
Update 02 May 2008: This comment at the HooK sums it up quite nicely:
“Oh, I could pay my debts, but I’d rather keep the money. P.S., I checked, and it’s fine with God.”
Just maybe these kids should go to a public school, where they can learn concepts like honoring contracts and morality.
Last Update – 04 May 2008 – I just noticed that the Calculated Risk noted this story as well. The comments are often fascinating and insightful.