A bad debt, a family home lost in small town Minnesota

Margie Hoyt is losing a home that’s been in her family for generations because of a loan she says should never have been made.

A source in our Public Insight Network who lost her job in April, Hoyt told us Thursday she has 30 days to vacate her home inMadelia and then another two weeks to get her stuff out, including the major appliances.

Hoyt, who served on Madelia’s planning commission and is now a city councilwoman, wanted to tell her story to let others know the collateral damage of a bad debt. She’s about to pay a price in this recession for a financial mess not of her own making.

Here’s what she told us:

Hoyt, 50, cared for her father for two years at the family home in until a few months before his death in December 2007.

The house, in her family since 1926, should have been debt free, except in 2003, she says, her 84-year-old father agreed to a 15-year, $20,000 loan for siding. Two years later her father refinanced for $26,000 and 30 years.

She knows her father showed poor judgment, but said lenders should have known better, too, given her father’s age and finances.

The final hit came, she says, when the homeowners insurance lapsed. To get it re-insured, she said, an inspection was required, which found problems with the roof. What was a $160.09 monthly payment jumped to $500.

Her father, she adds, had no life insurance and his estate is insolvent:

Because an 84 year old man was approved for a $20,000, 15 year mortgage, I now face being evicted from a home his sister lived in and with whom I spent several summers with as a child during the 1960s.

I came to live in this house with my dad in 1993 and had a daughter while living here and going to school in 1996. My daughter is the 4th generation to live in this house.

Given my financial situation and trying to get back on my feet after my dad passed away I couldn’t afford a lawyer to help with the probate or negotiating with the lender on the mortgage.

The job I had (night shift auditor at a local motel) only paid $7.25 with no benefits so it’s not like I can get a loan.

About 1 of 83 Minnesota homes is in the foreclosure process, according to a recent estimate, with a big jump in pre-foreclosure notices in Minnesota during June.

So even as the economy bottoms out, these problems aren’t going way soon.

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Hoyt’s story got us thinking about all the fallout from the recession and mortgage crisis. Many people messed up their personal finances and are paying for it now.

But what about those who did the right thing and still got sideswiped?

Use this form and tell us how you’re dealing with a personal financial problem that you didn’t cause.

Below check out stories people in our Public Insight Network are telling us about the housing market where they live.

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