Fighting foreclosures in the Valley

Shortly after Father John Lasseigne took over last summer as head of Mary Immaculate Church of Pacoima, a man and woman and their well-dressed children came to him after Mass and asked the priest to pray for them because they were about to lose their home.

The startling request was Lasseigne’s introduction to the epidemic of foreclosures afflicting his flock in the northeast San Fernando Valley, a working-class, heavily immigrant area where more than 8,000 homes are either in default or have been foreclosed upon.

Over the last three months, Lasseigne and other community leaders have come up with an unusual response: They have organized more than 500 Latino immigrant families who are behind on their payments into teams that will seek to negotiate with banks as a group.

They also intend to compile detailed records of how and whether lending institutions agree to modify loans -- information they say could be given to government officials in an attempt to give distressed homeowners more favorable terms.

“If we don’t make progress with the banks, we certainly expect to make progress with our elected officials,” said Lasseigne, whose congregation is a member of the community-organizing group One-LA, a local affiliate of the left-leaning Industrial Areas Foundation.

The effort represents an unusual attempt at collective negotiation between a community and banks, as well as information-sharing among homeowners, housing experts say, and leaders in the northeast San Fernando Valley say they hope it can be a model for other places.

It comes as policymakers grapple with the news, announced Friday, that 1 in 10 U.S. homeowners with a mortgage were either one month behind on a payment or in foreclosure at the end of September.

But the effort has also prompted skepticism from some who say it is unrealistic to expect banks to bail out homeowners who got in way over their heads -- especially as a group.

“The loans were not made en masse,” said Tom Kelly, spokesman for Chase Bank. “The issue of mortgages is a home-by-home, mortgage-by-mortgage issue.”

Modifying may be particularly tricky in an area such as the northeast San Fernando Valley, where home values have fallen hundreds of thousands of dollars from their level of a few years ago. That’s because many borrowers have low-paying jobs and poor credit -- and may not be able to afford even a modified loan at a fixed rate under strict lending standards.

Many in Pacoima and surrounding communities say they have to do something -- and trying to negotiate on their own with banks does not seem to be saving their homes.

The effort had its first big event Sunday, when about 60 homeowners met at a law office in Pacoima with representatives of Chase Bank, which now also handles loans serviced by Washington Mutual.

“Individually, they won’t listen to us. If we come together as a community, maybe we have a chance,” said Jose Hernandez, a 28-year-old special education teacher at Arleta High School who is hoping to save his parents’ home, where he lives with his mother and father, two sisters and three nieces, all of them pooling their resources to scrape together the mortgage payment on a three-bedroom house.

Community leaders say the story of the Hernandez family is sadly typical of what happened to many in the northeast San Fernando Valley.

Hernandez’s parents, immigrants from El Salvador, bought their house for $488,000 in 2005. Although they both had low-paying jobs at a local dry cleaner, they were approved for a loan. And they were able to put $100,000 down, mostly from the proceeds of a small town house they had sold.

“This was something my mom wanted so bad,” Hernandez said, gesturing around the living room. Pride of ownership was evident in myriad little touches, including carefully tended roses in a bed of white gravel out front, a fruit bowl on the shiny dining room table, and an oil painting of a mountainous Latin American village on the living room wall.

At first, Hernandez said, the purchase seemed like a dream. His mother was thrilled to be able to throw birthday parties for her granddaughters in the backyard -- and with everyone in the house contributing toward the mortgage, “it felt good. We were all helping each other.”

Then things started to fall apart.

Hernandez said his mother had wanted a fixed rate but was instead steered toward a negative amortizing loan, in which the family was allowed to make less than a standard principal and interest payment each month, and so the total principal slowly increased. Today they owe more than $500,000.

At the same time, the value of their house has plummeted and might now be worth less than $300,000.

Looking back, Hernandez said he can’t believe he was foolish enough to let his mother get into a loan under such terms, but a broker he trusted assured him he would be able to refinance.

Recently, the terms of the loan changed so that the family must now start paying back their principal, meaning their monthly payment has shot up to $4,000 from $2,300.

On a recent afternoon, Hernandez held the bill stub in one hand and clutched his forehead with the other.

“This is our home. We don’t want to lose it, but at the same time, there is no way we can do a $4,000 payment,” he said.

Hernandez did not know where to turn and said he had given $300 to a so-called foreclosure vulture who promised to save his home and then stopped returning his phone calls.

Then he heard an announcement at church.

So many people at Mary Immaculate and other local Roman Catholic churches are facing foreclosure that the church began making announcements about it at Mass and set up a table outside services where people could get information. Lasseigne, the priest, had teamed with other leaders from One-LA to try to organize a response.

Over the last few weeks, parishioners have confided a stream of stories to one another -- in some cases marking the first time they admitted to anyone the trouble they are in.

Not everyone is in the same situation. Some people appear to have been pushed by unscrupulous brokers into loans that seemed almost designed to fail. Others were so desperate to own homes that they got in over their heads, paying more for houses than they could afford. Still others have lost jobs or suffered illness, making it difficult for them to make their payments.

Government officials and policy experts are watching the effort -- especially because financial leaders lately have been saying the private sector has not done enough to prevent foreclosures.

“Foreclosures are a disaster not only for homeowners and lenders but for the communities in which they occur,” said Rep. Brad Sherman (D-Sherman Oaks) in a written response to questions from The Times.

“The current loan modification process is very cumbersome and confusing to borrowers, and, far too often, lenders and mortgage servicers are uncooperative. . . . I am very interested in seeing the information that these community groups plan to collect.”

City Councilman Richard Alarcon, who represents the area, said the effort may be a long shot -- but it is one he applauds.

Many of his constituents, he said, are financially unsophisticated and may not speak English well.

Some were victims of predatory lending. Others do not understand the foreclosure process well and don’t know what their rights are. Many feel trapped.

Meanwhile, he said, his district is growing more blighted. Some vacant homes have become magnets for rave parties. Other houses have turned into parched wastelands as water bills go unpaid and upkeep undone.

“The need is crying out,” Alarcon said.

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jessica.garrison@latimes.com