Latina Homeowners Surviving Foreclosure

On a beautiful summer evening in June, Martha Espinoza drove down the Grand Central Parkway heading home from a candlelight vigil for homeowners who lost their home due to foreclosure.

“I feel lifeless - like a piece of paper waving around," she said as she drove home to Jamaica, Queens with her 13-year-old son in the back seat. "Lately, I've been feeling like I'm going to have a nervous breakdown."

She paused and then her hazel eyes became glazed.

"I now look at homeless people and I feel like sitting down with them," she said. "I'm getting headaches two to three times a day...I pray to God...Sometimes I dread going home."

Espinoza, a 42-year-old woman of Puerto Rican descent, is a single mother of two, and an employee at three jobs as a health care aide. She is also one of more than 3,361 homeowners at risk of losing their homes to foreclosure in Jamaica, Queens alone.

Foreclosures have been increasing steadily in New York City and spreading rapidly all over the five boroughs. Since 2006, they've been hitting Queens the hardest, and according to 2007 data from the Neighborhood Economic Development Advocacy Project (NEDAP), Southeast Queens specifically has one of the highest concentrations of foreclosures. Brooklyn and the Bronx are not far behind. All of these areas are heavily populated by minorities. There are 597,773 Hispanics in Queens, according to the 2006 American Community Survey.

As thousands of homeowners at risk of losing their investments ponder their future, Martha, like many, is not sitting idly. At the vigil, a crowd of about 20 other homeowners and bystanders listened to her as she yelled into the bullhorn.

"I'm the one that shows the anger, because I'm so sick and tired of hearing you shouldn't have bought a home if you couldn't afford it!," she yelled. "My children grew up without a mother. We've created vultures who take advantage of the lower class. Those are the ones who can't deal when they don't have money. Yes, [foreclosures are going on] in Long Island, but it's in Hempstead, yes it's in Queens, but it's Jamaica, Queens."


An American Dream Interrupted

The foreclosure crisis comes at a time when homeownership among Hispanics was reaching a historic high in the U.S. The percentage of Hispanics who own a home has steadily increased from 41.2 percent in 1994 to 49.7 percent in 2006, according to the U.S. Census Bureau. Historically such factors as immigration to a new country, language barriers, lack of education, and the propensity to concentrate in high-cost locations such as New York City made homeownership an elusive dream for many Hispanics. In the 1990's however, the Latino population started penetrating into less costly, more rural areas, where homes were more affordable - a trend that not only contributed to more homeownership but increased wealth in the Latino population.

Still, many Hispanic households are more vulnerable to a fall in the economy. The wealthiest five percent of Hispanic households have a net worth that is less than one-half of the net worth of similarly ranked white households according to a 2004 report by the Pew Hispanic Center.

Espinoza's case illustrates the unraveling of the American Dream. Not only are many Hispanics losing their recently bought homes, but there is a great personal toll taken on borrowers who have no support networks and who, in many cases, are the first ones in their families to venture into homeownership.

Homeownership among Hispanics, which was once on the rise just two years ago, is now predicted to plummet according to experts.

"There is going to be a lot of pressure on rentals," said Silvia Martinez, senior advisor of the Federal Housing Finance Board. "It will be two to three years for things to stabilize, and a decade for things to return to normal."

Gregory Cahn, a housing counselor of La Fuerza Unida, a private company located in Glen Cove, NY that counsels individual and families for job training, and now foreclosures, agrees on the decline of homeownership.

"We're talking about first time homeowners," said Cahn. "They were lied to. They walked into a realtor and got reeled in. Imagine the commission: six percent on the real estate, then the mortgage broker makes four percent on closing costs. It's one stop shopping."

And for Espinoza, losing her home was a devastating setback in a life that already had its share of misfortune.

Espinoza grew up as an orphan in the foster care system. She says she was a drug addict at 17, raped by her foster fathers and beaten by her ex-husband. Despite all of this, she says she never sees herself as a victim. She says she once gave up a Section 8 apartment, because she thought she could work harder and leave it for someone else who really needed it.

“I was the only one who paid rent to live in a shelter because I was working,” said Espinoza as she sang to Celine Dion’s "You were my strength when I was weak" that was playing softly on her car radio. “I'm a hardworking individual."

