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agoodman

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As many of you saw "Inn the News", a month ago I received a foreclosure notice, and I think it is important for all Innkeepers, and potential Innkeepers to be aware of the situation we are facing.
Many of you may NOT be suffering, but there are many Innkeepers out there that like me have been bitten hard by the economy, and as B&B's we have some added hassles. I will try and keep this as short as possible and point out the specific issues relating to "Us".
I bought this Inn 5+ years ago and in the first year grew the business by 80% and then by 20% for the next 2 years. I have a 60% repeat rate. In Nov 2008 I looked at the economy and at my forward business and did not like the downturn. At that point I was not only up to date with my mortgage (which is residential) but I was overpaid. I had a credit score of 780 and had been with Wachovia for 20+ years and never bounced a check. I had no major debts other than one credit card (no car loan, no medical bills, no school loans).
I contacted Wachovia to ask for "forebearance in anticpation" (ex take 6 months of my loan and add it to the end with interest to give me some breathing room). Or whatever else they could suggest. I was denied because "I was not in default". What? I took this to the President's Office of Wachovia. They concurred. Could not help me because I was not in default. Took it to my Congressman. Yes we know (we have just given the banks 55 billion dollars or some ridiculous amount ..). For months I filled out papers and they lost them or did not work on them until they were expired and had to send more. Once I was just $200 behind the collection calls started so viciously that I had to have a lawyer issue a cease and desist. The President (Of Wachovia) office contacted my attorney and said they would work with me. Never heard anything for months. Suddenly they called. Why had I not completed the paperwork. What paperwork. So we started all over again. Denied now because I was in default. Denied for refinancing because it was a Fannie Mae loan. Denied for refinancing because I did not make enough. Denied for the Govt Home Affordable Mortgage program because I made too much (yes I have TWO jobs as well as the B&B). I told them they were using the wrong numbers (they were looking at my business numbers and not personal which is the criteria for the Home Affordable program). Denied to have a 3rd party intervene to look at my numbers even though I signed a 3rd party auth. Even CCCS approved me for the Home Affordable pgm but Wachovia stated they would not tallk to them because (1) I was denied previously (when they used the wrong numbers) and (2) because I had an attorney.
They IGNORED letters from my attorney trying to work out a repayment plan for the arrears. Did not even acknowlege his letters. I had even sent a follow up asking them to reply. Hard to believe but they did. Next thing I get a foreclosure notice. I called the Office of the Pres of Wells Fargo (by this time we had given up with the President of Wachovia) and asked why he had never responded. Oh they said. You never AUTHORIZED us to work with your attorney (HUH?). They assigned someone to look at my case. He never called back when he said he would. Ignored calls from my attorney. The attorneys assigned by the bank? THEIR attorney was out of the office for 2 weeks. No one opening his mail. No one checking his voice mail. They have no interest in working anything out because their job is to foreclose as quickly as possible. That's what they get paid for. Anyway they are 2+ weeks backlogged.
One of my regular guests started a campaign to "save the inn" and managed to raise 2+ months of mortgage payments. Called CBS in. Advised the Pres of Wells Fargo both before and after. I was headline news at 6pm and 9pm. No response from their office.
End result? I was required to declare bankrupcy. This will force the bank to work with me according to the bankrupcy regulations, something they could have done themselves because now they lose my 2nd morgage as a result. And THAT is worth almost 3x the arrears. I get to keep the Inn as long as I can make the payments and will probably have a very reasonable 48 months to pay back the arrears. (Reminder 22 months ago all I asked for was 6 months forebearance)
What I have learnt:
1. The banks don't care, they don't want your house and they will probably buy it at the foreclosure and then sit on it, AND they just pull from the the huge pile of money they got from the Govt
2. It does not matter how much of a good customer you are with the bank and / or can prove income. Do not believe like I did that they would work with you (I was not asking them to forgive or "lose" any part of my loan.
3. As you know the banks have practically shut down lending. They don't need to lend anymore. They got $$ from the govt at 0% and loan it back to the govt at 3%
4. It is practically impossible to get new or modified financing for B&B's. The "general" ruies for lending are much tougher and OUR INDUSTRY does not fit into any of their boxes. We are not commercial. We are not residential. We are too much of a risk factor. This means that selling B&B's is even more difficult unless you can find a cash buyer. And people looking to buy better have cash because no one is lending. Many of our properties have lost value so our mortgages are more than the value of the property.
It's easy to stand on the outside and point at all the B&B's that are shutting down or being foreclosed on. Don't think it won't happen to you and give some moral support to those having a tough time. TWO Innkeepers contacted me. (Thank you).
If you are having a tough time right now and have a commercial mortgage there are companies out there that are buying up commercial mortgages from the banks for around 22c on the $ which means that they can refinance you and probably lower your outstanding debt by thousands. (This would not work for me as I had a residential mortgage and the banks do not want to set a precedent on these but they are selling off commercial mortgages).
Bankruptcy to me was a dirty word but I had no choice. So I lay off a housekeeper and my yard service, drop one of my 2 extra jobs and start doing it all myself (so 2 more people are on unemployment).
And that's about as short as I can keep it. I have had amazing support from my guests not only with financial donations (which took a big swallow of my pride) but with moral support and advice (one couple who offered to buy my note but Wells Fargo did not even respond) and who then decided to drive 7 hours and "spend the weekend" because they knew I needed the business. July/Aug and Sept have been "better" and I can only hope that it stays that way.
So to all those who are struggling remember you are not alone!!
 
