Wide reach of mortgage crisis hits home
Stack of foreclosure papers shows all ethnicities, areas hit

June 22, 2008

BY MARK BROWN Sun-Times Columnist
We hear about the mortgage foreclosure crisis, and what we forget is that it's not just one big massive problem but rather thousands upon thousands of personal crises -- behind most a family or individual trying to hold it together.

I was reminded of that last week when I decided to look through a stack of foreclosure suits filed Thursday in Cook County.

The 72 lawsuits made a pile about a foot high, involved some $15 million in defaulted loans and were written in bare-bones legalese that only hinted at the greed and foolishness, bad judgment and bad luck that put us in this national mess.

Still, it was all there -- from the lawsuits filed by lenders holding mortgage-backed securities, one root cause of this financial catastrophe, to all those borrowers holding fatal adjustable-rate loans, many issued just last year when a lot of people on both sides of the transactions should have known better.

But the court documents also poke a hole in any preconceived notions you might have about who this crisis touches, that is, assuming you think anything other than it reaches everywhere.

Sure, if you drew a corridor parallel to the Dan Ryan running south through the city and into the suburbs, the bulk of the foreclosures would fall within it.

But in my one-day sample, there also were foreclosures on homes from Evanston to Palatine to Bartlett to Riverside to Palos Hills to Matteson -- and in every corner of the city of Chicago.

Plus, the names of those in foreclosure cover the spectrum of our area's ethnic rainbow with names like Yakimisky, Brewton, Liborio, Kim, Moldoveanu, Ziemkiewicz, Morrissey, Lipczak, Lino, Silva, Khan and Abdelnabi.

Most of the mortgages were under $200,000, but I saw defaults as high as $657,900 on a single-family home in Riverside and $628,000 on a Rogers Park house.

My original intent was to name names and addresses and let the chips fall where they may, since it's all a matter of public record. But as I began calling these folks Friday to learn what went wrong, I got too many tearful pleas about the additional harm I would cause them, so first names will have to suffice.

Lost chef job, 'tried to work it out'
Leon, 51, defaulted on a $283,000 mortgage on an Englewood two-flat. His family lives in one unit. He rents out the other.

Leon says he paid just $99,000 for the building in 2000 but "refinanced a couple times to pay bills," the latest in January of last year when court records show he took out an adjustable-rate mortgage with a balloon. A chef by trade, Leon said he used to make $45,000 a year, but lost that job and now works at an Indiana casino for $10 an hour. He considers the drop in income to be the source of his problems.

"I tried to work it out with the mortgage company. They said I didn't make enough money for a hardship," Leon said.

Scott, 57, says he refinanced his three-bedroom Tinley Park house in 2002 after girlfriend problems turned into financial problems, knowingly taking out an adjustable-rate loan with a higher interest rate to try to buy time.

Scott said he's been self-employed for 16 years, making and selling design patterns for scroll saws, a niche product in the crafts industry. But the interest in scroll saws has rapidly dried up, he said, along with his income.

Now Wells Fargo bank is after him for its $168,800, and Scott can't find a job. The house was appraised at $265,000 last year, but friends tell him he'll be lucky to get $200,000 for it in this market.

"I'm stuck," Scott said. "I don't have a college degree. I can't find a job to pay my bills. I can't give up, but I don't know what to do anymore."

Lizette, 37, defaulted on a $380,000 mortgage on a house in Bartlett. It was her husband, Jorge, who returned my call. He said they'd fallen behind on their payments when they lost their jobs, but were "starting to get back on our feet."

I asked him why his name wasn't on the loan.

"That's just the way they did it because my credit wasn't good," he said. Oh.

'I do mortgages for a living. Isn't that ironic.'
Then there was Vito, 31, who owes $545,384 to Deutsche Bank for his town house in the Dunning neighborhood. Vito's fortunes were flying high, until the real estate market went soft and he got stuck with an adjustable-rate mortgage on a property that is no longer worth what he borrowed. Here's the twist:

Vito is in the mortgage business.

"I do mortgages for a living. Isn't that ironic," he said. I'll say.

Vito admits, "I didn't have much of a conscience when I got in this business."

Now he looks around at his customers trying to get out from under the mortgages he sold them and realizes, "I'm in the same boat as them."

Amazing what you can find in a stack of paper.

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