One of the things she did to get back on her feet after leaving her husband was drive a cab. She says she slept four hours a day while going to college full-time. She now holds a bachelor's degree in human services and is determined to get her master's degree in social work in the near future.

Espinoza said her desire to own a home grew out of a deep urge to further herself and provide a better life for her two children, a then 17-year-old daughter and a 10-year old son. In January of 2005, after getting out of the shelter system and graduating from college, she was able to buy a three-bedroom, two-story brick house with a big bay window and shiny cream-colored siding covering the upper portion in Jamaica, Queens.

She calls the house a "cosmetically fixed home," because it appears freshly manicured on the exterior but is a mess inside - as was her subprime mortgage.

A little more than three years after buying the home, she's in foreclosure for the second time on the same house.

Weary from working three jobs, and having no time for her kids, she says she is constantly asking herself, "Where else can I work?"


Hispanics Targeted?

Many who think they are buying a house to better their lives are instead getting stuck with a gargantuan burden. Minorities, namely Hispanics and African Americans, more than anybody else seem to have gotten scammed into predatory loans, for many reasons, according to experts.

The foreclosure crisis' impact on Hispanics is more of a reflection of the widespread nature of the crisis in banking than an issue of targeting a particular population, according to Martinez. Basically, because banks tapped out of the white market, they decided to try lending in minority neighborhoods.

"When they found out they could get away with a lot, they did," said Martinez. "Advertisers would use radio, they would use Spanish language press, and have people go door-to-door."

She continues to say that soliciting door-to-door tends to convince people the fastest.

"[The financial terminology] is hard to understand, and people fall for it," said Martinez. "When people don't have financial literacy, that can happen."

Catholic parish offices, such as St. Mary Star of the Sea and St. Gertrude in Far Rockaway, Queens, have been inundated by phone calls with people asking for help for their foreclosure problems. About 65 percent of these congregations are of Hispanic descent, according to Kieran Harrington, Vicar of Communications of the Brooklyn Diocese.

"Many of the people should have, and could have, gotten a regular 30-year mortgage," said Harrington. "Many just weren't aware of the terms."

Subprime loans are those obtained by borrowers who don't have a credit score high enough for a home loan. They are typically offered at higher interest rates that are adjustable and often increase over time. When the adjustable rates increase, mortgage payments can increase so much that the borrowers can no longer pay their mortgage.

"We want to help people before they get into lis pendins," said Harrington, referring to the Latin term for a pending lawsuit.

In addition to helping people refinance with lending institutions, the churches of Far Rockaway, along with Catholic Charities and the New York Times, helps to make payments for people who have a viable chance at keeping their homes.

“When you sit back and look at it, it makes sense. I tried different brokers and I didn’t qualify for a mortgage,” says Espinoza.

Espinoza started feeling like something didn’t seem right when the lawyer she hired to represent her in the purchase insisted on paying for her fees and kept reassuring her not to worry.

"I was mentally and emotionally drained and exhausted," said Espinoza. "They were hovering over me. I felt trapped and alone. I didn't know who to talk to at the closing. I felt like something was going on, because I felt like an outcast. They made me feel like I was underneath them."

Now, after time has passed and she's realized what has happened, her confusion has turned into rage.

“How the fuck do I qualify for a mortgage for a piece of shit of a house?” Espinoza said.

Not only were the subprime loans she signed for a disaster, said Espinoza, but so was the house she bought.

“When we first moved in, we started showering and my basement was like a waterfall,” she said. “When it rained, it rained inside my home. It was an old home completely renovated - that's what I was told. I was very foolish and I really trusted my real estate agent.”

Besides the ruined furniture, Espinoza says the house is layered with illegal wiring that prevented her from obtaining insurance coverage on the house, and a serious mold and asbestos problem that is endangering her family's health. Since she’s moved in, she’s received two violations, including one for working without a permit and occupancy contrary to records from the Department of Buildings, each with a penalty of $2,500.

“How did this house pass inspection?,” said Espinoza. “It's all over my paperwork."

With all of these problems in the house, as well as the escalating interest rates on her mortgage, Espinoza has drained her retirement fund.

“I sued the real estate agent and the attorney representing me," said Espinoza. "They were all in cahoots together – the bank, to the attorney, to the real estate agent.”

