Homeowners Seek Foreclosure Help From HUD

 STOCKTON, CA—Four of the 10 U.S. cities with the highest rates of home foreclosures are in California's Central Valley, with the city of Stockton ranking fifth. But fed-up residents and community organizers here are determined to see those rankings change.

“This is not healthy for our families,” said Carol Ornelas, CEO of Visionary Home Builders (VHB), a nonprofit housing development company and counseling agency based in Stockton. “We don’t even want to be on the top 10 list.”


Ornelas made that comment at a recent housing rights forum, "Your Home, Your Rights," organized by HUD. the nonprofit ethnic media news service New America Media, and community partners including VHB and El Concilio, a nonprofit serving Latinos in San Joaquin and Stanislaus counties.

The event, held at the Cathedral of the Annunciation School gymnasium, also featured resource materials and free counseling by HUD-certified advisers to help attendees save their homes.


Dozens of residents from across the Central Valley attended, talking about their personal experiences with the mortgage meltdown and their hopes for recovery.

Stockton’s boom and bust



At the root of Stockton’s woes, analysts say, is a tremendous, unsustainable boom in housing construction that began a decade ago, when large numbers of Bay Area urbanites began to relocate to the Central Valley, attracted by lower housing prices.

Stockton’s population shot up from 243,771 in 2000, to 278,895 in 2005, an increase of more than 14 percent. The city is the 13th largest in California.

Like the rest of the nation, much of the housing boom in Stockton was fueled by financially unsound loans, said VHB's Joan Jacobs.

When people consulted lenders about buying a home in Stockton, they were essentially asked why they would give their money to someone else, when they could own, Jacobs said. Lenders emphasized that  home prices would continue to rise endlessly, meaning homeowners would be making money with virtually no risk. 

But then, starting three years ago, the housing market crashed. 

“All bets were off,” Jacobs said. “People couldn’t sell or refinance.”

“People believed the lenders,” she added. “They thought ‘they're experts and wouldn’t give me money they know I wouldn’t be able to repay.’”

The economic downturn and rising unemployment exacerbated the situation, said Amelia Adams, deputy director of the Community Partnership for Families of San Joaquin.

Stockton’s unemployment rate now stands at more than 17 percent, compared with 12.4 percent for California overall.

Last year, 9.5 percent of all Stockton’s properties were in some stage of foreclosure, the highest proportion in the nation. 

Adams said most borrowers were on top of their mortgage payments, until they lost their jobs.

At that point, she said, it became impossible to maintain a $500,000 loan with a high interest rate and no income. She added that most people lived in Stockton but worked— and spent most of their money—in the Bay Area, further harming the local economy.

She said many borrowers were immigrants and non-English speakers who bought into the notion of the American Dream. They often took large loans unaware of the ramifications, relying on their children to translate for them. “Children don’t have the knowledge to tell a banker or lender, ‘my parents can’t afford those interest rates,’” she said.

John Reddick, a retired Vietnam veteran who has never owned a home, said that if the economy and housing market continue their current trends, he never will.

He said he was attending the forum to empower himself with information that he could share with his neighbors who have been affected by the housing crisis..

“Banks are just exploiting folks,” he said, “and I don’t like that. There needs to be a way for people to get educated and protected."

Reddick said his brother, who has been unemployed for just under two years, plans to walk away from his home. Reddick added that his sister owned a home in Stockton, which she bought two years ago for $300,000. She just walked away from it, he says, because the value went down to $150,000 and she couldn’t sell it or modify the loan.

Other frustrated homeowners said the forum provided them with resources they did not know existed.

Carmen Gomez, a mother of three, recently found a second job to support her family. A teacher during the day, she now also works for Child Protective Services at night. Her husband has been unemployed for just over a year, receiving minimal benefits, and she can no longer keep up with the family's mortgage payments.

“I have applied for a loan modification three different times over the past year,” she said, “and each time, I have been denied without an explanation.”

Gomez said she has done everything possible to cut costs and save money to keep her home. “I took my children out of private school and put them into public school,” she said, “I have maxed out my credit cards, almost exhausted my savings and my children’s college funds."

“I have written and called Bank of America several times to ask about my modification,” she continued, “and most recently, a top supervisor just hung up in my face. Can you believe it?" she asked, “this is the American Dream—you ask your bank for help and they say no.”

At the forum, Gomez received free help from a counselor and signed up for follow-up appointments so that the two of them can call Bank of America together. Gomez also learned about making income adjustments on her modification application so that the bank will reconsider it and how to protect herself from predatory loans in the future.

“I am still worried,” she said, “but I feel much better knowing there is this kind of support.”