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Thank you for the information/warning.I just got a new loan last year on a rental, to buy a barn for the B&B & do some inprovements here and the rental.I also work full time + my small B&B. Your information is very eye opening and a somber lesson for us all.I only hope you can turn this sour lemon experience into lemonade.We are all thinking of you with our prayers.Mary in Bwater.
 

MTLLodge

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Thank you for sharing. Wishing you all the best.
 

wendydk

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Thank you for putting that out there. I think those of us who are keeping our heads above water should be especially thankful...I know I am.
I will say a prayer for your situation to improve.
 

Copperhead

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Agoodman - I have thought of you often and although I am saddended by the fact that you had to resort to bankruptcy to be able to move foreward, I am very hopeful and will be praying that only brighter days lay ahead for you.
Your story does not stand alone but I have never heard the battles - or hurdles in detail, to which I am sure took place. Thank you for spending the time and energy to open our eyes to the issues that could affect any of us at any given time. I recall another one of the forums inns experencing this in FL last year and as I recall, the bank purchased that property at the foreclosure sale.
I do not know about the rest of you, but I am receiving more and more mail flyers on home auctions with words like this could make a great B&B or event facitlity.
 

Joey Camb

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we are lucky where we are but I know plently of hotels, large and small that are struggling as well as houses and B&B's that have been on the market for 3 years and no luck. It is terrible. it doesn't help that people who want to just retire (ie nothing wrong with their business) can't sell their businesses as no one can borrow the money to buy it for its true value so everyone is just stuck.
 

Samster

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That is quite a saga. I hope that you can recover from all of this and keep your home and business. Best of luck.
 

birdwatcher

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Oh how i understand COMPLETELY where you are coming from...we where and still arein the same position. I just by the grace of a loan from my parents saved my home and then called the bank-now get this:
THEY told me that the money (which was sent to them through the attorney they hired to foreclos on my home) that they received was not put into my account, oh yea it was but then taken out because--THE CASHIER'S CHECK DID NOT HAVE MY NAME ON IT!
ok so my parents went to BOA (Barf on Anyone) to get the cashier's check with the loan number on it but they put it in the right account but then took it out! They practically told me that they would have REJECTED that payment. Yup, if I hadn't called them they probably would have foreclosed on my house. The other house we don't know...that was our B & B and it was a residential loan. The job prospect was nill-we where having a hard time keeping warm last winter-we moved out of state so that we could try and save at least our home-better pay and they would not work with us for a modified loa-yea same excuse-did not receive paperwork-blah blah blah-and if your not behind-they won't talk to you.
I really want to sue them-we bail them out and what do they do-they are banks afterall-all they care about is themselves-the sad fact is that with all the foreclosures lurking-they WONT BE ABLE TO GET RID OF THOSE HOMES.
We are also going to have to declare bankruptsy-and we don't want to but they leave us no choice.
 

Joey Camb

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that is beyone ridiculous they have gone out of their way to not take the money. And they wonder why banks all over the world are a complete mess this is why. They won't let decent people like you and agoodman pay! or organise payment plans or think generally at all. They are not much better here but as now our government owns about 50% of our banks due to the bail out they are seriously frowning on forclosure which helps a little.
 

Samster

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that is beyone ridiculous they have gone out of their way to not take the money. And they wonder why banks all over the world are a complete mess this is why. They won't let decent people like you and agoodman pay! or organise payment plans or think generally at all. They are not much better here but as now our government owns about 50% of our banks due to the bail out they are seriously frowning on forclosure which helps a little..
Although it's sad that this is happening in other countries, it's a good reminder that we're not alone in this here in the States!
 

seashanty

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agoodman, i hope this works out for you. just words, i know, and not much help.
i have a friend who has deliberately put his house mortgage in a default state so that the bank would offer him some kind of loan restructuring. they simply would not talk to him and would offer no options while the payments were being made. he wasn't paying other things in order to pay the mortgage. and this is just a modest house, not a business. i have no idea how this will go down.
 

gillumhouse

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Thank you for telling us this. It must have been very painful to go over it again. I have been of the belief for quite a while that tis whole situation was planned - Wall Street and banks have a history of sweeping problems under the rug to AVOID panic rather than create it. Someone is making a LOT of money from all this. History repeats itself if it is not remembered.
A Goodman, I wish there was something we could do more than words. I do know that in the 4 years since I took out my honking loan, my "paper" has been sold at least 3 times to different "lending" institutions. As long as Social Security holds out (except now I lose a lot because they will be taking a cut for Medicare) I think I will be able to hold on. It is a good thing neither of us smoke or drink - we could not afford the luxury....
 
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