They're at a loss
Brockton couple follows path to foreclosure that's becoming a more frequently traveled road
Two months ago, Lisa and Eric Jacobs of Brockton attended a regional seminar on how to avoid foreclosure, hoping they would soon see their way clear.
Two weeks ago, they gave up.
Buried in debt, with a condo worth far less than what they owed in mortgages, the Jacobses, both in their 40s and without children, figured it made more sense to let the bank foreclose. They owe $180,000 and believe their two-bedroom in Madrid Square is worth $140,000.
With a combined annual income of about $60,000, they figured they could afford to pay about $1,100 a month - but monthly payments on a first and second mortgage, as well as condo fees, were about $1,800 a month.
"We're in this predicament and there is no end in sight," Lisa Jacobs said.
The Jacobses's tale is familiar. As home prices slip and a recession takes hold, more and more people are finding it difficult or impossible to hold on to their homes. Many, like the Jacobses, after struggling for months, decide the battle is over, and they have lost.
The Jacobses hit financial shoals after they unwisely spent themselves into credit card debt and Lisa Jacobs lost her job. Refinancings helped them stay afloat, as long as property values climbed. But when values fell, they found themselves stuck with no place to turn, like losers in a game of musical chairs. They didn't have the income to pay the mortgage and no one would refinance.
The Jacobses live in what is the regional epicenter of the foreclosure problem. Brockton has had more foreclosures, 488, during the last two years than the next five highest communities combined. Regionally, foreclosures of single-family houses, condos, and multifamily units climbed 150 percent from 2006 to 2007. There have been more than 1,500 foreclosures.
Many home buyers "stretched so far [to buy] that any extra stress puts them under and once they are under, it's hard to get back on top," said Normand Grenier, executive director of the Neighborhood Housing Services of the South Shore, a nonprofit organization trying to help people facing foreclosure. A layoff, an illness of a few weeks, even a new baby that keeps the mother out of work a little while can trigger major problems, he said.
Lenders are under pressure nationally to help out borrowers more by giving them more time, but so far he doesn't see widespread changes.
The problem has been more severe in communities such as Brockton and Lawrence because predatory lenders target the low-income and less-educated people, he said. Grenier said he knows a bus driver, making $10 an hour, who was qualified for a $250,000 mortgage, which the man could not possibly afford.
"It's very sad," he said, adding that the agency has calls from more than 300 people. "We try to help people, but the news we give them is very difficult."
The Jacobses followed a grim financial path trod by many others. When they purchased their two-bedroom condo in 2000 for $82,000, it was exciting. About to get married, they each had decent, steady jobs, and their payments on the mortgage and condo fees were about $800. "It was fun, it was great," Lisa Jacobs said. "We had something of our own." It was her first time living outside of home, apart from college.
As the value of the condo increased, as it did for most real estate in the state, the Jacobses dipped into the equity, spending money for fun. They refinanced several times through August 2004, to pay off credit card debt, until finally their mortgage debt had mushroomed to more than $100,000 and their total monthly payments had nearly doubled, to about $1,460. One of the lenders was Fremont Investment & Loan, which has been sued by the state attorney general's office for allegedly engaging in predatory and unfair lending practices.
"It was my fault," said Lisa Jacobs, who had had financial problems before and had to file for bankruptcy in 2001. "I just bought stuff for the sake of buying," such as clothes.
The next year, with their financial situation already tight, she lost her job at the Brockton Neighborhood Health Center. She began working as a temp, but it wasn't enough to make up for her lost income, and the couple fell behind.
In August 2006, the first foreclosure warning arrived from
In a confusing turn, the forbearance agreement was canceled after a few months under murky circumstances. The Jacobses said they weren't notified; a representative for Ocwen said that because of privacy laws the company cannot comment on individual circumstances.
In any event, the Jacobses called the state Division of Banks, and a representative last year helped work out an agreement to restructure their loans, with payments on a second mortgage deferred. Total payments, including condo fees, were about $1,500 a month. That helped, for a while. Lisa Jacobs found full-time work, which helped, too. But payments on the deferred mortgage are kicking in, boosting total payments to about $1,800.
After talking with a lawyer, they decided to let the mortgage company foreclose.
"It's hard," said Lia Jacobs, who is taking medication for panic and anxiety attacks. Now the Jacobses have to leave their home of eight years, the friends they've made, and move into the furnished basement of Eric Jacobs's mother's house.
Matt Carroll can be reached at mcarroll@globe.com.
