Family struggles against foreclosure
First of four parts
Steven Fugate stood tall before the DuPage County judge, fighting the weight of owing $248,000 in mortgage and late fees on his Carol Stream home. Yet standing tall could not erase the reality that he and wife Melanie dreaded most: foreclosure.
The couple, who have five children, struggled to buy that raised ranch about 2½ years ago. Now they're struggling to avoid a foreclosure, the stigma, the heartache and the black mark on their credit. Despite frantic attempts to hold on to it, their home has been slipping out of their grasp.
Steven, a 48-year-old mechanic, has Hepatitis C, a liver disease that often leaves him too fatigued to work regularly. He's been denied disability, but has appealed, which could take up to a year. Yet Steven holds on to the hope that he'll become healthy enough to get a good job and pay off the debt.
Time is not on their side. The sheriff's auction of their home has been set for Jan. 8. It also places them in a Catch-22. In this tough real estate market, could they sell their home in a so-called short sale to get what they can before it lands on the auction block?
Melanie, 43, sat at the back of the courtroom and watched her husband talk to the judge. Steven's back remained straight, his jeans pressed. She couldn't hold back the emotion welling inside, so she stepped into the hallway. Tears flowed.
The Dream Foreclosed is a four-part series looking at the local home foreclosure crisis. Stories Foreclosures continue to spike in Illinois, nation [06/13/08] Foreclosure crisis going to get worse before it gets better [11/28/07] Dreams end and begin at foreclosure auctions [11/27/07] How one couple lost their home [11/27/07] Salvaging the American dream [11/26/07] Miscommunication at heart of foreclosure crisis [11/26/07] Communication with lender key, counselor advises [11/26/07] Foreclosure tips: What you need to know [11/26/07] Families struggles against foreclosure [11/25/07] Many factors fed housing breakdown [11/25/07] Growing areas not safe from foreclosures [11/25/07] A glossary of foreclosure terms [11/25/07] Graphics Map of local foreclosures Excel document breaking down local foreclosures "We need to have something to start over," Melanie said later. "We need to keep a roof over our heads. That's the whole thing. We've worked for years and years and it's all being pulled out from under us. That's the hardest part."Staggering numbersThe Fugates are not alone. Tens of thousands of other homeowners nationwide have been facing foreclosure in record numbers. The foreclosure crisis is a perfect storm of sorts. It includes a mortgage industry in turmoil with years of risky loans coming to roost and with billions in losses for lenders who doled out sub-prime loans and the resulting rules that tightened borrowing. Then there are adjustable loans that quickly strangled homeowners when those rates reset at a soaring interest rate. Add to that a shaky economy, a depressed housing market, a volatile stock market, and the air let out of inflated housing prices.Other reasons run the gamut. Job loss, sickness, hefty medical bills, out-of-control credit card debt and divorce. Couple these problems with those in the industry and the foreclosure crisis is expected to get worse, experts said.All it takes for a warning notice or foreclosure complaint is for the homeowner to miss two or three payments. Some people are able to work out a payment plan. Others cannot pay and have little option but to lose the house. Ignoring the complaint or subsequent notices or going into denial can be detrimental to their case."It's almost natural and universal for many people to go into denial," said Steven B. Bashaw, a Lisle attorney specializing in real estate and foreclosure cases. "Some come into this late because of their denial, and that's the worse thing you could do."The Fugates are among 6,662 households in the Northwest and West suburbs that have received foreclosure notices just from January through September. That amount already has exceeded the full year of 2006, which had 6,428, according to data provided by Kaneville-based Record Information Services.Throughout Illinois, 20,008 filings were made in the third quarter (July through September). That's one for every 257 households. Those filings involve 19,128 properties. That is about 12 percent higher than the previous quarter and 38 percent higher than the same period a year ago, according to foreclosure data service RealtyTrac Inc. in Irvine, Calif. This text is replaced by the Flash movie. var so = new SWFObject("/graphics/dh_foreclose/dh_foreclose/dh_foreclose.swf", "dh_foreclose", "531", "253", "8", "#ffffff");so.addParam("base", "/graphics/dh_foreclose/dh_foreclose/"); so.write("flashcontent");Nationwide, a total of 635,159 foreclosure filings -- including default notices, auction sale notices and bank repossessions -- were reported on 446,726 properties during the third quarter. That's a 30 percent increase from the previous quarter and a 100-percent increase from the same period last year, said RealtyTrac.At that rate, it's one foreclosure filing for every 196 