Preventing Foreclosure with Apple Cakes

Angela Logan saved her New Jersey home from foreclosure with apple cakes. According to a CNN report, Angela Logan, an actress, fell behind on her mortgage when her talent agency closed without paying her for commercial work. To make things worse, her entire second floor is bare except the beams and some plastic wrapping after a contractor took her money and never finished. To catch up, she turned to her other talent: baking her family’s favorite apple cakes. She set a goal to sell 100 of her delicacy, named Mortgage Apple Cakes, in 10 days at $40 a piece, which would reach her monthly payment and qualify her for the Making Home Affordable (MHA) program. Friends and family responded, and she sold 200 cakes to make the payment and qualify for the program. Her new mortgage decreased by 20%, and she’s back on track. It’s a unique solution to the foreclosure problem facing US homeowners, although not all borrowers show the same drive to meet servicers half way on workout programs. Logan may have pulled herself up by her bootstraps — or oven mitts — to make Making Home Affordable work for her, but she seems to be the exception. HousingWire has received numerous e-mails from borrowers that say their lenders are unwilling to work with them at all on the HAMP program because it presents a slimmer profit to them than the HARP program, in which they legally can charge borrowers fees. While the CNN article did not specify whether Logan received a Making Home Affordable modification or refinance — although the money she raised indicates an up-front fee common with refinancings — it presents a financing solution the industry could learn from. It would be interesting to see other borrowers join in, buying and selling apple cakes in order to afford mortgage payments. Perhaps lenders could get in on the game, lending apple cakes and then bundling them in whole apple cake pools or securitizing them on the secondary market. Investors could made millions trading the hot commodity. Rating agencies may even place them into triple-A status based on their extra apple flavor. Assuming the apple cakes don’t share the same shelf life of a 30-year mortgage, however, the apple cake bubble may soon burst. Lenders will be forced to foreclose if unemployment rises any faster than the dough. If the securitizations crumble, we may enter the worst Apple Cake Recession in generations. Fortunately, the Administration may form the Making Apple Cakes Affordable program (MACA) to make apple cakes affordable to everyone. Write to Jon Prior.