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Foreclosures: Stories behind the numbers

By Stephanie Hoops

Danny Ludy and his girlfriend, Carrie Purgason, and her son, Tyler (not pictured) moved to Moorpark after they were evicted from a house they were renting in Camarillo that went into foreclosure.

One day in the future, the foreclosure crisis will be a dark memory that elders will urge new generations to remember in American history, and when that day comes, Mark Lunn hopes he’ll have some wisdom to impart on young people.

“Is it wise to buy a home?” he asks, rhetorically. “What do we tell them now?”

These are questions that Lunn, Ventura County’s clerk and recorder, doesn’t recall hearing as he grew up, having been raised with the notion that homeownership is an American aspiration.

From Lunn’s vantage point at the hub of local foreclosure activity, documents stream through at a steady pace and he tries not to lose sight of what they represent — likely the death of a family’s biggest lifetime investment.

“How excited they were to have the American dream,” he says, trying to imagine the day the family was handed the keys to the home. “And now their life has been turned around. These are devastating things.”

A precursor to the Great Recession, which began in late 2007, the housing slump is evident in the numbers. Ventura County foreclosures skyrocketed from 39 in 2004 to a peak of 4,296 in 2008 as people who had adjustable-rate mortgages saw them reset at higher interest levels and began defaulting. From 2004 to 2011, the county recorded a total 12,195 foreclosures filed.

But the numbers don’t tell the whole story. Havoc has been wreaked on lives across Ventura County, and the wreckage thus far includes desperate and angry people, increases in crime and homelessness and abandoned animals.

In February, federal and state officials announced 49 states, including California, had joined a $25 billion settlement with five of the nation’s private mortgage lenders to provide relief to victims of foreclosure abuses. Consumer advocates and some locals were skeptical that it would assist enough people, and the details on how it might come to benefit Ventura County remain unclear.

Empty homes

At Re/Max Gold Coast in Camarillo, real estate broker John Heard is on the front lines of the crisis, primarily selling bank-owned properties. While bankers are sometimes removed from face-to-face interaction with homeowners who default on their loans, Heard deals with them. Banks pay Heard to see who the residents are and remove them, do a title search, investigate for tax liens, secure the property and clean it up for sale.

It takes a moment of thought, but Heard has stories to tell about his work. For starters, he recalls seeing a lot of property damage caused by residents whose emotions clearly got the best of them when they learned they had to go.

“I went up to a house in Oxnard that I had listed,” he said. “I could hear water running and went up to the front door and I could see, like, water kind of trickling and I opened the front door and whoosh! Just a flood of water came out.”

The former residents had left all the faucets turned on and broken the toilets so they would keep running. What remained was a pool of water that climbed nearly half a foot up the wall, almost to the electrical outlets.

Heard also has encountered people who make his heart ache, like a family he recently had to relocate. They were cooperative and “very nice people,” he said. The father had lost his job, the mother was sick and their child had a broken arm.

“There are cases where the people have done everything they can to save the house and they really have nowhere else to go, and I feel for them,” he said. “I really do.”

At a large foreclosed house in Ojai, Heard was stunned to see the family had abandoned everything, from the furniture to their toothbrushes and three dogs. He fed the dogs until a neighbor took two in and the other could go to the animal shelter.

He has taken many animals to the shelter over the past few years, including a German shepherd and poodle found at a property in Thousand Oaks, a horse from Ojai and a miniature pinscher he found at a house in Santa Paula.

“She was so sweet with big, brown eyes,” he said of the pinscher. He left her food and water, and she was so thrilled to see him every time he returned that he eventually took her home. She’s now named Cleo.

The housing collapse has been “horrible” for animals, said Jolene Hoffman, shelter director with the Humane Society of Ventura County.

“We had so many calls every day,” she said. “It was constant.”

When neighbors of foreclosed homeowners called, Hoffman said, the Humane Society’s hands were tied because it can’t enter houses without permission. So animal control officers had to come.

“It’s been really tough times,” Hoffman said. “Some of the girls were getting five to 10 calls a day each that people had lost their homes, lost everything and couldn’t keep their animals, and it’s usually the animals that go first, before the furniture.”

Vehicles have been abandoned about as often as animals, Realtors say. Heard typically pushes them onto the street so the city will tow them for a violation.

Homelessness and desperation

Foreclosures have contributed to the county’s homeless population, according to Cathy Brudnicki, executive director of the Ventura County Homeless & Housing Coalition. Homelessness rose 3 percent in 2011, with 1,872 people being homeless on a given day, compared with 1,815 in 2010.

On the street are not just borrowers who defaulted but also renters whose landlords lost houses.

Daniel Ludy and his fiancé, Carrie Purgason, were homeless for a short time because of the foreclosure crisis.

