On the third floor of the Brooklyn Supreme Court, the list goes up every morning. The daily record of scheduled foreclosure mediation meetings lists each case, along with the corresponding plaintiff, defendant and the past number of conferences.
The list is posted outside two rooms where the meetings are held — ordinary courtrooms that have become battlegrounds. Inside, homeowners and mortgage lenders wrangle over the future of the brownstones, pre-war co-ops, warehouses and lofts that make up New York City.
By 9:30 a.m. on a recent Friday, many of the people on the list had already arrived. Lawyers and residents on opposing sides of foreclosure cases calmly occupied the same hallway. Many checked their phones or their paperwork. They rarely made eye contact with one another. Some homeowners had brought their children, who slumped sleepily against their parents.
Toward the end of the hallway, Sophia Reinoso sat on a bench with her mother, Gloria, as they waited for their name to be called. It was their 13th time going into a conference.
Both of the buildings owned by Sophia’s father, Macario, have been in the foreclosure process for nearly two years. “It’s never-ending,” Sophia said.
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For New York residents dealing with foreclosure courts, that feeling isn’t just hyperbole. New York leads all 50 states in the amount of time it takes to go through the foreclosure process.
Foreclosure lawyers and housing advocates say that part of this long wait time is due to the rise in the number of foreclosure settlement conferences, which have been steadily increasing over the last four years in New York. Now cases are taking 10, 12 or even 14 meetings — which translates to months and years deciding the outcome of a single case.
According to Realty Trac, the timeline for a New York foreclosure case opened in the fourth quarter of 2011 is an estimated 1,019 days.
While part of the wait is due to New York’s congested foreclosure courts, new studies suggest it is also indirectly tied to new regulations that were passed to help New Yorkers in foreclosure.
To combat “robo-signing” in 2010, the New York court system started requiring that lender attorneys attest to the accuracy of foreclosure summons and complaints by filling a Request for Judicial Intervention, or RJI. Basically lawyers had to verify that a human was behind the initial foreclosure filing. However, while foreclosure notices were being filed at the same pace, lender attorneys often neglected to file the newly required RJI that kickstarted court proceedings between the defendant and plantiff. Without the necessary paperwork, homeowners could be caught in a kind of limbo or “shadow dockets.”
For the ordinary homeowner facing foreclosure, even those not in “shadow dockets,” the three-year period between the start and end of a foreclosure case means three years of stress and anxiety.
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Sophia’s father Macario is from Ecuador. Macario’s story originally was a positive one of an immigrant making it on the streets of Brooklyn.
He opened the Superstar Deli and Grocery on Irving Street in the Bushwick neighborhood of Brooklyn in 1985. Sophia and her brother grew up in the apartment at the back of the store, its entrance hidden behind the soda machines and stacks of potato chips. Macario bought the first building 25 years ago and a second one, two doors down, 11 years ago.
With a full head of hair, Macario can look decades younger than his 74 years. But he moves stiffly and his hands are rough from years of making change and lifting boxes. When he talks about his finances, he gives the appearance that he is bracing himself for bad news.
During the recession, Macario’s profit from his market dropped 70 percent. In addition, two of the four tenants from his building stopped paying rent, as they ran into problems themselves. On top of that, Macario was paying taxes on the building originally valued at $850,000, but now worth $400,000 in the current market.
While much has been made of homeowners borrowing far more than they could afford before the housing bubble burst, in person many homeowners describe a complicated scenario that led to the foreclosure. Macario thought he did everything right.
Sophia, now 34, looks nearly as tall as her father but has the wide almond eyes of her mother. She has been assisting her parents as they try and sort through the foreclosure process and keep their buildings. During the dire period after his income started to drop, Macario met with a lawyer who assured him he would be able to modify his mortgage to a more manageable sum.
But Sophia says the lawyer was no help. “‘Don’t pay your mortgage; don’t pay your taxes. You need to show you need the help,’” said Sophia, recalling the lawyer’s advice. After working with the lawyer for approximately six months, Macario was surprised to receive his first foreclosure notice.
