Your Stories
Your Stories - Is The Credit Crunch Biting?
April 03, 2008

Even the normally cautious Bank of England has admitted it - the cash squeeze is about to get even tighter.

Until few months ago, few outside financial circles had even heard of the phrase "credit crunch". Now it's on everybody's lips.  Last time we asked this question we barely got a response.

Now mortgage lenders are withdrawing products, loans are harder to come by - and more expensive because the bank is wary of cutting interest rates for fear of stoking inflation.

Millions of people are directly affected by the current economic problems, so how has it hit your life?

Are you struggling to get a mortgage or falling behind with the loan you already have?

Or are you trying to sell a property and finding no-one's interested in your asking price?

Tell us your stories.

Written by Sky News, April 03, 2008



How We Got Here:
Nearly 2 years ago, we decided it was time to retrofit our modest two-bedroom bungalow in the upscale neighborhood of Rockridge in Oakland, California in US. While our 13-year old son was sharing a bedroom with our 6-year old daughter, the bigger issue was the unstable foundation that caused exterior walls to drift and buckle off the perimeter.

“No Problem”:
In August 2006, we decided to stabilize the foundation. But people we knew in the industry (contractors, architects, real estate and mortgage brokers) all said that now was the time to undertake a full renovation given the space constraints, the antiquated plumbing and electrical systems, and rising construction costs. As evidence that it would be “no problem” they pointed out that our 2-bedroom house had appreciated considerably in the Bay Area real estate boom - valued at over $950,000 - and that in our neighborhood 3-bedroom homes sell for well over $1 million - and still do despite the downturn. Over the years, we had used some of the appreciated equity to fund a portion of Jason’s graduate business education (after years in the nonprofit sector earning less than $30,000 we wanted to enhance his career). We also used the funds to supplement Hiroko’s income of $50K per year that she had earned as a community planner for an Oakland-based affordable housing organization. When our daughter Denali was born, we relinquished Hiroko’s income so that she could care for our children and launch a socially responsible blanket making company. Her time was shared between raising our children, her new business, volunteering in leadership roles at school, and co-founding a neighborhood based urban planning group that advocates for mixed-use higher density affordable housing in North Oakland.

In Fall 2006, we met with a mortgage broker to consider our options and were surprised to learn that they felt that we would have “no problem” securing cheap financing for the entire project. To start the project we used the remaining funds from an existing equity line and then, through our brokers, secured another equity line that bought out the first and provided the additional funds to finish. As the project progressed the work began to slow, everything was more expensive than originally quoted and we found major dry rot in the roof and entire back half of the house. In Summer 2007, we found ourselves in need of an additional $150,000 to finish the project. The situation was critical because we did not have enough equity left to obtain more funding and the house was only ¾ complete.

Our Community:
Amazingly, our community of neighbors, friends and family lent us most of the money from their own home equity lines and life savings. We used credit cards to fund the remaining balance needed to finish the project. Our mortgage brokers encouraged this strategy -- again assuring us that we would have “no problem” obtaining the funding we needed (up to 90% LTV) to finish the project, pay everyone back and then payoff our credit card debt. But by late 2007, the only loan our brokers could find was a “neg-am” first from Washington Mutual. While the terms are steep at 9.0% interest with a one-year pre-payment penalty, we took it, because our brokers assured us that once we cleared the main hurdle of a first, getting a second to pay everyone back “would be no problem and could just re-finance next year.” But given the negative amortization on our first and the broader market conditions, we have not been able to secure a second.

The delay in being able to repay our friends is beginning to cause tremendous emotional strain on our family. One of our friends who leant us money has a family with 3 children in a home located in another neighborhood in Oakland where property values have decreased. Their equity line was recently frozen below the amount they’ve already withdrawn. While they lent us money to help us finish our home in a high-value neighborhood, they have now lost their safety net and are facing the possibility of not being able to pay their mortgage. Another friend and neighbor is retired and in the process of looking for a home. We have now put our community of friends in the grave position of losing their own homes or not being able to finance a down payment on a new home.

Track Record, Future Prospects + Divine Intervention:
Jason is earning close to $150,000 per year as a controller for a major corporate foundation. After 3 ½ years there he has proven his leadership skills and we are confident that he will be promoted to Director level by year’s end (which would mean a 15-%20% increase in salary). Hiroko’s business continues to attract positive media attention and most importantly is beginning to earn a profit. Her accounts have grown to Chicago, Seattle, and New York. Last week, she was contacted by the De Young Museum in San Francisco to participate in an exhibition of Asian-American artists. More recently, a local non-profit, the Unity Council, hired Hiroko to launch an Oakland-based sustainable sewing factory called MIO (Made in Oakland). This socially responsible enterprise will employ 70 low-income Oakland residents in 2 years. She is receiving $45K per year to manage the program part-time while continuing to grow her own business ( She plans to contract with MIO to manufacture a line of her blankets.