They learned over the holidays that a bank was foreclosing on the Camarillo house they’d been renting for a year. They had to be out by Jan. 1, so they packed up and spent Christmas surrounded by boxes and stress.

“Thank God we made it through,” Ludy said. “I just kept having faith. Everybody told us it was going to work out. It didn’t seem like there was a light at the end of the tunnel. We didn’t sleep. It was terrifying.”

It was a struggle to find a place in the right school district for Purgason’s 12-year-old son, and the couple were homeless before a church and county workers helped them find a one-bedroom rental in the hills of Moorpark.

“It took a landlord that was willing to work with us,” Ludy said. “A lot of landlords don’t understand that houses are being foreclosed left and right and you know a lot of people are like, ‘Well if you’re in this position, we don’t want to deal with you.’ ”

During the last few years, a complaint heard often came from people desperate to modify their loans who became exacerbated trying to navigate deals with banks.

Margaret Ann Barnes-Morales’ story is like that of many others. She had such trouble getting a loan modification recently that she gave up trying, deciding she’d be better off selling the Moorpark house she inherited from her sister, who died June 19.

Barnes-Morales said her sister was not behind on her payments. The last one she made was on June 15, four days before she died. She left the house to Barnes-Morales, who traveled to Moorpark from her home in Greensboro, N.C., to take care of her sister’s affairs. When she realized she couldn’t afford to make the payments on the house, she tried to get the bank to accept loan modification paperwork she repeatedly submitted.

“It’s unbelievable what they make you do and the hurdles they make you go through, and I had done everything — dotted every I, crossed every T,” she said.

She eventually became convinced she was getting the runaround when she was told she would need her dead sister’s signature on a document.

“That was the craziest thing I’d ever heard,” she said. “I don’t know what these people are about. You do your best to keep your calm and cool to talk to them because you can’t get irate. But, honey, it does take toll on an individual.”

Banks maintain that they try to work with people seeking loan modifications. Wells Fargo, for example, indicates it is committed to assisting struggling homeowners and has helped about three-quarters of customers who are 60 days or more past due avoid foreclosure.

But Realtor Monique Bryher, publisher of the California Real Estate Fraud Report, believes some of the inefficiency is intentional.

“If somebody’s living in it, the property’s usually being maintained to an extent,” she said. “Whereas if it’s vacant, there’s a problem with squatters and vandalism.”

Bryher also believes banks have no financial motivation to modify loans because they are protected by mortgage insurance. Mortgage insurance compensates lenders or investors for losses in the event of a default on a mortgage loan.

In Bryher’s opinion, it’s the mortgage insurers who are getting hit hard, and she calls it “blarney” to think banks are losing on short sales.

More to come

Financial fraud also has been an issue.

Real estate fraud has been most prevalent in Oxnard, according to Deputy Ventura County District Attorney Dominic Kardum, who works in the real estate fraud unit of the DA’s Office. Those targeted tend to be elderly or Spanish-speaking people who don’t understand the documents they sign.

“We saw a lot of equity theft crimes because people had a lot of artificial equity in their homes,” Kardum said.

Equity fraud schemes involve offers to help a person stay in a home if he or she signs ownership over to a con artist. The perpetrator then uses the equity in the property as collateral to borrow money, makes no payments and the true owner faces foreclosure.

As home values dropped, equity dwindled and a decline in opportunity prompted a shift in schemes to loan modification fraud, Kardum said.

Loan modification fraud happens when a perpetrator offers to resolve a distressed homeowner’s mortgage woes. For an upfront fee they offer to help the homeowner get a loan modification, but it never happens.

“And they tell people, ‘Don’t pay the bank, pay me,’ ” Kardum said. “To me, it’s despicable.”

Kardum has seen people in Ventura County taken advantage of in these schemes who ultimately lost their homes.

“The outcome’s not good,” he said. “I can tell you that.”

While local foreclosure numbers fell 36 percent last year from their peak in 2008, economists suspect the housing market is not yet healthy because banks are sitting on shadow inventory, properties they could sell but haven’t yet.

There are a number of reasons banks may hold on to shadow inventory. Economists and real estate experts believe it would be unwise to flood the market all at once, driving down prices further. Also, banks may find it cost-prohibitive to process so much distressed inventory quickly.

A few weeks ago, real estate broker Heard was approved to handle business for three more banks.

“I think this is going to keep coming,” he said.

Back at the County Clerk and Recorder’s office, operations manager David Valenzuela said he won’t soon forget the fraud and how it forced people to move to worse situations during the mortgage crisis.

When County Clerk and Recorder Lunn looks back, he’ll recall a grim time in Ventura County’s history.

“A lot of empty homes, a lot of for-sale signs and a lot of tragedy,” he said. “And that’s what I’m going to remember.”

Read more:

Newton Real Estate Services

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