After a Nightmare of Refinancing, Hope

New York Times
By Abby Aguirre

HACKENSACK, N.J. — In a white house on Marvin Avenue, a light-filled street of green lawns here, Qiana Haywood sifts uneasily through a formidable stack of papers.

“Wells Fargo, Wachovia, IndyMac, Countrywide,” she says, flinging documents across a kitchen table. “Washington Mutual, Chase, Ameriquest, American Brokers Conduit, American Home Mortgage Service.”

Surveying the spread, she adds, as though identifying a clue, “A lot of them have ‘American’ in the title.”

The home, owned by Ms. Haywood’s grandmother, Doris Canales, 73, is in foreclosure, threatening with eviction not only Ms. Canales, but also Ms. Haywood’s mother, Pamela Haywood, 51; Ms. Haywood’s brother, Vernon York, 18, a full-time student; Ms. Haywood’s disabled uncle, Charles Haywood, 49; a tenant who rents a room; and Ms. Haywood herself.

Until about a year ago, Ms. Haywood, 28 and a Rutgers graduate, had been in Atlanta, working toward a post-baccalaureate pre-medical degree. Then she got a disquieting call from her grandmother. “She basically said she couldn’t pay her bills, and that she was confused, and that she wanted me to come home,” Ms. Haywood said.

Ms. Haywood flew home and began sorting through the bills. The first one, a mortgage statement of $4,000, seemed ominous. Though she knew little about Ms. Canales’s financial obligations, she recalled that the payments used to be lower. “What other papers do you have on the house?” Ms. Haywood remembered asking.

Ms. Canales brought out a stapled packet. It was the original mortgage. She closed on the home in December 1999, putting $50,000 down toward the $192,000 price. Her loan was for $142,000, which with closing costs, broker’s fee, taxes and insurance resulted in monthly payments of $1,700.

Ms. Haywood recalls pressing her grandmother, “O.K., but how did we get from $1,700 to $4,000 a month?”

When Ms. Canales brought out the stack of documents, at first Ms. Haywood was unsure what she was looking at. But as she put the forms in chronological order, a picture emerged.

It seemed her grandmother had made a pastime of refinancing her mortgage, beginning with an adjustment in 2002, two in 2004, another two in 2005, and then others — a total of 13.

All the revised mortgages were “no-doc,” meaning her grandmother had to document neither income nor assets. Many forms submitted by brokers on her behalf belied Ms. Canales’s true income, claiming among other things that she was a full-time nurse rather than a part-time health aide.

The disbursements Ms. Canales received from each adjustment ranged from $2,000 to $10,000, the fees she was charged from $19,000 to $39,000. As the loan grew, so did the monthly bill. By the final refinancing, in January 2007, Ms. Canales was treating her home like an A.T.M., taking equity out to meet the mortgage payments.

“I felt sick,” Ms. Haywood said. “I just kept saying, ‘How did this happen?’ ”

But Ms. Canales’s kidneys had been failing for some time, and her state of mind in the preceding years had been less than lucid.

She does not remember today much about the cold calls she received, or how the deals were made to seem advantageous. “They’d just call and say, ‘Hey, do you need money in the bank?’ And I was like, ‘Yeah, I need money in the bank,’ ” Ms. Canales said.

She does recall one detail, what the broker on the last refinancing said after she signed all the papers. “Get out of this mortgage as fast as you can,” the woman said.

By last year, Ms. Canales’s loan had grown to $544,000 from $142,000. Meanwhile, the house dropped in value, to $480,000, according to the last appraisal, from a high of $619,000. After almost 10 years of making mortgage payments, Ms. Canales owed more on her home than it was worth.

Ms. Haywood never returned to school. She began looking for full-time employment and, between temp jobs, for ways to redress her grandmother’s financial affairs. Ms. Haywood’s mother, Pamela, who was also living in Atlanta, moved in to help with finances and with caring for Mr. Haywood, who has schizophrenia. They rented out a spare room for the extra income.

By March, the first foreclosure notice had arrived.

The Children’s Aid Society drew from The New York Times Neediest Cases Fund to pay the fee for a mortgage modification, which at 1 percent of Ms. Canales’s balance came to $5,440. A modification agency is negotiating with Ms. Canales’s current lender to knock off some of the principal owed and to lower her monthly payments.

In the interim, Ms. Haywood found a job, in what might be one of the moment’s few booming businesses. She is a foreclosure-prevention counselor.