More Than a House:
We were married in a backyard, potluck wedding with over 120 guest at this home and held welcoming ceremonies for our children. We feel that our commitment and our love for our community transforms our house into a home that has become a central location for building community. Jason has coached youth baseball and hosted many baseball movie nights for the team in the backyard; annually we host a Halloween movie night with popcorn, tea and hot chocolate for neighborhood families; Hiroko heads the Diversity-Unity Committee at our daughter’s elementary school and is on the leadership council which also meets at our home; our musician friends and neighbors play concerts in the backyard; and countless potluck dinners to discuss neighborhood solutions happen right here at ‘341 62nd Street’. The “beauty” of this house lies not only in its aesthetic charm but also on a deeper level: the home is ‘alive’ with the soul and heart of a community. Our friends and neighbors, who have literally helped build this house, are more than represented in the walls and floors of this home…it is theirs, as well…and represents yet another blessing that we are eternally grateful for.

Lifetime of Lessons Learned:
Despite the feeling that we were caught up in the overwhelming wave of "irrational exuberance" with regards to the housing market and the sobering thought that we are in fact one of the thousands of families referred to in the endless stream of newspaper articles and NPR stories affected by the credit crunch, we take responsibility for our actions. This is why we are reaching out to try and work with our lender -- we want to stay in our home.

We also fully realize that there are thousands of families facing far more challenging circumstances than ours and we are grateful that we have good jobs and our children are healthy and attend strong public schools in Oakland – our years of working and volunteering in the nonprofit sector have taught us that this can never be taken for granted. It is almost ironic that we are such strong affordable housing advocates and yet within the continuum of housing costs we find that we cannot currently afford ours. However, in addition to staying in our home, we also have an obligation to ensure that our community of friends, neighbors and family are repaid so their own homes and financial security are not jeopardized.

We have learned a lot of valuable life lessons through this entire ordeal…but through it all, it is hope and faith that have sustained our family and community. We have a solid history, having never missed a mortgage payment or bill, and feel confident that given the opportunity we will succeed…we understand that after everything is stripped away…it is our character, and what we stand for that mattes most.

We are asking our lender, Washington Mutual, to consider our history and our future potential; our commitment to our core values and faith; and extend the same level of trust and believe in us that our community has.

Oh,in my last posting on here i never metioned the judge or system,he still kept me in bankruptcy,even though i paid what i owed plus the costs to the courts.
The system and corrupt judges stink,again,one rule for one,one rule for another.
When does the next spaceship leave to Mars please?

29th November 2007

Trade & Industry.

Please find the enclosed e-mail i sent to the Official Recievers Office.

"After the Hull City Council made me bankrupt for un-paid council tax in Nov 2005,i had a bank loan running with the Lloyds TSB,which was the only monies i owed.
I paid off all the C/Tax and extortionate costs, to the court in Hull i owed in the week between Christmas and New year in 2005.
I was paying my loan off to the Lloyds TSB as per my contract with them.
But was instructed by one of your "officers" in Hull a Mr.Mallatrat to take a loan out to repay back the sum outstanding.How can he give financial advice?
He seemed very pleased that i had to borrow even more monies to pay this off.
The phrases used by him were,Are you re mortgaging,or borrowing from a 3rd party?
He also did ring me on my mobile phone numerous times,maybe that is how he gets his kicks.
He sounded quite pleased to stop my case being anulled to the satisfaction of the court,ie,paying my loan of as per contract with the Lloyds TSB Bank and owing no more monies to anyone.
I organised the sum for this from a 3rd party,made an appointment to go to The Lloyds TSB to pay it all off.
Because i didnt do it within his time scale,he has then passed my case onto a "trustee" (robber more like).
When i telephoned them at their offices, i was informed by one all she said to me was, "We will get our money from you".
From a loan i was paying for the sum of just over 12k,this sum has now more than trebled to a sum near 43k.So who is trying to make over 31k out of me?
After telephone calls from me to the Lloyds TSB,who was willing to either take full payment with a reduction,or carry on with the monthly payments to them. Mr.Mallatrat,stopped me paying the loan,when i asked him why,the reply i got off him was after a few chioce words was exchanged,was "i want you out of that house".
Could you please reply as soon as possible explaining this please?
As you know most working men in this country cannot afford the charges solicitors charge.
As i see it Mr.Mallatrat,who sent me to see a person employed by Baker Tilley of Hull,
They have both worked together previuosly,so it would not suprise me me if there are underhand dealings going on there between them both.But i will endeavour to find this out.
I did telephone your offices last week and was passed from pillar to post."

