When dream homes become nightmares
Soledad Aviles dreamed for years of owning a home, with a plot of land where he could grow corn and chiles as he did in his native Mexico. So he felt blessed last year when he learned he could buy a three-bedroom, single-story stucco house on West La Verne Avenue in Santa Ana.
Referred to a local loan broker by a trusted friend, he borrowed the entire purchase price of $615,000 from Washington Mutual at a high interest rate typical of sub-prime loans. The monthly payment, as he says he understood it, would be $3,600 -- steep for a glass cutter who made $9 an hour -- but Aviles counted on his wife and three of his six daughters, who also worked low-paying jobs, to contribute.
“We took out our pencils, figured out our take-home pay and figured out that if we all pitched in, it would work,” said Aviles, 54, a stoop-shouldered, soft-spoken man with a sixth-grade education from Mexico.
Relying on the broker’s word, he signed loan documents written in English, a language he neither speaks nor reads, Aviles said. He was shocked to learn afterward that the monthly payment would not be $3,600, but $4,800 -- a price that forced him to rent out bedrooms, the garage and an enclosed porch while he and his wife slept on the couch. He fed his family with food from friends and corn he grew.
Aviles says he was not aware that the February 2006 loan application he signed dramatically exaggerated his family’s income. The application lists him as the owner of a landscaping business with a $7,400 monthly income. His 27-year-old daughter Marlene, who earns $9 an hour in a noodle factory, appears as the owner of a housecleaning company who makes $5,700 a month. The application lists their yearly income as $157,000, when, according to Aviles, it was really closer to $60,000.
Now, five months behind on his payments, Aviles is scrambling to sell the house before the bank forecloses. Desperately ill from kidney disease and unable to work for the last year, he sits dejectedly at the dining room table, wondering when the bank will kick him out.
Aviles’ situation is hardly unique. Add his name to the ever-expanding list of casualties in the nationwide sub-prime mortgage debacle, his experience echoing that of thousands who bought homes in recent years only to find themselves in a sagging market saddled with payments they cannot make.
But amid the storm of foreclosures, his story illustrates the special vulnerabilities of first-generation immigrants in places like predominantly Latino Santa Ana, where city leaders have identified about 800 sub-prime borrowers facing the potential loss of their homes.
“We think this is just the tip of the iceberg, in terms of the breadth and depth,” said Steve Harding, Santa Ana’s deputy city manager. Apart from the language barrier, he said, many first-generation immigrants might have been especially vulnerable to sub-prime lending because they avoided checking accounts and credit cards, which prevented them from qualifying for regular loans.
The city has teamed with the Fair Housing Council of Orange County to offer free foreclosure prevention workshops, hoping to teach people to avoid predatory lenders and find help as they face the loss of their homes.
The Fair Housing Council said the number of people seeking help over mortgage woes, many of them Latinos living in Anaheim and Santa Ana, has soared. The group typically receives 15 to 20 complaints annually, but in September of this year the group received more than 20. The state Department of Real Estate, nonprofits and the Mexican consulate also have reported a rise in mortgage complaints, many of them from homeowners saying they signed documents they didn’t understand.
Across the state, many cases are landing in court. Kerstin Arusha, a directing attorney at the nonprofit Law Foundation of Silicon Valley, said that Spanish speakers, along with the elderly, “seem to be hardest hit by both sub-prime lending and predatory lending. There are many borrowers out there that were misled about the terms of the loan.”
The Law Foundation is suing a broker, real estate agent and lender in federal court on behalf of nine Santa Clara County families, many of whom speak only Spanish, contending they were lured into mortgages they didn’t understand. The lawsuit alleges that the broker inflated incomes on loan applications, misrepresented the terms of the loans and stuck clients with higher payments than they had been promised.
The victims “thought they saw the promise of the American Dream, and instead they ended up with a nightmare,” Arusha said. “I think they were seen as easy targets for predatory lenders who could sell them a bill of goods without giving them disclosures in a language they understand.”
The Law Foundation is handling 10 other cases involving predatory lending, half of them for Latino clients, Arusha said.
But in Orange County, the district attorney’s office has not reported an increase in prosecutions for fraudulent lending. Elizabeth Henderson, a prosecutor in the county’s fraud unit, said many such crimes go unreported in immigrant communities because of a distrust of law enforcement and confusion over what had occurred.
“They’re not really sure what they were promised, so they don’t know if they were cheated,” she said.
Sitting in his Santa Ana home, waiting for the bank to kick him out or for his kidney to kill him, Aviles did not hesitate to characterize what had happened to him: “They used me, nothing more.”
He was led astray, he said, by a man he had considered a dear friend, Carlos Lares. They used to work in a factory together. He said Lares showed him about a dozen homes, including the one he bought, and offered to arrange a mortgage.
State records show Lares lacks the real estate license required to show homes. In an interview with The Times, Lares denied showing homes and said he merely took Aviles to the office where he works, Century 21 South Coast. He declined to comment further. His business card lists him as a “team service associate.”
Aviles’ loan paperwork was processed at the South Bristol Street offices of Century 21 South Coast and Su Casa Mortgage, an affiliated mortgage broker.
Agent Saul Velazquez said he co-owns both companies with his cousin, Carlos Velazquez. They declined to discuss the Aviles case specifically, citing client confidentiality.
“We explain things. . . . If clients don’t understand, how can we go back and fix that?” Carlos Velazquez said. Problems like Aviles’ are “happening everywhere. People, when they get in situations, make up stories,” he said.
Saul Velazquez said his employees are bilingual and translate mortgage terms into Spanish for clients before they sign.
“We only put on any application what the clients tell us,” he said. “That’s why everything is translated into Spanish.”
Velazquez said it was unfair to blame Realtors for factors beyond their control, such as illness or divorce, that cut into a borrower’s income, or for the drop in housing prices. “The Realtors are not the bad guys,” he said. “This is something that happens in the market.”
Aviles took out two loans, one for $492,000 at 8.5% interest and another for $123,000 at 11.1% interest. But he and his family struggled to meet the payments, even after the house was crammed with renters.
It is unclear how long Aviles otherwise could have made the payments, but a confluence of factors made it impossible. His illness forced him to quit work, and the tanking housing market prevented him from refinancing the loan on better terms.
Realtor Sylvia Prata is now trying to help the family sell their home. She expects it will be a “short sale” with the house selling for less than the original $615,000 purchase price, with the lender weathering the loss.
“When I met Soledad, he was sitting with his head so low it was almost to his knees,” Prata said. “It’s like a tidal wave hitting them.”
Even after what Aviles has been through, Prata said that when he signed the documents to sell his house, she had to remind him to read them first.
christopher.goffard@latimes.com
Editorial assistant Nardine Saad contributed to this story.