Espinoza said the real estate agent referred her to the lawyer who took her to the bank.

In the end, Epinoza said she felt like she had to comply in order to have a chance at her American Dream. It was now or never.

“They know the ins and outs so they can get away with it,” said Espinoza. “It’s all an underground mafia.”

Millie Muñoz, 47, is another single Puerto Rican homeowner facing a similar situation. She is a dental assistant and grandmother of two living in East New York, Brooklyn - only a little over five miles away from Espinoza.

Walking down her street as a late-June sun shower subsides, the humidity creeps back up from the street.

"It's a really quiet neighborhood," she said of her predominantly Dominican neighborhood where she was born and raised. "Somos todos trabajadores." (“We are all hard-working people.”)

Her half a million dollar house, also bought in 2005 with a down payment of only $5,000, is a quaint, two-family brick duplex with iron black railing as shutters. Pink flowers are peeking out of them - distinguishing the house from the others on the block. Its cheery facade masks the problems inside.

Sitting in her living room, Muñoz is somewhat reserved.

Ever since her closing date, Muñoz remembers that instead of toasting champagne, she was grieving.

"I was crying, crying, crying, and everything just turned sour,” said Muñoz. “I wish I had never gotten this house."

Muñoz also went to different real estate offices and got accepted by one in particular – Team Mates Realty. The ramshackle house Team Mates sold her did not even appear to be habitable, but she was promised that it was going to be remodeled by the seller.

After three months of back and forth with the realtor, Muñoz told the group that the $575,000 the sellers were asking for was too much with her yearly salary being $33,000. Team Mates called her back and said the price would go down to $525,000. Muñoz still thought it was too much, but she was told that the price wasn't going to go any lower.

"They didn't give me too much time to think about it," said Muñoz.

Muñoz said her loan officer from Team Mates - whose name she declined to disclose, tried to appease her by saying the mortgage would be $3,400 monthly, but that she would only be paying $800 a month out of her own pocket, because she’d be renting out the first floor and the basement. When she asked him about how making repairs around the house might affect her investment, she says he told her, "No, you won't have any problems."

Muñoz remembers clearly her closing date on May 31, 2005 in an office on Queens Blvd.

"My attorney that day was late, and she said, 'We gotta hurry up, I have another closing today,’" remembers Muñoz. "Every time I asked her a question, she kept pushing me to not ask questions."

When Muñoz finally had the papers in her hand – something she thought she’d be excited about, she just felt, as Espinoza did, like something was gravely wrong.

When she got home that night, her father asked her, "What's wrong?," recalled Muñoz. “I said, ‘I did the closing today.’ He just walked away. He knew it was a mistake. I should've gotten my family involved to tell me the right thing to do, but I thought I'm a grown woman."

Muñoz' instincts were right. She said when she took a closer look at her closing price on her documents, she discovered that she is paying off a $550,000 mortgage, not the negotiated $525,000.

Muñoz started off paying $2,464.86 on one of the two loans, and $956 on the other, when she first moved in. After two years, the bigger mortgage from Washington Mutual went adjustable. From her once fixed rate of $2,464.86, she is now expected to pay $3,081.97 monthly, in addition the still-fixed rate of $956 to EMC bank. Once her rate went adjustable, Muñoz was not able to afford the payments - even with two of her three grown kids living on the first floor and helping her pay rent. Soon her savings were depleted, and then it was either pay her mortgage or let her credit cards go.

In September of 2007, Muñoz stopped paying Washington Mutual.

In November of 2007, she stopped paying EMC.

After writing four "hardship letters," something most lenders require in order to qualify for a loan modification or repayment plan, Muñoz is still waiting to hear an answer back from both lenders.

She received a court summons on March 20, 2008 claiming that she never wrote a hardship letter to Washington Mutual. It included 13 complaints, and with the aid of an expert dealing with foreclosures, Debbie Seabrook, she counterclaimed each one. Muñoz went to court to have the letter notarized and mailed it to Washington Mutual in the courtroom.

So far, she says she has had no response yet from Washington Mutual.

