Dr. Val Farmer
Rural Mental Health & Family Relationships

Avoid Foreclosure At All Costs

April 5, 1999

I received a story from a successful farmer who was forced out of agriculture in 1998. He had many insights about the emotional and legal aspects of his battle with his lending institution. He titles his unpublished manuscript, "Final Harvest." This column contains excerpts from Chapter Five, "Don't do it, and why not."

I doubt that any of you has ever read and studied every word in that pile of papers you were asked to sign when you closed a loan. I assure you they give your lender every single advantage fine legal minds tempered with years operational experience could possibly put on paper. Somewhere on those pages they make sure that if all payments are not made, YOU will have the honor of paying all collection costs.

If you were a relatively naive farm boy like me who never dreamed he would ever miss a payment, you probably easily agreed to your lenders seemingly endless quest for collateral and when you left his building that closing day, he had in his possession what amounted to a blank check on your net worth.

... When you break the provisions of your loan contract and your loan meets the criteria, when it crosses some defined line, you cease being a customer and are seemingly transformed into, for lack of a better word, the enemy. In all fairness to the institution, when the transformation occurs, various state laws that were passed to protect the debtor, are activated.

The state laws generally assume there is an adversarial relationship between lender and debtor and strict procedures must be followed or the lender may lose the right to collect. There will be no friendly chat with your loan officer any more. In fact he will probably lead you to another part of the building and introduce you to the person that will, "be your contact in the future."

... Whether you know it or not you are now paying a very expensive lawyer to plot your own demise. Your lender almost certainly has used one of those blank checks against your net worth to buy very expensive legal advice even though their own "collector" has knowledge and experience that far exceeds yours.

Hopefully you will now again feel my spirit reach out from this page, throw you up against the wall and lovingly slap your face a couple of times to make sure I have your undivided attention for what I am now going to say. If you have not yet searched out and hired the very best bankruptcy attorney you can find, YOU MUST DO IT NOW. [Later in the chapter, the author suggests even better advice, "You should never let the foreclosure begin."]

...Well, if there ever was a time for you to be a realist, it is now. You are in a war. Your opponent has knowledge, experience and, a very expensive lawyer you are paying for that is leading the attack. They know the laws, the tactics and where you are vulnerable. It would be insane not to have someone on your side that knows your rights under the law and the tactics used in this kind of war. Someone smart and knowledgeable who is not emotionally involved that can keep you in touch with reality.

... I often used to wonder why lenders never wanted to lend more than sixty or at the most, seventy percent of market value on such stable assets as land. There is almost always some inflation which should make land worth more each year, at least monetarily. And each year you make payments, the land has greater collateral value to the lender.

... There are a lot of factors that affect the sale of an asset. For instance, agriculture has long term up and down cycles. I believe there is a high degree of probability that your lender’s hatchet man will not agree to delay the sale of your assets a few years in order to sell at the most favorable point of the cycle. Obviously there also are better and worse times of the year to sell farm assets. Again, you should not expect your lenders AX GUY to lose any sleep worrying and working to get the prime time to sell your stuff.

Is there much of a difference between the best time of the year to sell something and the worst? You better believe it. And how about who is hired to handle the sale? I know of one potato farmer whose machinery was sold by an auctioneer who knew nothing at all about potato machinery or what it was worth. To make matters worse, the sale was held in the middle of small grain harvest. I assure you, that elderly farmer took a terrible hit that day. ...

[A couple of paragraphs from the next chapter returns to the point about delay once the legal process has started.]

... The opposition lawyer knows the institution that hired him is not paying his fees so there is no pressure for a quick settlement for him. Your own attorney probably has kids to feed too and I think it would be unfair to expect him to passionately work to end your expense, and consequently, his paycheck.

I am not necessarily suggesting that either of them is consciously or unconsciously trying to make it last, just that they have no reason to end it either - other than humanitarian. Do you see it now? You are the only person participating in the war that is crying out for it to end. The slow motion train wreck continues.