“Then I get the panic because how come it is like that?” Macario recalled. Macario asked that the law firm refund him the $4,000 he had paid them, but only received $750 back.
Housing advocates say that Macario’s story is a familiar one of homeowners taking bad advice and ignoring potential problems, all on the word of someone not actually invested in the building.
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Approximately seven miles from Macario’s market is the quiet neighborhood of Mill Basin. On 55th Street off Avenue O, Alex Perdia lives in a two-level brick home with his wife Nomanda and his daughter. When Perdia talks about the foreclosure process, he does so after sighing in relief.
Alex says he got in over his head after his brother-in-law suggested buying his home with little money down and an adjusted-rate mortgage. “With family you didn’t think you have to look out, but you do,” said Alex. “It’s business.”
During the downturn, Alex asked his local bank to help him refinance his mortgage when his payments started to balloon. However, since his house had lost value in the housing bubble, he was told there was no equity in his home, and that the bank would not let him refinance.
With payments looming, Alex became increasingly desperate until he saw a sign for legal assistance at the Erasmus Neighborhood Federation. At the center Alex was given a lawyer who assisted him throughout his case free of charge. He was one of the few who are able to go through the process with legal help.
According to the Brennan Center of Justice, court officials reported 70 percent of homeowners facing foreclosure in New York lacked legal representation in 2009, Alex believes he would have lost his house if he hadn’t found help.
His lawyer’s first suggestion was to actually stop paying his mortgage, since he was eligible for the federal Home Affordable Modification Program, which would facilitate the mortgage modification process and help him keep his home.
Alex said the lawyer estimated that he would be done with the foreclosure process in approximately four to six months, instead it took 18 months.
Alex and Nomanda went to 10 settlement conferences. The pair describes the meetings as frustrating exercises in repetition. Since the lender sent a new lawyer to each meeting many times, the new representative would attempt to argue points that had been dealt with in previous meetings.
“It’s like one hand wasn’t talking to the other hand,” recalled Alex. He said even the court moderator told the lawyer once, “We’ve moved past this.”
Many foreclosure lawyers and counselors say that finding a different lender lawyer at every conference has become commonplace. This practice can often result in delays as lawyers attempt to argue cases they have just received. One foreclosure lawyer said he had to give the bank’s attorney his file to read, because the case information sent to her blackberry came up scrambled.
Mark Ladov of the Brennan Center for Justice said that although lenders are required by law to send someone knowledgeable about the case, and with the ability to settle, it rarely happens. “It’s certainly an indication of how, even this many years into the foreclosure crisis, the financial industry hasn’t taken the steps needed to help homeowners and get us all out of this financial mess,” Ladov wrote in an -mail.
The Perdias say their first inkling that they might face a real battle was after they attempted to send a payment to the bank. In order to qualify for the Home Affordable Modification program, the Perdias had to send three trial payments to the bank after the foreclosure process started. Although they sent the check overnight with a FedEx receipt, their bank claimed they never got the first payment.
“She told us to resend it. We resent it,” recalled Nomanda. “When we went back [to the settlement conference], we had to start all over again.”
While the Perdias were going to court once every six to eight weeks, the bank was still attempting to contact them at home in spite of their lawyer’s request that the bank speak only with her directly. “They said they never knew our lawyer! How do you not know about our lawyer and we’ve been in court six times already?” said Alex. “This is the games that they play.”
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Those who have worked for the banks see things differently. Patrice Harris is a former mortgage banker turned housing counselor at the Neighborhood Housing Services of Bedford-Stuyvesant. He says that the mortgage lenders were overwhelmed with the number of foreclosures and have been playing catch-up ever since.
“They personalize it,” said Harris of residents facing foreclosure. “It’s not personal; it’s business.”
Harris recalled that at the beginning of the downturn, many banks only had a single dedicated fax line for foreclosure cases. Thousands of cases would get sent to one fax line resulting in the banks receiving incomplete paper work.
Harris says things have gotten slightly better after those initial hectic months. Now he uses an online server created by the Treasury to upload paper work. However, he says clients still have to be fierce to win the foreclosure fight.