"If my hardship letter worked, I could have made my payments with modification," said Muñoz. They would freeze your payments to where they are at to get you back on your feet for six months, but I don't think they're really willing to help you. They don't back up their word...It's just back and forth...That's how they win - a lot of people don't have the energy and force to fight."

As a rainstorm started and thunder clapped loudly outside her window, she paused to say how the rain makes her feel some tranquility.

But in a few seconds, she snapped back into her daily reality.

"I stopped crying, and now I want revenge," said Muñoz.


Nobody Cares If We Hang Ourselves

For the past two years, the constant worrying about her situation, and the fact that she's getting advice, but not immediate help, has resulted in many sleepless nights, mood swings and a week of lost wages for being hospitalized.

"I've been in and out of the hospital for ingrown hairs all over my stomach due to stress," said Muñoz. "They had to cut a hole in my stomach. It could've turned into gangrene."

She says that on a day-to-day basis her moodiness sometimes makes her want to scream at everyone with whom she comes into contact, "Don't talk to me!," but then her responsibilities at work and at home sink in. There have been many nights when she could not sleep and she would find herself unable to concentrate at work. The daily reminder calls from lenders to her job do not help matters.

It has also been a strain on the family.

"Since I bought my home, [my children and grandchildren have been] lucky if they got one gift," said Muñoz regarding the holidays.

Espinoza remembers times when she was so broke trying to make her house payments that she couldn't even buy food for herself or her children.

"Is it fair to my son?," said Espinoza. "Do you know how guilty I feel that because of trying to improve their quality of life, that I subject them to this?!

Between the daily stress of breathing in mold and asbestos everyday and financial strains, Espinoza says she became afraid of the home.

"I feel more now that I need to talk to someone," said Espinoza. "I could see how you really could lose control. Last night when I was watching the news, a girl robbed a bank - you have to now wonder what are they going through?"


Past Crying For Help

“When you complain to politicians, they say, “Listen lady, millions of Americans are going through the same thing,” said Espinoza.

The perception that the government is doing nothing to help them is making many foreclosure victims take matters into their own hands.

Espinoza decided to stake out a foreclosure auction that are held every Friday in the Queens Supreme Court to see if she can catch her predators in action. She is convinced that they are the same people involved in a Queens mortgage scandal with another woman homeowner in 2007. Earlier this year, the New York Daily News, reported that a broker known as 2000 Homes had swindled Eva Murphy, a 63-year-old former airport worker.

Espinoza discovered by using E-courts, a free case information services provided by the New York State court system, that her attorney's firm which was active from 2004-2006 started using different names but continued to use the same address - the same address as 2000 Homes in Queens Village. The New York Daily News also reported that 2000 Homes has been fined $3,900 for their aggressive sales tactics.

After reading this article, Epinoza became convinced she was onto the people who cheated her and wanted to go to the auction to see if she recognized anybody, as she was told by an expert that investors and those involved in property flipping are always at these auctions - as are those who were connected with the sale of her home.

According to Espinoza, her attorney, whose name she says she is not allowed to disclose due to a confidentiality agreement that he made her sign, sued the estate of the former owner of her house who died in 2004.

"They stole his house," said Espinoza. "He's the one that makes the things legal to get away with this stuff."

On one Friday morning in late June, Espinoza awaited with a tense face as about 70-100 people leisurely gathered in the courtroom. Everyone was finally called to their seats at 11:22 a.m.
A man announced, "If you are the successful bidder, it is payable in cash immediately. Money orders and coupons are not acceptable."

After waiting anxiously through more than 34 bids, Espinoza hastily ran outside to take pictures inconspicuously of some of the men she recognized from her dealings.

They looked at her suspiciously as they entered their cars.

"What?!," Espinoza yelled. "I'm taking pictures of the block. It's a free country!"


The Harsh Reality

Currently, there are two alternatives to foreclosure for homeowners according to experts - "short sales" and "deed in lieu of foreclosure." A "short sale" is when the homeowner sells the house at a market value that is less than the amount owed on the mortgage, but the lender usually agrees to forgive the remainder of the debt. In a "deed in lieu of foreclosure," the homeowner hands over the property to the bank with the bank's consent. It is then up to the bank to sell the house. As in the "short sale," the lender tends to forgive the remaining debt.

