A Florida Mortgage Fraud Story, Warning
Gabriellee Cunningham had fallen behind on the Florida mortgage on her modest suburban Miami home and was mired in debt when she was approached in June by a door-to-door “mortgage lender” who promised to help her.
Nine months later, her $89,000 mortgage has ballooned into a $234,000 loan, her monthly payments have doubled and she faces foreclosure on a house she no longer owns.
Housing officials call Cunningham the victim of one of the worst cases of predatory lending they’ve ever seen and warn, as the U.S. subprime mortgage crisis grows, of a rising tide of scams in which homeowners are being cheated out of their home equity.
“I know I did something stupid but I am going to fight these people ’til my last breath because they are trying to rob me,” said Cunningham, 48, who works at three jobs. She says she fell behind on her payments while trying to fund college educations for two daughters.
Consumer advocates have seen a surge in “foreclosure rescue” and “equity stripping” scams in recent months as the subprime mortgage crisis developed.
Lenders launched foreclosure actions against more than one in every 200 mortgage borrowers in the fourth quarter of 2006, according to a Mortgage Bankers Association survey that hammered equity markets this month.
That figure was the highest in the association’s history. Subprime adjustable-rate mortgage delinquencies jumped to nearly 14.5 percent in the quarter.
CRISIS JUST BEGINNING?
Florida is among the states hardest hit by the crisis, which some advocates believe is in its infancy. The Florida housing market ranks second to California in the percentage of subprime loans, or loans granted to people with poor credit histories, many of whom are finding they can’t make their payments.
By some estimates, up to 30 percent of loans in Miami, a metropolitan area with large poor and immigrant populations, are subprime.
The non-profit National Consumer Law Center said no one tracks the number of people trapped by mortgage scams but it agrees with the views of lawyers and consumer agencies that loan scams, which routinely target the poor and minorities, have proliferated with rising property values.
Jeffrey Hearne, a lawyer with Legal Services of Greater Miami, said his office saw few cases until two years ago but now has two dozen and sees one or two new ones each week.
“We are having to turn them away,” he said.
Cunningham said she was panicked about her finances when a sweet-talking lender knocked on her door. He promised to refinance her house and relieve her of Florida mortgage payments for a year to allow her to catch her breath.
Cunningham said the scam artists used race and religion to lure her – “affinity marketing” tactics that experts say are typical.
“They sent a black guy. I’m black,” Cunningham said. “He said he was a Christian. I’m a Christian.”
The result: Cunningham says her mortgage, an $89,000 Florida mortgage loan at 8.5 percent when she bought the home in 2000, is now a $234,000 loan at 11 percent. Monthly payments have gone from $1,038 to $2,275. And her name is no longer on the title.
“How do you think I’m going to pay $2,275 if I fell behind at $1,038?” she said. “I’m afraid I don’t even own my home anymore. I’ll be homeless.”
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October 7th, 2008 at 2:30 pm
HELLO?! Although I know my way around, I am no economic expert but I could see there was something wrong (the water was receding before the tsunami, I guess.). When I would bring this up to people they would tell me to enjoy the ride, how prices in Florida were just too low for too long. I thought maybe I was worrying for nothing but I guess that nagging doubt was right after all. Better to listen to your gut then a expert who’s first solution is to buy more of the toxic debt nobody wants.
People were buying way over their head. Instead of a starter home, the young couple wanted the big house with a pool. It was hard NOT to sell a house. They got questionable loans & didn’t seem to care about the penalties even after explained to them. But how can the same exact model house be going up $10,000 a month with no sign of hitting the brakes? It was a literal run away train. The builders were giddy buying up lots & completely filling in blocks of vacant land within weeks (I still have many vacant, never occupied homes around my home for 15 years with tall grass). Where were the jobs? All the out of town agents have since moved on to fertile ground. They come, conquer & leave their footprints with no consequences. What about the people who actually live here? With all the experts we hire, nobody can COUNT the number of building permits & figure in how much more or less roads, services, drainage, schools, etc. are going to be needed for this growth. These ivy league school grads are full of stale air instead of any new ideas.
Our next President should have a YEARLY review with objectives & consequences, like we all have. RESUMES do matter but only the accomplishes count. Everyone can ask, “What have you done for me lately?” It’s about time the People of this great country get to say, “YOUR FIRED!” Let’s push our agenda…not theirs.