Johnson: Dreams ruined, he walks mortgage plank

By Bill Johnson, Rocky Mountain News (Contact)

Published September 15, 2006 at midnight

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He cried. Goodness, he cried.

Finally able to speak, he apologized profusely through his tears, saying it had just sneaked up on him, that he hadn't done such a thing in a long time. I told him to forget it.

He was letting his family down, he explained in halting words. His entire future was crumbling before him. I think he was picturing just then the faces of his three little kids. And he lost it again.

If only he had said "no" when he sat at that table two years earlier, gotten up and just walked away.

"But I was desperate, sir," Anthony Stewart said.

His is among the heart- rending stories being told often in Colorado these days. Good-intentioned people are unwittingly getting in over their heads with home mortgages or they're outright being fleeced by the unscrupulous at mortgage-signing time.

According to a report Wednesday, Colorado ranked first nationally in the number of home foreclosures filed in August - one new foreclosure filing for every 301 households - up 53 percent from a year earlier and the sixth month in a row the state has ranked first.

RealtyTrac Inc.'s latest foreclosure market report showed there were 6,079 properties in Colorado in some stage of foreclosure in August, more than twice the number reported in August 2005.

"With home price appreciation continuing to decelerate, and with billions of dollars in adjustable rate mortgages projected to reset in the next few months, this month's increase could be the beginning of an upward shift in the foreclosures market," said James J. Saccacio, RealtyTrac chief executive officer.

On Anthony Stewart's dining table today is a letter from his lender that pretty much tells him he can avoid all of his troubles if he and his wife, Kerry, just turn over the keys to their Superior home and walk away.

"I don't know what to do," the 42-year-old man said over and over.

It started two years ago. Anthony Stewart runs an automotive-services business. His wife cares for children in their 4-year-old home on a quiet street in a nice subdivision.

They learned at that time that a third child, a boy, was on the way. Being self-employed, they had no health insurance.

They paid for Kerry's prenatal care, hospital and delivery costs out of their savings and by selling stocks and fairly exhausting every credit card and line of credit available to them.

By the time they took their infant son home, they still owed the hospital $17,000. Negotiations on a payment schedule went nowhere. The $17,000 landed in collections.

Yes, they would refinance their home, pay off the hospital debt, plus bring down their credit card debt.

A banker friend steered them to a mortgage broker, a seemingly friendly woman, who told them that despite their credit woes and low credit scores, she could get them a mortgage at a rate no higher than 7 percent.

Weeks passed. And the offered rate continued to climb: 7.8 percent, 8 percent and higher.

Finally, at the closing table, the broker told them their new loan would be 10.8 percent, and adjustable. Anthony Stewart had missed his last mortgage payment, the one she'd earlier told him he didn't have to pay. He paid it that day. It made no difference.

The mortgage on his home would climb to nearly $5,000 a month now, from the $3,000 per month he'd been paying since buying the house.

"I know, I know. But quite frankly," he lamented, "I really, really needed the cash. Worse, they made it sound like they were doing us a big favor by giving us this loan. It's my fault. I made a huge mistake."

He sold most of what he and Kerry had, including the fancy cars they once drove. They scrimped everywhere, just to make the note.

Most months they were late, but never by 30 days. Their credit scores dived into the low 500s, where they remain.

Getting out of the loan was impossible, what with their low credit scores and a pre-payment penalty of no less than $22,000.

Now, two years later, the adjustable rate mortgage is about to adjust.

He and Kerry have figured out the monthly loan amount likely will total no less than $7,000.

He knows there is no way to pay that. He doesn't know what he is going to do, he says again and again.

And again, Anthony Stewart wept.

He has called, he says, more than 20 banks and brokerages seeking to find a new loan. He says he has been turned away by each one, scared off by his low scores.

"Hopefully, there is someone out there with some compassion, who can look past our string of misfortune that we just can't seem to rebound from."

There is at least $100,000 equity in the house, Anthony Stewart said, confident and insistent that he is not mentally overpricing what he still owns.

"It's there. I just can't access it," he said.

I could write this column from now until I retire. At the root of each of the now-pending 6,079 foreclosures in the state, even the experts say, are health-care expenses and slowing job and income growth.

It is no salve, though, for those living through it.

"You know, I was living the American dream," Anthony Stewart says. "I had savings, stocks, was living in a nice home in a very nice community, and I always paid my bills.

"Now, I'm wiped out."

Bill Johnson's column appears Wednesday, Friday and Saturday. Call him at 303-954-2763 or e-mail him at johnsonw@RockyMountainNews.com.

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