However, there are downfalls to both. One broker in Jamaica, Queens, points out that a short sale appearing on a credit report is just as bad as a foreclosure. It still means the borrower couldn’t pay the mortgage.

The obstacle that victims of predatory lending face is getting educated about these alternatives and figuring out whom to trust.

Espinoza was under the assumption that a law existed that forced banks to send a default letter 30 days after a payment is missed. Hers never sent such a notice.

According to Jay Kim, a legal advocate at the nonprofit group, Common Law, Inc., this lack of notification is not uncommon.

"Although some states require lenders to provide notice of and the right to cure defaults, New York does not," she said.

Recently, the policy has changed as a result of a new foreclosure bill signed by Governor David Patterson on August 5, 2008. If Martha's bank decides it wants to foreclose on her after September 1st, it will have to take certain measures to do so.

"The new bill requires lenders to send homeowners with high cost, subprime, and non-traditional home loans a notice stating the number of days in default, amount owed, and the telephone number of the lender or servicer," said Kim.

Muñoz has also lost trust in the institutions that she used to buy her home. She believes that her lawyer should have protected her.

However, Muñoz' attorney, Leesa Shapiro, blames the problem on her former client, saying that Muñoz had 60 days to back out of the mortgage and that she should have chosen a broker that she was more comfortable with.

"Are they still in business?," she said when asked if she's heard of Team Mates.

She denied ever dealing with Team Mates before.

The owner of Team Mates, Salvador Martinez, also blames Muñoz for the foreclosure.

"Anything signed with her lawyer's approval is out of our hands," said Martinez. "It's easy to blame left and right when you're in trouble."

However, he does not hesitate to say that it's the bank's fault that she was approved for a mortgage.

Told that Muñoz accuses Team Mates of encouraging her to buy the house against her judgment, Martinez replied, "I don't see anything wrong with it. A sale is a sale. If you know a house is too expensive, be responsible. Don't buy it."

Lavonia O'Neil, a senior personal financial representative and lending specialist at Washington Mutual, did not work on Muñoz' case but says that the responsibility for such cases rests with everybody involved - the bank, the attorney representing the client, as well as the client.

"The real estate sends [the homebuyer] to a mortgage broker," said O'Neil. "There are some situations where the lawyer often works with the realtor."

She says the pressure on prospective borrowers is intense.

"The attorney you think is helping you, but is really making sure the entire plan is executed," said O'Neil. "Some mortgage brokers were making $25,000 to 30,000 a month without a college degree."

O'Neil said that subprime loans gave loan officers a higher commission. The riskier the loan, the more profit for them.


Some Relief To Ease The Pain

Many counseling services have become available within the past few years to help address the issues that foreclosure victims go through, but some advocates say not enough is being done.

"There were 15,000 foreclosure cases in NYC last year, and only 25 lawyers dealing with them," says Lionel Ouellete, an advocate who has been working to fight predatory lending and foreclosures since 2002.

Ouellete is executive director of Communities, Homeowners and Neighbors Gaining Economic Rights (CHANGER) - one of the newest non-profit organizations in New York City that is working with people dealing with foreclosure. It was founded in 2004 by a group of low-income homeowners in New York City with the belief that as a community they could work together to demand a change in the mortgage lending industry. Not knowing where to turn when she first started having problems paying her mortgage, Muñoz discovered Erasmus Neighborhood Federation (ENF), a community-based non-profit that serves the East Flatbush community in the areas of tenant rights and affordable housing. Advocates of ENF told her that she shouldn't have even qualified for the house with her salary of $33,000 a year. Shortly after encountering ENF, Muñoz met Ouellete from CHANGER who motivated her to continue making her voice heard.

Through weekly clinic meetings at New York Assemblyman's Darryl C. Towns' office in Cypress Hills, CHANGER has taught homeowners facing foreclosure how to defend themselves in court, to be wary of misleading terminology in the mortgage industry and created a support network and a family for those who can't go to their families for help.

During a typical Tuesday night meeting, six to seven homeowners, an accountant, two attorneys, and the executive director and housing organizer of CHANGER sit around a large conference table to discuss the cases of two select homeowners. The homeowner whose case is studied rotates each week, but is usually whoever has the most pressing court date. For three hours they all scrutinize mortgage papers and court summons' in detail and discuss the best methods to retaliate.

