BY KEITH BENMAN, Times of Northwest Indiana
kbenman@nwitimes.com
As hospital bills mounted from her mother's life-threatening illness two years ago, Stacey Clemons took a look at the home refinancing they had done in an effort to pay off some of those bills.
"When I saw it was adjustable rate, I just cried," Clemons said last week seated on a couch in the Crown Point ranch home she shares with her mother.
The interest rate on their refinancing has undergone several hikes since Clemons pulled it out for another look two years ago. It will hit a credit card-like-level of 12.95 percent in a few months, jumping the monthly payment by $175.
Clemons and her mom, Joy, know they cannot squeeze that amount out of what's left of their modest incomes after buying medicines, paying utility bills and scraping together property taxes.
Clemons, 37, works as a food service worker at St. Anthony Medical Center in Crown Point and Joy, 65, just started collecting Social Security.
"This is all we've ever known," Clemons said of the three-bedroom, 1950s-era prefab home where she grew up. "It's not like I can go out and buy one of these new homes they are building in Crown Point."
This year, about 1.5 million subprime adjustable rate mortgages like Stacey and Joy Clemons' are scheduled to reset to higher rates in the United States. That is fueling fears the foreclosure crisis that kicked into high gear last year will go on and on.
Federal Reserve Bank Chairman Ben Bernanke last week urged lenders and Congress to do more to help homeowners.
Foreclosures not only are affecting those fearing foreclosure or people who already have lost their homes. They also are weighing down property values in many neighborhoods.
And people living in the house next door or down the street have other concerns as well.
A sprawling home on 84th Terrace, a wooded cul-de-sac in Schererville, has sat empty for more than a year. It was foreclosed for $390,115 by Chase Home Finance and put up for sale on May 2 at the Lake County Sheriff's sale. It didn't sell.
"We've seen a lot of people walking around there and peeking in the windows," said Agnes Burhans, who lives two doors down. "But what would they steal? There's nothing in there."
Through the years the small cul-de-sac has been a good place to raise a family, she said. Her husband built their house there 30 years ago.
"We never had anything like this happen on this street before," she said as she trimmed weeds out front on a recent sunny morning.
Bankruptcy lawyers, consumer advocates and sheriff's civil division officers say every foreclosure has its own story.
But they agree that underlying the recent surge in foreclosures are the subprime loans that began being offered by specialty lenders in the late 1990s. Those loans, available to those with less-than perfect credit and often available with no down payment, soon were offered by scores of lenders.
Caroline Jurcak, of Hobart, said a desire to get her mortgage in her name after a divorce left her with little choice other than to refinance her home two years ago.
Now, with all the news of how consumers were preyed on by unscrupulous lenders, she has taken another look at the deal she signed.
She knew the fixed rate of 10.95 percent was high. But she also started thinking about the way the broker pressured her to take a cash payout of almost $10,000.
"It was like they wanted me to take so much cash. I told them I didn't want to do that. I only needed so much."
She also remembers how the loan broker never asked for a current pay stub or proof of current employment, telling her it was a "stated loan." And then how the closing costs were "rolled in" at the same high interest rate. A prepayment penalty was included if she pays off the loan early.
Mortgage Lenders Network USA Inc., was one of the biggest lenders to people with shaky credit. Then, it ceased all lending activity in January 2007 and declared bankruptcy a month later.
Jurcak has since turned to the local activist group ACORN for help. She wants to have the interest rate or principal on the loan reduced through negotiation with the finance company that holds the loan.
Clemons also has turned to ACORN for help, hoping to get her interest rate reduced to a more manageable level.
At one time, Clemons was working four jobs to help pay her mother's medical bills. Before that, she worked at Burrell Professional Labs, where rushes on developing photos often had her working 12 hour days.
Joy worked there for 13 years. As a younger woman, Joy worked as a meter maid and dispatcher for the Crown Point Police Department. A portrait of her in her crisp Crown Point police uniform hangs over a desk in her living room.
"We've worked hard for what we have," Stacey Clemons said. "We just want to hold on to something."