TILTON - Joe Kevlin stood on his porch, holding back tears as he braced himself for the reality that by Monday, a number of interested parties with $5,000 checks in hand may be trying to buy his family's home.
Joe and his wife Lynne aren't interested in selling, but their house payment, which is based on an adjustable-rate mortgage, doubled within the past year, they said. Now they're in a foreclosure situation that is becoming more and more common across the country.
The Kevlin's last-gasp effort at declaring bankruptcy might be their only chance of keeping the home. The family is $10,000 behind in their mortgage payment, and if their house is auctioned off, they won't be getting any of the buyer's money.
"The only time I have felt this helpless is when I was drafted (for the military). Try to sit down with your family and tell them you are probably going to lose your home and have to give away your pets," said Kevlin, a 57-year-old Vietnam veteran who until this year had been meeting his financial obligations, he said.
The Kevlins, like many families, encountered serious money problems after refinancing their home through an adjustable-rate mortgage. Their house payment went from $1,000 in past years to nearly $2,000 when they consolidated their bills and dropped a local bank mortgage that offered a fixed rate.
Kevlin was recently diagnosed with diabetes and lost his job, creating a situation where money wasn't coming in like it used to be. He lost his health insurance during a time when his health care costs rose dramatically.
The Kevlins thought consolidating their bills was a smart choice considering that the financing plan they were given appeared to allow them to pay a slightly higher payment than the mortgage alone.
Both Lynne and Joe Kevlin admit to being at fault for not fully understanding the terms of their refinancing plan, but say they are among the many well-meaning homeowners who are now in big trouble after being sold on a plan by a large national financing company.
Kevlin said as their interest rate began increasing, they began to live paycheck-to-paycheck, and their plan had them barely paying off any of the principal loan on their home, in which they have lived for the past eight years.
When he lost his job and his medical problems arose this past year, they missed several payments, forcing their home onto the foreclosure lists. Now, their post office box is filled each day with offers from people looking buy their home for cheap, and from financial companies asking to take more money from them to help them through the mess.
Lynne Kevlin said they didn't ignore their mortgage payments, but simply found themselves in a situation where they hit tough times while their interest rate kept jumping.
Joe Kevlin said isn't one to not pay his bills, noting that he has paid off mortgages on other homes. He has six children; three of them are adults living elsewhere and three still live at home.
However, he said the current situation is the toughest experience he has ever had, as he and his wife are scrambling to declare bankruptcy to simply save their home, which could be bought below the assessed value.
The family will keep their children away from the home on Monday when interested parties are expected to gather there and possibly tour the home to decide if they want to make an offer.
The Kevlins say they don't want people's sympathy, but rather want their struggles to be known so that other families might not make the same mistake.
The Kevlins aren't the only ones in trouble. New foreclosure rates hit their highest-ever level in the fourth quarter of 2006, according to the Mortgage Bankers Association, with both homeowners and financial services companies losing during a time when the housing market has dipped.
New Hampshire foreclosure rates aren't nearly as high as those of other states, but the situation is widely being attributed to a combination of factors including a declining market and the problems of subprime loans, which are typically granted to people with less-than-perfect credit.
Subprime loans offer low interest rates for the first two or three years, but in many cases allow for the rates to be adjusted up every six months to a year, often making the monthly interest payment much higher than a buyer originally planned for.
Chris Guilmett, a mortgage consultant and assistant vice president at Laconia Savings Bank, said a number of financial service companies have been blamed for "predatory" lending techniques that actually target prospective buyers with lower credit scores. He said the "magic number" for being in the subprime target area is a credit score of 660 or below.
Guilmett said subprime loans often see people being sold a mortgage product that has offers lower initial rates that appear to be too good to be true. He said consumers have the responsibility of making a smart choice when it comes to picking a plan and home they can afford, but he said some mortgage brokers are not educating buyers about the long-term impacts of options that include adjustable rates.
"In some cases the consumer is not being given the pitfalls of what could happen," said Guilmett, adding that buyers must be sure to ask questions and understand what they are signing.
He said the problem comes when people are only covering the interest on their mortgage or when extremely low payments have the principal on the home rising.
Guilmett said many find themselves paying a rising interest rate on a higher principle thus leaving them unable to meet the payment demands. He said such a situation is referred to as "negative amortization" and it occurs when the monthly payment is insufficient to cover the interest thus resulting in the balance increasing.
Guilmett said homebuyers should be aware of the many different mortgage packages being sold because each is designed to fit a different prospective buyer.
He noted that an adjustable-rate mortgage might be the right choice for someone who plans to only stay in a home for a couple years and hope the market shows increasing value before selling, or for someone who expects their income to increase substantially as the loan term progresses.
Guilmett said the best way to approach borrowing is to realize that you aren't being sold a home but rather a home mortgage, and that each person's choice needs to meet their particular needs and financial situation.
As a mortgage consultant for a local bank, Guilmett said underwriting guidelines sometimes require him to turn down an applicant with less than perfect credit thus creating a situation where they could turn to subprime options.
"What I see, and it bothers me, is that I could end up saying 'no' to somebody, but I know one of these predatory lenders is going to say 'yes,'" said Guilmett.
The banker said that while a single monthly payment may seem more simple, individuals should think hard about whether they want to draw out a car payment or credit card debt over 30 years and pay interest for that period. Guilmett said he often asks consumers if they really want to pay 30 years of interest on a car they won't have for that period.
Kevlin said his older children have offered to help him with his money woes, but he believes it is not their responsibility and has decline the offer.
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