U.S. households. A single property often will have multiple filings against it. The cycle hasn't peaked yet, some experts say. They expect foreclosures to escalate by this spring as ARM loans with initial low-interest rates balloon with much higher interest. That could further flood the real estate market with homes, making it tougher to sell and reduce home values even more. And that could slow the nation's economy further, experts said."We have about 300 clients and we try to work with them and their mortgage lenders," said Helena Walls, a mortgage counselor with the Lake County Housing Authority, which helps low- and moderate-income people with housing opportunities."But if you have no income, none at all, then there's nothing we could do."Despite the hurdles, both emotionally and financially, the Fugates remain hopeful."But we don't have time on our side," Melanie said.How it startedMelanie and Steven owned a two-bedroom condo since 1998. Steven earned good money as an auto mechanic and later as a forklift mechanic. But he was starting to have various health problems and couldn't pinpoint the exact problem.They scraped together a down payment for their first home, which cost $275,000. They obtained a 30-year fixed mortgage at 6 percent.By January 2005, they moved in to the new home, which offered more space with three bedrooms and two baths. Most of all, the home offered direction for their future, a sense of belonging to a community and a piece of the American dream.By March 2006, Steven's health worsened, leading to a lot of time off. He lost his job and spent days in bed. Doctors diagnosed him with Hepatitis C, which had led to cirrhosis of the liver. He's worked on and off since.Last May, Steven's condition worsened with internal bleeding. He started treatments to help eliminate the virus coursing through his veins. Health insurance covered nearly all his bills. But without a steady job, only the most critical bills were paid first, so the utilities wouldn't be turned off."We looked to a lot of different agencies to help keep us from getting behind," Melanie said.But they feel they have fallen through the cracks, not poor enough for free legal services or other programs, yet not wealthy enough to keep all of them with the basics while paying for utilities, food and other bills.In April, they received their first foreclosure notice. They had only paid half of their monthly $1,800 mortgage bills for the last three months. The partial payments weren't accepted by the lender and were not credited to their account, Melanie said."My first reaction was sadness," said Melanie. "Then I was just utterly scared. Where do we go? What do we do? We couldn't afford an attorney."Taking actionThe Fugates started talking with their lender and agreed to a customized payment schedule to help them catch up on the mortgage.They then contacted their credit card companies and arranged for set monthly payments with no interest. "They pretty much leave us alone," Melanie said.They have no car payments or school loans.Steven also sold some tools, a motorcycle, a ladder and other items, putting the cash toward bills.But without regular employment, Steven couldn't help with the mortgage. Melanie, an independent researcher who works from home, makes a small wage. But that income couldn't stretch much further.They also talked to lawyers but didn't qualify for pro bono services.Their last resort was to put the home up for sale "by owner.""The market's not good," Melanie said. "Nobody really was looking to buy."Next, they hired a Realtor, The home lists for $279,900, but so far no one has made an offer. Even if they could sell the home before it hits the auction block on Jan. 8, where would they go?"We can't afford to live in Illinois anymore," Melanie said. "We have some relatives out of state, but we don't want to do that because the kids are in school here and they like it, and my husband has family here. He needs their love and support."Whatever happens, they have decided against filing for bankruptcy. "That only stalls the problem and doesn't make it go away. Not really," Melanie said.They also attend every court date to make sure the judge knows they're sincere in their efforts, Steven said."We've always been sort of lucky. Something will work out," he said.Still, the stress has exacerbated some of Steven's symptoms. He has accepted his physical limitations, such as the fatigue. He must also avoid contact with chemicals, which his liver can no longer process. That means he can no longer handle motor oils and grease, which often seep onto the hands and arms of a mechanic. So he's been looking for other work.Melanie has been doing her best to care for the home, the kids, her husband and her job."We're losing our home," Melanie said. "It's the worse thing in the world, not knowing where to turn or what to do next. If it wasn't for my faith in God, I wouldn't have been able to get through any of this." 512498 512471Melanie Fugate and son Jake, 5, look through foreclosure papers in their kitchen in Carol Stream. Melanie's husband, Steven, is sick with a liver disease.Marcelle Bright | Staff Photographer