Bob called wanting to look at a small house (about 900 sq ft) we had for rent/sale near the University of Louisville. The house appealed to Bob because he could see from the outside that this house had been beautifully updated and well cared for. In qualifying Bob as a renter for the house, he told us that he had been on his job for 16 years, he earned in excess of $60,000/year and that 46 year old Bob has lived continuously in the same one room apartment for 2 years, paid his rent on time, was unmarried, had no children, and had $41,000 in his bank account. When asked why he wanted to move from his one room apartment, Bob told us that the apartment was no longer suitable for him because he would be bringing his elderly mother to live with him and needed more room. Bob was an ideal renter candidate, providing the information he gave us was accurate (and so often it is not).
Why was Bob interested in renting and not purchasing? We had to find out. Bob told us how he’d been single all his life and had always owned his own home and never had any debt. He had 1 credit card which he paid down to $0 every month. (A quick check while we were on the phone together revealed that Bob had purchased a home 15 years earlier for $160,000). Bob said that he’d met the love of his life 3 years earlier and they married. Wife thought they needed a larger home, which with Bob’s and her income, they could afford. They sold Bob’s home and purchased a $220,000 home. Wife enjoyed access to Bob’s good credit and good income. Within 6 months, Wife had accumulated 7 credit cards and $50,000 in credit card debt. Bob had warned his new wife 3 months earlier, that he didn’t want to see any more new things around the house, that he’d never been in debt before and that she had to close the credit card accounts and pay them off. Instead, she continued to make purchases. Bob filed for divorce and moved from the new family home. Wife refused to contribute towards the mortgage so Bob kept the payments current as long as he could, but it was too much for him alone. He encouraged wife to sell the house, but she refused and remained in the home until it was foreclosed upon 1 year later. Bob told us that he’d been paying off all of the marital debt for the previous 1 ½ years and that he was again debt free, living in his small studio apartment. He also shared that he’d recently gone to his financial institution, where he’d banked for 25 years, but was turned down for a home loan because of the foreclosure and that he’d have to wait another year before they would lend to him.
Neil, a skilled negotiator, told Bob that if he could prove his good credit, excepting the foreclosure, he could possibly get a small local financial institution to offer him a loan. Bob was ecstatic until I told him that it was L & N Credit Union I planned to speak with. Bob’s smile ran from his face, hung his head, and told me that it was L & N that was his financial institution for 25 years and that they are the ones who had turned him down. Neil asked Bob to sign an authorization for L & N to speak with Neil. With that done, Neil met with L & N Vice President and asked that Bob not be run through the loan computer program, which because of the recent foreclosure would exclude Bob as a borrower, but to look at Bob’s L & N account, review Bob’s handling of his account along with all other credit, including the $50,000 credit card debt that Bob successfully paid off and closed over the last 18 months.
After careful scrutiny and consideration, L & N loaned Bob $110,000 towards his $150,000 purchase of a beautiful new home. Bob was so happy, his brother came to us and he too is now the owner of a new home.