Longtime homeowner Karen Mena, with her son Eliseo Garcia, says she was… (Gina Ferazzi, Los Angeles…)
Foreclosure commonly represents the end of a struggle. A borrower can't pay a mortgage, loses a home and moves on.
But Karen Mena, a 38-year-old county worker, never gave up. Mena fought even after her San Bernardino home was no longer hers. And she won the three-bedroom house back — at least for now.
The ordeal isn't over yet. The eviction was stopped and Bank of America canceled the foreclosure because of the possibility that the loan would be modified to make it more affordable.
But Mena continues to negotiate with the bank over loan terms. She could still lose the house where she built a life and raised two sons.
"I have had the home since I was 21," she said. "It is my primary residence. My son goes to school in the neighborhood and has an after-school program nearby."
Even getting as far as she has is notable, experts said, because it is difficult to get a foreclosure rescinded. That is particularly the case in states such as California, where the foreclosure process is streamlined and largely unfolds outside of court.
Some consumer attorneys say foreclosure reversals like Mena's could become more common as they learn to better exploit foreclosure errors.
"We are making some headway, even in California, though it has been slow," said Walter Hackett, an attorney who represents Inland Empire homeowners. "As attorneys become more savvy about the realities of mortgage lending, they are starting to file more meaningful lawsuits."
In 1996, when Mena and her husband bought their house, the region's last real estate bust was just beginning to recede.
"It was good," Mena said. "You could still afford to buy a house, there was work and I was young."
Her husband, who declined to be interviewed for this article, worked as a licensed contractor, slathering buckets of paint on walls for homeowners looking to spruce up their properties. Mena worked for Riverside County managing the medical cases of handicapped children.
In 2002, they brought a second son home to the tree-lined street not far from the San Bernardino National Forest.
As home values surged and the region's real estate bubble inflated, the family's starter home became a source of income as well as an investment tool.
The pair refinanced their property several times to pay off vehicles, consolidate bills and complete home repairs and upgrades, Mena said. They also used some of that money to launch a contracting company. The last time the home was refinanced, the mortgage remained in her name alone.
"You kind of take a gamble, like, 'Hey let's just do this, let's be self-employed, let's have our own business,'" Mena said. "Then all of a sudden it came to a screeching halt."
The van, spray guns and other newly purchased tools sat idle as construction work in Southern California dried up. By 2008 the two-income household was relying on one income, and the couple was forced to draw on a line of credit to pay the mortgage.
When that final means of survival was tapped out in August 2008, Mena pleaded her case to Bank of America. The bank put Mena on a temporary payment plan that allowed her to pay half of her mortgage note.
In early 2009, Mena was demoted in a cost-cutting measure by her employer. She faced some unexpected expenses in February 2009 and missed a mortgage payment, breaching the terms of her agreement with Bank of America.
The bank told her she could no longer make partial payments, according to letters of financial hardship she wrote applying for mortgage assistance. She tried to make full payments when she could, Mena said, but quickly began falling behind.
"We were still hoping it would work itself out, not only as a family, individually, but as a country, that this will fix itself, and then it didn't," Mena said. "Nothing was working."
President Obama, who took office in January 2009, unveiled plans that spring to help as many as 4 million borrowers such as Mena through its foreclosure assistance plan, the Home Affordable Modification Program. The plan would reduce monthly payments by lowering borrowers' interest rates, extending the length of time on some mortgages and deferring portions of some mortgage debts to the end of the life of the loans.
The program has fallen well short of its goals, and last year the Republican-controlled House of Representatives voted to end it, arguing that the program is a waste of money and gives homeowners false hope. The measure didn't go beyond the House, but the Obama administration has taken steps to improve the performance of banks participating in the program. Last year it withheld financial incentives from some of them, including Bank of America.