By Lynn Arditi
Published April 1, 2007
PAWTUCKET – Jim and Tammy Grinnell bought their first house with a loan from New Century Mortgage Corp.
Their story, like most stories of first-time homebuyers, begins with the familiar yearning for a place to call their own. It was 2001. They were living in a trailer: Jim, Tammy, and two children from Tammy’s previous marriage. Space was tight.
So, they sold their trailer for $10,000 and used the money for a down payment on a three-bedroom Cape down the block for $135,000.
Jim drove a truck. Tammy ran a daycare center in their basement. The 30-year mortgage carried an interest rate of about 12 percent, Tammy recalls, and payments of about $990 per month.
Flash forward. House prices rose. Interest rates fell. And the Grinnells were living off credit cards. Their debts piled up and the phone rang with offers: CONSOLIDATE YOUR DEBTS! ONE LOW MONTHLY PAYMENT!
The Grinnells refinanced. They rolled their credit-card debts into a bigger home loan. They rolled in their car payments, too. They refinanced again, and again, and again.
“We were just trying to get rid of extra bills, consolidate debts,” Tammy says.
“We got rid of our credit cards,” Jim says.
“We got rid of our van payment,” Tammy adds.
In all, the Grinnells refinanced their mortgage four times. (Their mortgage was sold to another lender but wound up back with New Century.) The last refinance was in March 2004. The new mortgage was for $193,500.
The new loan had an interest rate of 8.37 percent for the first two years; in later years, it could go as high as 15.15 percent. The refinancing alone cost the Grinnells more than $5,300. Of course, it didn’t feel expensive because they simply rolled the refinancing charges right into their new loan. Their payments climbed to $1,440 per month.
It took just five months before they began to fall behind on their mortgage payments. Late fees piled up.
In early 2005, they received a foreclosure notice.
The Grinnells had fallen into a familiar trap, say lawyers and housing counselors. They had “consolidated” their debts, as the radio and television ads say. What they didn’t realize, though, was that by rolling their credit-card debts into their mortgage they were putting their house at risk.
If you don’t pay your credit-card bills, you may be harassed by debt collectors. But if you don’t pay your mortgage, the lender can take your house.
“We thought we were doing better because we were paying big bills,” Tammy says, softly, “but we actually wound up hanging ourselves.”
Tammy blames herself. “We didn’t research it like we should have,” she says.
The couple sit on the couch in their living room, where Tammy has been clipping coupons. She holds the scissors, blade closed, like someone who knows what it means to get cut.
“If you’re not smart about it …” she breaks off. “We learned the hard way.”
The Grinnells are trying to keep their house. They found a lawyer who was able to stop the foreclosure by suing New Century in federal District Court in Providence for violating the federal Truth In Lending Act. The lawsuit alleges that New Century failed to provide the Grinnells with a copy of the mandatory disclosure documents when the loan was refinanced in 2003.
The couple then “exercised their extended right to rescind the loan for violations of TILA,” according the court documents.
It’s been two years since the lawsuit was filed. As part of a settlement, New Century has agreed to “rewrite the (loan) at favorable terms for the Grinnells so they can try to keep their home,” their lawyer, Christopher M. Lefebvre, said in an e-mail. Lefebvre says he plans to charge all of his legal fees on the case to New Century.
Meanwhile, the interest charges and fees on the unpaid balance has soared. The Grinnells’ mortgage debt as of last November total $243,859.24, according to a payoff statement from New Century. That includes an unpaid principal balance of $193,119, interest on the unpaid balance of $40,366, late charges of $7,318, and another $3,054 in unpaid fees, according to a statement
The Grinnells resumed paying their mortgage in January.
Tammy recites their monthly payment by heart: “Two thousand, one hundred and twenty-one dollars and fifty-four cents.”
Jim, 40, earns about $5,000 a month driving a truck. Tammy, 43, gave up her in-home daycare and started a new job, but she has been out of work for several weeks on medical leave. She says she is taking medication for anxiety.
“It’s stress issues,” she says, “and one of them being the mortgage.”
The Grinnells now pay for everything in cash. No credit cards. Tammy’s children try to help out. Her 21-year-old daughter is a medical secretary; her 19-year-old son is a machine operator. They each chip in $25 a week for food.
“It’s not a lot,” says Tammy, “but I’d rather them take care of their car insurance and loans.”
A few weeks ago, a woman called the Grinnell house. She offered them a way to refinance their mortgage. Tammy responded that she would talk it over with her lawyer. The woman called back the next day.
“Basically she told me New Century has gone under,” Jim Grinnell recalled. “She was trying to get me to refinance.”
This time, he didn’t take the bait.
“I’m gonna call my lawyer,” he told her, “before I decide anything.”
Editor’s note: The Providence Journal is working on a series of stories about house foreclosures and people who are at risk of losing their homes. If you want to comment or tell your story, go to projo.com or e-mail email@example.com
firstname.lastname@example.org / (401)277-7335