Family Narrowly Skirts Foreclosure
A close look at a how California homeowners pulled off a short sale.
The homeowners: April Reed, 35, a real estate agent, and Eric Reed, 38, an electrician.
The home: In October 2005, the Reeds bought a house for $294,000 in Chester, Calif., a small mountain community east of Chico, Calif., and west of Reno, Nev. The three-bedroom, one-bathroom 1950s ranch home offers 2,050 square feet of space, room for their family of five.
The mortgage: The Reeds financed 80% of the home with an adjustable rate mortgage, which started at 6.6% for the first two years and reset to 8.5%. The couple got a piggyback loan for the remaining 20%, at a rate of 10%. Their mortgage payment was initially $2,050 a month but reset to $2,350 in September 2007.