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Out of house and home

A bad decision, a sudden layoff, a tricky loan, an unexpected illness or any of a number of other factors can start the downhill slide to foreclosure.

July 20, 2009|Sara Catania

Even as home prices show signs of stabilizing, home foreclosure rates in California remain alarmingly high. In the second quarter of 2009, foreclosures in Los Angeles were up significantly from the first quarter of the year, to 9,263, according to PropertyShark.com, a real estate data site that tracks first-time residential foreclosures.

The problem is especially acute in Los Angeles, a University of Virginia study found, in part because "more than 20% of mortgage holders ... were paying at least 50% of their income in housing-related costs."

Losing a home rarely stems from a single cause. It may begin with the purchase of a property that is too expensive, or a decision to borrow for a remodeling project or to help a family member in need. And once homeowners become overextended, they are vulnerable. Job loss, illness or death can quickly lead to foreclosure.

Legal Aid of Los Angeles put The Times in touch with five homeowners who had walked through its doors in recent weeks seeking help. They shared their stories with Op-Ed contributing editor Sara Catania. These are the edited transcripts of her interviews.

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James Byas: Constant scramble

My house, which is on Virginia Road in Wellington Square, was purchased by my parents in 1955 for $18,000. It was built in 1921, a two-story Tudor-style home with big picture windows, a fireplace and hardwood floors. I grew up there with my three older sisters and my parents, who were married for 63 years.

When my mother became ill, I moved back in to take care of her, and when she died in 2005, the house became mine. Herein lies the problem. Over the years, my mother had borrowed against the house several times. The last was in 1995 when she borrowed $145,000 to help my sister buy a house.

I'm a musician, and my income is unpredictable. I took in boarders to help pay the mortgage, which was $1,032. I kept up with it until early 2008, when I had to deal with some major plumbing repairs. That threw me for a loop, and I got two months behind on the mortgage. After that, I picked up the payments and continued paying each month. But the bank stopped cashing my checks. In September of 2008, the bank sent me back all the checks I'd written since I missed those payments. By then, I was getting default notices and foreclosure threats.

I tried contacting them, but they refused to talk to me because it was my mother's name on the note, not mine. An auction date was set for Dec. 21, 2008.

At that point, I realized that if I wanted to keep the house, I was going to have to take out a second mortgage. As a musician, I do contract work, which made it hard for me to get a loan. Five days before the auction, the loan went through -- $25,000 at 16.9%. The terms were terrible, but it was either that or the house was gone.

My monthly payment on the second was $333, and the bank raised my monthly payment on the regular note to $1,500.

In March of this year, I woke up one day and my left leg would not move. I'm still having trouble with it, which makes it hard to work. I missed two payments on the first note, though I did keep up with the second. Once again they're threatening to foreclose, and once again they're refusing to talk to me.

One way or another, this will work out. I'll come up with something. At the peak of the market, the house might have been worth close to $800,000. Now I guess it's at about half that. I'm not going to lose $400,000. But I won't take out another loan. I learned my lesson. It's just creating another bill I can't afford to pay.

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Michael Zavaleta: On the edge

I live in Alhambra. I bought my house in 1999, and I'm on the verge of losing it. It's a three-bedroom, two-bathroom house with a garage and a small side yard next to a freeway interchange.

I was working as a systems analyst for Toyota Motor Sales when I bought the house, but I suffered a work-related injury and severely injured my right foot. I was in a cast up to my knee, and I had to have several surgeries. I missed quite a lot of work, to the point where I was terminated.

I applied for state disability insurance, but it took a long time for the application to go through and the payments to begin. I went without income for more than a year. In 2004, I filed for Chapter 13 bankruptcy and was able to get a new loan. Then my disability payments kicked in, which helped me keep up with my mortgage.

When the disability payments ended in 2007, I had to take out a second mortgage. The terms were bad -- the interest rate was 12% -- but I was able to save my house.

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