“You have to be willing to fight. You have to be willing to defend what’s yours, and you have to pray,” said Harris. “Prayer, faith, patience are the three key ingredients in this entire process.”
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For the Perdias, the fight finally is over. After the bank repeatedly claimed it didn’t receive the initial payment and its representatives insisted they didn’t have the authority to offer modification deals, the court-appointed mediator signed a document accusing the mortgage lender of not negotiating in good faith, which was then presented to the judge.
At that moment the Perdias said they perceived a change in how the case was going. The judge ordered that the lawyer fly out a representative who would be able to offer a mortgage modification.
“You can see the expression on the judge’s face,” said Perdia. “You can see [the bank’s lawyers] are nervous, but they’re trying to play hardball.”
During the 10th settlement conference, the judge finally gave the lender’s lawyers an ultimatum: They had 10 minutes to come up with an acceptable mortgage modification or he would rule.
After a year and a half of fighting over the brick two-level home, the case would be decided in a matter of minutes. Alex Perdia’s lawyer explained that he would be able to make a statement to the court about his experience going though the foreclosure process.
“I’m thinking about all of these things and trying to keep it in order,” recalled Alex. “I’m preparing myself mentally and I’m a little nervous too getting up there in front of the judge.”
Minutes before the judge’s ruling, the bank came back with a final modification that Perdia’s lawyer recommended he take. Alex and Nomanda said all they could do was sigh in relief and sign the papers.
After nearly a year and half of worrying, Nomanda said the most shocking moment was the realization she was actually going to get to keep their home.
“They ignored the mediator and whatever — you’re a nobody,” recalled Nomanda about the bank’s representative’s demeanor. “‘You’re not keeping this house’ is the attitude they have. ‘You’re not keeping it, no way.'” But they did keep it.
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In Bushwick, Macario is still holding his breath.
He fired a second law firm that he found untrustworthy. Macario says they brought bank representatives to his property and neglected to tell him about every scheduled settlement conferences. “It’s not right; he’s supposed to work for me,” said Macario. “I start thinking he’s working for somebody else.”
Macario says he began to question his lawyer’s dedication to his case when he was asked why he wanted to keep his buildings.
“You asked me how long I’ve lived here, I tell you more than 25 years working 17 hours a day,” said Macario. “I give half my life to keep this running. When you spend all that time and work and money, how I can say ‘I don’t care?'”
Macario’s problems have also been exacerbated by his role as landlord of the eight units in his two buildings. Even though some tenants were not paying rent, since the building was in foreclosure, Macario was unable to evict them. In addition, with the building in foreclosure, the court designated a third party to collect rent, while Macario still had to pay taxes and other utilities to keep the apartments habitable.
This meant for the first time in 25 years, Macario and his family had to pay rent. Macario’s lawyer recommended that he ignore the order and continue to collect rent from his tenants just to “have something” to fall back on. As a result, he was nearly evicted from his store by sheriff deputies. A last-minute letter from his lawyer proving that he would and could pay his rent stopped the eviction.
Currently Macario is working with a new lawyer who was suggested to him by his pastor. He expects that the building he bought 11 years ago, where his wife lives, will be out of foreclosure in the next few months. The other building, which houses his store and was his first home in America, remains in peril.
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New regulations have been passed to help combat the lengthy foreclosure process time. In the federal settlement reached earlier this year with five of the major banks involved in foreclosures, loan servicing standards were addressed. Now banks must provide a single point of contact for the borrower. In addition, there is a pilot program in Queens that will have each mortgage servicer provide a dedicated representative for a week who has the power to make decisions in the case, in order to avoid the problems of having different lawyers for every meeting.
For Sophia, the new regulations and aid seem more theoretical than practical. “It just seems far off in the distance,” said Sophia.
At age 74, Macario says the only thing he can do is keep his head down and continue to fight for his buildings. “I have to leave them something,” said Macario of his family. “This life is very difficult.”
This story is part of a series of stories that focuses on the less economically vibrant parts of Brooklyn. For more, check out the rest of our Under the Radar series.
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