Woman Evicted Near End of 30-Year Loan
For more than 28 years, Lee Mary Hamilton kept her part of the deal. Every month or so, through good times and bad, she would go to the post office and mail a money order to her mortgage company.
Bit by bit, she chipped away at her 30-year mortgage. She watched with satisfaction as the principal shrank. It fell below $10,000, then $5,000--finally, below $1,000.
And then, like a long-distance runner who trips--or is tripped--a few yards short of the tape, Hamilton came up short. Today, she is fighting eviction after her house was sold for $26,675 at a foreclosure auction in June.
Hers is every homeowner’s nightmare turned to life.
But Hamilton is not every homeowner. And this wasn’t supposed to happen to her.
A single mother on welfare who raised two children and two grandchildren in her cramped and decaying cottage in South-Central Los Angeles, she was one of the beneficiaries of a federal program to encourage home ownership among the poor.
The program, Section 235 of the National Housing Act, contained provisions intended to make it extremely difficult for someone to default on a loan. The government would assist them financially. Lenders would bend over backward to keep borrowers on track, and were mandated to provide counseling to those who might go astray.
In her case, the system didn’t work.
Hamilton, a 62-year-old native of Mobile, Ala., has lived in Los Angeles since 1948. She claims she could never get a job because she was too thin; the only work she ever did outside the home, she said, was volunteering at her church. She is an obviously bright woman, with a sharp memory for dates and names, though not necessarily schooled in the finer points of finance.
She just wanted a bigger place to rent when she went to a real estate agent in early 1970. Why not buy, the agent asked.
Hamilton, struggling to support her family on welfare, had never considered home ownership possible for someone of her means. But as the agent told her about the Section 235 loans, which required a tiny down payment and promised a government subsidy that would fluctuate according to her income, she began to realize that she could do it. And so, on Feb. 6, 1970, she signed a contract to buy a tiny, two-bedroom house on West 63rd Place, a cramped alley just off Broadway, for $11,250.
It wasn’t much, Lord knows. But it was hers.
In the subsequent years, she was faithful, if not always prompt. The mortgage was held by the federal agency Fannie Mae, but serviced by a series of contractors. Sometimes she would get a couple of months behind in her payments, then pay two or three months at once. But she always paid. And nobody seemed to mind.
The payments became a bit more erratic after June 12, 1989, a date she can recite like a mantra. That was the day her 22-year-old son, Mario Henry Hamilton, was killed in a drive-by shooting within yards of her house. Police say the crime has never been solved.
Still, she continued to make payments, some later than others. And in 1997, with the end in sight, she began increasing her payments in an effort to prepay the mortgage.
In early 1998, she made her last payment of $99.22, believing, she said, that she had finished paying off the loan. When the mortgage company sent her letters warning that she was in danger of default, her response was that she couldn’t default on a mortgage that was fully paid.
“I’m not going to be bilked out of no money,” she says now. “Somebody explain it to me first.”
According to Hamilton and her legal aid lawyer, Tai Glenn, she made dozens, if not hundreds, of telephone calls to mortgage companies--more than one was involved--and the Department of Housing and Urban Development, trying to straighten out what she believed was a simple misunderstanding.
Her efforts led to a remarkable letter in April 1998 from a HUD official to Alliance Mortgage Co., which was then servicing the loan, urging Alliance to write it off.
“Apparently, there are still some misunderstandings,” wrote Bettie J. Watts, a housing specialist in HUD’s office in Oklahoma City.
“Either way, it seems that it would be just as cheap for you to write off or discharge this matter as it would be for you to pursue foreclosure and the expense related to it. Especially in this instance, when there is . . . the very reasonable possibility that Ms. Hamilton may be correct in her assumption that her loan has been paid off.”
Neither Alliance nor HUD will say how Alliance responded. Hamilton said she heard nothing until that December, when another company, Professional Lenders Alliance, wrote a letter addressed to “Dear Sir,” demanding to know why she had defaulted.
Eventually, Professional notified her that her house would be sold. On June 23, it was sold at auction to a Newport Beach real estate speculator, Jess Mendoza.
There was never any of the counseling mandated by law, Hamilton and her lawyer say. In fact, they say, neither Fannie Mae nor Alliance Mortgage nor Professional Lenders Alliance did anything to help Hamilton, aside from sending a series of threatening letters that only served to confuse her.
“It should have been impossible for her to default--impossible,” said Glenn, who has worked for the Legal Aid Foundation of Los Angeles for 10 years. “Only once or twice in those 10 years has something hit me as so solidly wrong. It just has to be fixed.”
None of the lenders would comment on Hamilton’s case for this story. Mendoza, the new owner, said he had no qualms about his decision to buy the house and move to evict Hamilton.
“If they sold it and they shouldn’t have sold it, let them rescind the sale,” he said.
Hamilton is fighting the eviction in Municipal Court. She also has filed for bankruptcy, allowing her to file suit in U.S. Bankruptcy Court to overturn the foreclosure sale.
According to Glenn, it still isn’t clear whether Hamilton paid off her loan. Records from the period before the default are of little help: In one two-month period of 1998, two mortgage companies and HUD gave three widely divergent figures for what she owed, with HUD also acknowledging that she might owe nothing at all.
“You can make a case . . . that she paid what they said she needed to prepay,” Glenn said. “It depends on how you apply it.”
But even if Hamilton didn’t pay, Glenn insists she was done an injustice. “A person just can’t be foreclosed on when they owe $1,000 in principal,” she said. “They just can’t. It’s, like, against gravity.”