Now i have opened my mail today the 29th of November,my next appearance is at the so-called "trustees" office on the 21st of December 2007 to force the sale of MY home.
Who themselves are charging me a small fortune.

After a very brief but nasty meeting with my local MP,who happens to be a Mr Prescott,who never paid any c/tax on his flat in London for over 7 years, the reply i had from him was.....
"Good luck with your debts"

It does make me very sad that the politicians of this country,and the O/R officer who get their pensions paid by the tax payer in this country,and also have a very good standard of living,
just seem to want more.
This home is my pension.

UPDATE : Today the 27/12/2005,i had a visitor from the Hull Court,the trustees' are applying to them on the 6th of February to force the sale of my home.

I wait for your reply to this e-mail.

Merry Christmas.


Whilst 10 Downing Street is bailing out the banks because of a guaranteed loan offered me by Advantage Loans which didn't turn out to be guaranteed and required a guarantor I am now in serious difficulty with Abbey National. Their fines on cheques I cannot cover are going to exceed my incapacity benefit.
I doubt whether I can actually go insolvent. If I am going to go bust then so should the banks who get into difficulty. There is one law for the banks and another for their customers

There are lots of people coming to Britain to work, earn as much money as they can, spend as little as they can to live on whilst here and send the rest home. All fine BUT surely this must be having an impact on our economy as the money is not going back in?

What are the goverment doing?
Everything is going up. I am on heating oil for my property and when I moved in 3 years ago it was £98 for 500 litres. It is now £300 for 5oo litres. My money has not changed in all this time. Yet electricity, petrol, food, everything has risen 3 fold. How the hell are we meant to survive. I have had my oil stolen twice because it is so expensive and I know people that are having their petrol stolen from their vehicles. The goverment are penilising us to pay for all the immigrants that are leaching of our economy. All I can say is if you read this Gordon Brown HELPPPPPPPP your people are drowning and no-one will help, especially the immigrants.

As a self-employed person I have been struggling recently with my business - getting enough each month to meet my credit committments. I start each month not knowing if I have enough to pay the mortgage at the end of the month, let alone any credit cards (which I have stopped using). Paying my mortgage and then the cards is my first priority. Luckily (?) I do not have children to support, so I do not know how people with children who are also in my parents manage.

Years ago when I had money to spare and I was employed I took out a voluntary addition to my work-based pension. Now I am in a really tight financial position I have tied to cash this in, but I am told I can not do it. There is legislation to stop us getting access to voluntary funds set aside for pensions. Obviously with the downturn in the stock markets, like everyone else I watch my voluntary scheme fall in value by £1700 a year. I only have less than £20 a week on food and other personal expenses.

One would think that the government would relax some of these laws when it comes to money I earned, and chose to put away for a rainy day, when faced with severe hardship circumstances. And I can not believe I am the only person in this sort of situation. Brown and Darling keep going on about how they want to help people in difficult hardship. Allowing people like myself access to money we worked hard to save woudl be one way I could avoid loosing my house, and keep paying my bills (liquidity, right?). Try writing to the Chancellor and the Pensions Minister and the silence is deafening!

My vote, come May, will be a protest vote: against anything Labour even if I have to spoil the paper!

The government should give help to first time buyers, for instance young couples with children for every child 1000 pound per year for 5 years. The first time buyers need help. The preis for properties should rise with our earnings and not in the way it has over the last few years. The Government and banks have made a fortune in the UK housing markets over the years and now the banks also lost a fortune trying to earn a fast buck in America! Lets find away to help our first time buyers.

