No Closure In Sight

The foreclosure crisis that has plagued the nation since the Great Recession continues to be a burden for many Westchester homeowners

When newly elected Mount Vernon Mayor Richard Thomas promised constituents earlier this year that he would “take on zombies,” he wasn’t referring to post-apocalyptic flesh-eating monsters. 

In his crosshairs instead was the long-abandoned shell of what was once a home at 207 South Fifth Avenue, a local eyesore that Thomas said “destroys the property values of the neighborhood and threatens public safety.”

It would become the second “zombie house” demolished by city workers since Thomas took office at the start of the year, the young mayor inheriting a city still struggling with the long tail of the county’s lingering foreclosure crisis. The effort is part of what Thomas calls an aggressive initiative “to take back quality of life” in his city.

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Mount Vernon is not alone. During the financial crisis of 2007-2008 and the ensuing Great Recession, millions of Americans lost their homes due to foreclosure. Westchester County was hit particularly hard, and the recovery has been slow. The county’s foreclosure totals in 2015 still outpaced both state and national rates, according to County Clerk Timothy C. Idoni. While foreclosure filings in Westchester fell to 2,120 in 2015 (down 9 percent from 2014 filings), foreclosure judgments spiked to their highest totals in the last decade (from 772 in 2014 to 1,178 in 2015), evidence of “a foreclosure crisis that continues to linger,” Idoni adds. The data from the first three months of 2016 shows this familiar pattern persisting.


Helping the Hardest Hit

At the forefront of this is Veronica Raphael, director of foreclosure prevention at Westchester Residential Opportunities (WRO), a nonprofit housing counseling agency based in White Plains. According to Raphael, when homeowners miss four consecutive mortgage payments, their bank is obligated to initiate foreclosure proceedings—a step that may take six months or more. Next is a settlement conference, in which homeowners meet with lawyers representing their lenders to discuss next steps. WRO can represent homeowners at those conferences and negotiate loan modifications on their behalf—services that Raphael estimates her office provides to roughly 300 people in Westchester each year.

One of these people was Orlando Williams (above), a lifelong Bronx resident who moved with his wife and three children to Westchester in 2008, seeking a safer neighborhood for his family. A friend introduced him to a Mount Vernon-based real estate agent whose children attended the same middle school as Williams’ kids. The agent began sending Williams listings in Westchester and advising him through the intimidating process of becoming a first-time homeowner.

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“Our kids went to school together,” Williams says. “I trusted him.”

The relationship soured quickly. According to Williams, the agent sent him only his own listings and steered him toward his in-house mortgage broker, but when Williams found a house in Elmsford on his own, endangering the agent’s exclusive commission, Williams says the agent attempted to scam him, to make up the difference.

Eventually, Williams decided to cut the agent out entirely. He did some research and discovered a mortgage broker all too eager to give him a home loan—Countrywide Financial, the now-infamous company revealed to be one of the main predatory lenders whose practices destabilized the financial and housing markets.

“I was so relieved,” Williams says. “We finally had a home. I thought: We got through it. It’s all done.”

The truth, however, was that Williams’ troubles had just begun.

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Soon after Bank of America purchased the failing Countrywide Financial in 2008 for $4.1 billion, Williams started having trouble making mortgage payments. He reached out to the bank and learned that his terms had changed: Bank of America’s “product” wasn’t as forgiving as Countrywide’s. The bank initiated foreclosure proceedings. Williams tried to refinance, but, he says, Bank of America kept losing the documents he’d sent to support his application. His bank account dwindled.

“It was terrible,” Williams recalls. “I felt powerless. Every time I did what they asked me to do, they said I did something wrong. I thought I was going to end up homeless.”

That’s when Williams found WRO. His counselor negotiated a loan mediation, and (as of this writing) he’s back in good standing. But Raphael says Williams’ situation is typical of the homeowners she works with every day.

The flood of foreclosure filings during the Great Recession overwhelmed the county’s clunky court system, says Raphael, so the recent rise in foreclosure judgments can be at least partially attributed to the clearing of a backlog of pending foreclosure cases. That doesn’t mean, however, that the county’s foreclosure problems are in the past. The “first wave” of foreclosures, Raphael says, consisted of new homeowners like Williams but now there are longtime county residents who are struggling to stay afloat in a changing economy.

Marlene (who asked to be identified only by her first name) has lived in Yonkers for the past 33 years. After working for more than 15 years to put her three children through private school, Marlene was laid off in 2009 and began having trouble making her mortgage payments. Hers was another Countrywide Financial deal swallowed by Bank of America, so it didn’t help that her rates went up precipitously, yielding a monthly debt that skyrocketed from the $1,200 a month she had been paying all the way up to $1,900. When her request for a second loan modification was denied, she put her home up for short sale in 2014. It pained her to do it.