Seabrook, the woman who helped Muñoz file counterclaims against Washington Mutual, is a regular at the meetings and the foreclosure auctions in Brooklyn and Queens.

"The courts are just rubber stamping anything that comes before them as credible," she said. "Nobody wants to recognize the fraudulent deeds. They just can't see anything beyond what the bank is putting forth or they don't want to take responsibility. Everybody is wearing blinders."

As the weeks go on, the members of the clinic start knowing each others stories as if they were their own.

After working with CHANGER for the past four years, many members say they trust Ouellete because he is sensitive to their feelings and seems to understand them. In addition to the weekly mortgage clinics, he brings them together for rallies and vigils and sought out an old colleague, Hermon Getachew, who worked with him at his previous award-winning project in 2004, called Urban Mana, to help the members of his group with the emotional aspect of foreclosure.

"To help each other, support each other, go to each other's court dates - that in itself is helpful," said Getachew, founder and healer of Urban Healing - one of the only emotional counselors dealing with foreclosure victims in New York City. "We are afraid of what is going to happen if we break down. There is a lot of fear [of what is going to happen] and folks want to be proactive - work through it and be brave."

Muñoz says being in a group like CHANGER has made her feel stronger.

"Before [I joined CHANGER] I didn't have fun at all," says Muñoz. "I go out more now that I'm in the organization. I felt alone, now I feel wow, there are people like me. I want to go out and help others just like myself."

Despite the toll that foreclosure has taken on her mind and body, Muñoz says that the organization has taught her how to help herself, as well as others who are going through the same thing. She tries to attend the mortgage clinic every Tuesday, and she does not miss the regular meetings and political rallies the group also sponsors.

One Tuesday night, her usually neatly arranged wavy black hair was a bit disheveled, and she looked more tired than the week before, but her facial expressions never failed to show concern for the others in the group and she nodded in agreement whenever someone shared a similar story.

As she introduced herself to the new members of the group, she said, "I'm ready to fight," while her big brown eyes fight back tears and she tries her hardest to smile.

That night she agreed to help write letters to other homeowners approaching foreclosure to let them know about CHANGER.

"I do it because I want to make a difference," said Muñoz. "I don't want anybody else to go though this. When you do want to buy a home, don't do things blindly - don't have just one attorney, have three."

Many people feel embarrassed to talk about losing a home in front of other people who are not going through the same thing. Shame is a palpable emotion for them.

"People are going to tell me I'm stupid," said Muñoz. "People are not compassionate. Even my father would tell me I'm stupid for signing the papers."

She says that the only time she really feels free to speak her mind is at the CHANGER meetings.
Neighborhood Housing Services (NHS), another non-profit organization aiding the five boroughs in foreclosure prevention, provides financial counseling to those in need. But Helen Maxwell, a foreclosure counselor at NHS, says she has seen other problems among her clients.

“Some people say they have sleeping problems or start drinking more,” Maxwell said. “I then give them a general referral to a therapist or psychiatrist.”

Of course, she has no way of knowing what clients do with that referral.

“We don’t get a lot of clients that speak Spanish," said Cerinelly Disla, a Spanish- speaking counselor of the NHS of Jamaica. “Probably say 30 percent throughout Southeast Queens. Hispanic clients don’t really like to come back. Many feel ashamed –don’t understand what’s happening.”

Getachew agrees with that observation.

"Folks in poor or working-class communities tend to use therapy a bit less," said Getachew. "It's never presented as an option because it's very expensive, and there are some taboos, as well as language barriers, cultural sensitivity - they want people to understand them."

She says the need to get help is imperative, because the post-traumatic stress can be severe.

"Like a soldier that comes back from war, these are wars that are based on communities," said Getachew. "People don't have the tools to defend themselves, and their trauma is not validated. They are basically fighting for their lives."

Espinoza is only one in an army of thousands. At the end of a long summer, she retreated from the group, according to Ouellete, and had not been seen at meetings. But Ouellete remained hopeful about her situation. She may be weary, as some members of the group concur, but she's not surrendering.

This assessment echoed Espinoza's own words several weeks earlier when she contemplated her future.

"I'll go sit on the city court steps," she said. "They're not taking my house."