Nice to see Mr Brown and his Darling aren't doing much to help, how about a drop in taxes on the petrol pumps. They say one thing, but do another.

hello im 27 years of age im a qualified consultant technician. i trained at college for 3 years after leaving school to do this technical job. i have two children of my own and my partner has three. i would like to know why as a skilled trades man earning only 20000 per year why the mortgage i have of only 88000 which is cheap in todays market already costs me 460 per month. this alone means i will repay around 56000 more than i borrowed will be increasing to a monthly repayment of over 600 pound. this in turn means the origional 88000 i borrowed will mean i repay around 200000 once i finish my mortgage payments. how can any young family afford to live in this country when the cost of buying a home for your family almost outweighs your monthly earnings. then on top of that is the rest of the financial burdens that come with trying to make a life for yourself. with the cost of living being so high its no wonder why many leave this country and go somewhere that is affordable for the average joe public. if i earnt the same money as most of these politicians i wouldnt mind paying there taxes. as i see it the job im employed to do not one of our government could do. and not one of them could live on the money i earn. so why do they persist on trying to make me homeless with the increasing cost of everything. i imagine it wont be long before they start taxing us on how much oxygen we use. i would like to see any member of the government change places with me for a month and see how they afford to live on a daily basis.

its is true that theprices of goods,utilities,etc have gone up.most wages are static.let me tell you its not doomand has to live within ones own means.I walk across the our shopping centre i do not see any dip in numbers ,people are spending and spending ,buying alot of rubbish.there is mothers day,fathers day sisters dayand ofcourse the big chritmas get toys woth hundreds which will not be seen inafew months. so forget the credit crunch,live now,everybody has to die one day

HSBC has done really well t come in and give mortgages as the other banks are pulling the plug on everyone.

I think the other banks should be fined for causing more chaos and difficulty for ordinary people on mortgages.

The other banks seem to be doing everything to keep the rollercoaster going and the Bank of England with it half hearted slow approach seems completely half baked. Perhaps they should go into the food business and join the Slow food movement?

If you do not have children, work full time, Earn £ 20,000 PA, Own your own house, Can you get anything from the Govenrnment, I raised my children single handed, got Taxed on the £ 20.00 a week maintenance I recieved from my Ex, Never claimed a penny, now I have to work an extra 5 years before I can retire, Is there anything out there that I can claim. ?

Insofar as to the provision of a mortgage, naturally once the right foundations have been put in place and fences revamped, [Sister Sledge] will be [Lost in Music], although didnt we sow some seeds along the line?
As for the credit crunch itself, indeed such measures are to the advantage of both the lender and borrower insofar as to provide long term stability in the comfort of ones castle.So, depending upon the term struggle, I would say control would be best suited.

I work full time. Live on my own as I am divorced and my children are grown up and left home. I work for the local government BUT I struggle financially. I earn £18000 a year but my rent(private) is half my monthly wage.Which doesn't leave alot for council tax etc etc. I need a car for work but unfortunately it is an older car which is diesel so costs me a fortune to run.I can't afford to get a mortgage and actually end up with more outgings then incomings. I don't smoke or drink and can't afford holidays or even to go out. Why at the age of 42 with a decent full time job should I be struggling?? I was better off when my children were at home and I was getting family tax & working credit. Now they have left home I can't afford to live.At the moment I am surviving with the help of my credit card but what happens when I reach its limit. I am having to look for a second job. I am sure I am not the only one struggling

Many homeowners are feeling the pinch with the credit crunch, higher bills for fuel, food etc. In todays world many people spend money on credit cards and have high levels of debt. With the ease of remortgaging and releasing cash from the increase in house values, people have been busy spending and increasing their mortgages to pay for it all. This was always a danger because as we know house prices can go down. Many people are now struggling with debt, those that have increased their mortgages are now facing negative equity as if they sell their house they will not be able to pay off their debts and remortgaging is becoming increasingly difficult to obtain with banks less willing to lend and rates not as attractive. So with people being less able to repay their debts, repossessions will be on the increase. We can already see the problems America is having with the high numbers of repossessions and the UK is set to follow, the forecast is that by the end of this year the number of repossessions will be more than the last three years put together.

mugabe has ruined the economy in the last 9 years and cut all ties with western countries (the only people who can aid zimbabwe in this situation). He hasnt made any efforts to fix the economy and clearly if he is trying, his tactics arent working. The other African leaders who are supporting him are enjoying the success of their countries while our zimbabwe goes to the fishies. Now by clinging onto power, how does he think its going to help the country. He deals with his political issues the way he did in 1980, now that worked but times change. We need people with new ideas, no hunger for enriching themselves while the people they represent suffer, people with new ideas and 'A NEW BREED OF POLITICS'. And lastly all i can say is that the army and police service man are some of the "stupedest" people i have ever can u back a man who feeds of your great work. Back at their homes, their families are experiencing the full blow of the zimbabwe situation while their commanders and senior officials enjoy lavish lives enriching themselves with the wealth that 33% of zimbabweans abroad sent back home! nonsense i tell you..

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