“It’s my home,” she explains. “I’m in my 60s. The next place I go might be the last, and I’m very happy in my house.”

With the short sale on her home now finally going through, Marlene is moving to an apartment in Yonkers. 


The County Steps in—But Is It Enough?

While the federal and state governments have enacted legislation to prevent predatory lending and aid struggling homeowners, Raphael feels that the county needs to do more. The services her agency provides create value for the county, and she’d like to see the county return the favor with a bigger investment.

“We haven’t seen much assistance for homeowners at the county level,” Raphael says. “I don’t think [County Executive Rob] Astorino is interested in this issue.”

“I felt powerless. Every time I did what they asked me to do, they said I did something wrong. I thought I was going to end up homeless.” —Elmsford resident Orlando Williams

“Of course we care, but we have to follow the laws,” says Ned McCormack, communications director for the county executive’s office. “The county is not party to a foreclosure. That’s between the homeowner and the bank. We understand the human toll that foreclosures can take, and the county is working actively to move the process along, provide services to those in need and rehabilitate foreclosed houses.”

McCormack adds that the county has a healthy housing market compared with neighbors like Nassau and Suffolk Counties in Long Island but that the county executive is nonetheless doing what he can to help Westchester homeowners who have fallen through its cracks. He points to the county’s emergency-shelter grant program, which awards funds to eligible nonprofit agencies providing eviction-prevention services, including WRO. McCormack also cites projects in Mount Vernon and Peekskill—two of the cities hit hardest by the county’s foreclosure crisis—where the county has purchased foreclosure homes and sold them to developers for conversion into affordable-housing units.

The county’s response to one crisis, however, might be prolonging another. The county has lost millions of dollars in funding from the federal government’s Community Development Block Grants after the US Department of Housing and Urban Development in 2015 accused the county of violating the terms of its 2009 affordable-housing settlement. (For more on this issue, see our April 2016 article, “Home Sweet Affordable Home.”) Geoffrey Anderson, WRO’s executive director, explains that some of that money used to trickle down to agencies like his.

“There are services we could provide to people who, truthfully, without those [block grant] funds, aren’t being served,” Anderson says.

Hard-hit cities like Yonkers, Peekskill, and Mount Vernon can’t afford to wait for help. The foreclosure process can take several years, and foreclosure homes are often neglected or abandoned by both their owners and the banks, spawning the decried zombie houses that drive down the
property values of already blighted neighborhoods.

Peekskill mayor Frank Catalina points a finger at banks that don’t maintain foreclosed houses yet refuse to sell them at a lower price, leaving local residents to step up and assume responsibility for upkeep in order to protect their own property values.

“It’s a vicious cycle,” Catalina says. “The courts and government put more and more obstacles in the way of the foreclosure process, and the banks [don’t sell because] they can’t recoup their investment.”

The issue has also vexed state lawmakers, who undertook the Abandoned Property Neighborhood Relief Act as their latest effort to outline banks’ basic responsibilities toward foreclosure properties. Introduced in 2015, the bill remains active before the assembly and the senate.

Mayor Thomas echoes the criticism by his Peekskill counterpart, saying his own city remains “ground zero” of the foreclosure crisis. “This is one of the issues I intend to play offense on,” Thomas explains. “I’m going to use the full strength of my office to ensure safe communities. I’m not going to wait for an invitation from the banks. If they want to fight, so be it, but I’m going to clean up these neighborhoods.”

For some homeowners, the damage has already been done. Harvey Morgan* was a farmer in the Dominican Republic before moving to the US in 1987. He now works in a warehouse during the day and drives a taxi at night, but after a divorce from his wife and some trouble with the tenants occupying the second unit of his multifamily home in Yonkers, he’s fallen far behind on his mortgage payments. Too far, according to his counselor at WRO, who told Morgan that it may be too late to sell the house and stop the foreclosure. She advised Morgan to consider an alternative strategy: either listing the property immediately or filing for bankruptcy.

He points a finger at the banks, saying they enticed him with a teaser rate, then jacked up his payments. However, he
remains optimistic. “I feel lucky,” Morgan says. “Lots of people don’t even have anything to lose.” 

Peter Madden is a recurring contributor to Westchester Magazine. His work has also appeared in Sports Illustrated, GOLF Magazine, Reuters, The Daily Beast, and Southbay.


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