A bank lent her $142,000, which covered the sale price and loan fees, and provided $20,000 to fix up the place. To Ms. Carter, it seemed as if the bank was paying her $20,000 to take the loan. She did not even have to come up with a down payment.
After the deal closed, Ms. Carter discovered the house needed structural work that would cost far more than $20,000. Then the man she married about a year after moving in received a diagnosis of late-stage cancer.
Ms. Carter soon fell behind on her mortgage. After a bank advised her that the best way to settle her mortgage debt was to evacuate and let a lender sell the house, the couple moved out. Instead, banks let the house deteriorate, and now it is an eyesore in its Englewood neighborhood — the kind of house that devastates nearby property values.
“This place is a disaster,” said a neighbor, Ernest Hearny, surveying the trash-strewn yard of the boarded-up home. “There’s nothing inside. Gangbangers got in there and got high, had sex. The odor is so bad. They took the pipes, the plumbing, everything. It started going downhill when the people moved out. ”
Ms. Carter’s story is more than an all-too-familiar tale about the ravages of predatory lending. It is also an example of why the Woodstock Institute, a nonprofit research group specializing in housing issues, just reported that Chicago’s inventory of foreclosed homes continues to be at record levels. Red tape, clogged courts, victimized borrowers and overwhelmed banks have created a glut of abandoned homes mired in a foreclosure nightmare.
The federal government and big banks have offered programs to mitigate the damage for overwhelmed borrowers. But as Ms. Carter and her husband struggled to stay in their home they tried to tap into the tools, only to be driven to the brink of bankruptcy as their home descended into blight.
“It was my first time buying a house by myself,” said Ms. Carter, 60. “I did a poor job. I’m telling everyone I know not to do this. I wanted a place of my own so bad that I didn’t follow the proper steps.”
Ms. Carter’s financial quagmire began when a friend in the mortgage business told her about a distressed two-flat on South Morgan. A bank had foreclosed on the property and was looking for a buyer.
“We thought it was a good deal even though it needed repair,” said Ms. Carter, who did not hire a home inspector. She and her husband-to-be Morgan Carter, a former WVON-AM radio host and newspaper publisher, planned to live on the first floor and convert the second into rental property.
At the suggestion of a mortgage service company that is now defunct, Ms. Carter obtained the $142,000 loan from Washington Mutual Bank. (Years later, WaMu was accused by a United States Senate investigative committee of igniting a “mortgage time bomb” by making thousands of subprime loans that were destined to go bad.)
After she agreed on the price, John Ptak of the Westland Group in Crystal Lake issued an appraisal that valued the property at $142,000, a perfect match to her WaMu loan. The Westland Group’s telephone has been disconnected, and Mr. Ptak did not respond to an e-mail.
In December 2004, the couple moved in, confident that the $20,000 would cover the repair work.
“I called heating, plumbing contractors, an electrician, to come in and tell me what I had to do,” she said, “and they started telling me they didn’t know how anyone could have sold the house to me because it wasn’t up to code.” The contractors’ estimates totaled $50,000.
The couple married. Then in late 2005, Mr. Carter became ill. “He was going in and out of the hospital, and our income fell,” Ms. Carter said. She was soon missing mortgage payments.
joshea@chicagonewscoop.org
boshea@chicagonewscoop.org
Article source: http://feeds.nytimes.com/click.phdo?i=eca2d75e58e86f8260f241f6f0983505