By Lynn Arditi
Published October 5, 2008

PROVIDENCE – The mail keeps coming, long after the residents are gone.

Grocery store circulars, water bills, medical bills and notices from loan-servicing companies addressed to houses the postman knows are vacant. The undeliverable mail gets stacked in the back of the postal truck.

In zip code 02907 of the city’s West End, where the house-foreclosure rate is more than six times the statewide average, postman Mike Ferreira’s delivery route is shrinking.

On Bellevue Avenue, homeowners who plant flower gardens and sweep their front steps live next door to boarded-up triple-deckers with weedy yards and trash-strewn sidewalks. Foreclosures have a way of rotting neighborhoods like cavities, from the inside out.

Five of the 49 houses on one block of Bellevue Avenue are vacant. And this is one of the better streets.

Here, in the house with the icicle lights, is the Fernandez family. There, with the SUV parked out back, is the Vallejo family.

The homeowners of Bellevue Avenue are janitors and cab drivers and rental property managers – many of them first-generation immigrants who bought into the American dream of homeownership.

Now, these homeowners who mow their lawns and trim their hedges and paint their front porches are angry. They’re angry at tenants who can’t or won’t pay their rent. They’re angry at thieves who break into the boarded-up houses to steal the copper. They’re angry at the litter collecting on their sidewalks.

And they’re angry because some of them, too, are losing their homes.

BELLEVUE AVENUE is stitched into a patchwork of residential streets in the city’s West End and a smaller slice of Olneyville that form a one-third-square-mile swatch of the city which the census bureau calls Tract 14.

The neighborhood between Cranston and Dexter streets is a checkerboard of two- and three-family houses where, during the 1930s, Russian, English, Irish, Polish and French-Canadian immigrants lived. By the turn of this century, over half of the residents – 55.7 percent – were Latino, according to the 2000 census.

During the housing market’s peak in 2006, more than 6 in 10 loans for houses in Tract 14 were risky “subprime” mortgages – the largest concentration anywhere in Providence County, according to an analysis by The Center for Responsible Lending, a nonprofit group in Washington. The biggest share of subprime mortgages – 67.3 percent – went to Latino borrowers.

Subprime loans, designed for borrowers with blemished credit, typically carry high interest rates and fees. During the first half of this decade, their use expanded dramatically around the country, especially among Latino and African-American borrowers.

Lenders seeking to enlarge their portfolios in Rhode Island discovered a large untapped market among the state’s growing Latino population, which the census bureau last year estimated at 115,000, or about 11 percent of the state’s population. By 2005, more than half of the roughly 5,700 mortgages made to Latinos in Rhode Island were subprime, compared with less than 20 percent in 2002, the Center’s data shows.

Lending practices once heralded as spawning the greatest expansion of homeownership in America are now being blamed for setting off the worst financial crisis since the Great Depression.

Lawmakers in Washington Friday approved a $700-billion taxpayer bailout to shore up world financial markets. But it remains to be seen whether that will help residents on streets such as Bellevue Avenue.

TWO DOORS down from a boarded triple-decker, a small boy holding an Ironman action toy peers out the doorway of a porch trimmed with the icicle lights as his father collects the mail.

Two of the three mailboxes remain empty. The tenants have moved out, said the owner, Walter Fernandez.

Upstairs, the owner’s wife, Janice, cooks lunch in the kitchen as their 4-year-old son, Wally, stretches out on the living room floor with a coloring book. The walls are covered with colorful paintings by Dominican artists.

The couple, both immigrants from the Dominican Republic, bought the three-family house at 129-131 Bellevue Ave. three years ago. At the time, they both worked – he as a janitor, she as an administrative assistant for a property-management company – and lived in a $700-a-month rental in Providence. They looked at more than 60 houses, Janice Fernandez said, before they chose this one. Built in 1922, the house has decorative moldings and original hardwood kitchen cabinets.

In November 2005, the three-family house was selling for $280,000.

“They put everything so easy,” said Walter Fernandez, who struggles with English.

“Why pay rent,” his wife, Janice, recalled the broker saying, “when you can buy your own house?”

Their loan application stated that their household income was $3,500 a month – even though Janice said it was actually closer to $2,000 a month. Their mortgage broker also listed on their loan application another $1,850 for rental income that they would receive from the two apartments which they had agreements to lease. That raised their annual income on the application from $42,000 to $64,200.

The broker, whom they knew and trusted, arranged for two mortgages – a $224,000 mortgage to cover 80 percent of the loan, and another $56,000 mortgage for the remaining 20 percent. Their payments on the “80/20” loan were $2,200 a month.

Not only would they have to rely on the rental income to pay their mortgage but also to pay for water, electricity, heat, food and other household expenses.

Janice Fernandez said she was worried about how they could afford such an expensive house, but the broker reassured her. If they rented the other two apartments for $700 and $750 each, they’d have to pay only the remaining $750 –– or roughly the same as they used to pay in rent.

“After a year, you can refinance,” she recalled the broker saying.

The couple moved in the week after Thanksgiving 2005.

They spent their time fixing up the house – replacing broken windows and refinishing the hardwood floors.

SEVEN MONTHS later, another Dominican family moved in down the block.

Manelik “Manny” Vallejo drives a 1999 gold Ford Explorer van with a cracked windshield and letters on the rear window that read in English and Spanish: “If it causes you envy … work harder like me.”

Vellejo runs his own taxicab service. He and his wife and their five children, ages 8 to 18, used to rent an apartment in Providence for $1,000 a month. Back then, his wife was working in a factory and earning about $300 a week. Together, their household income was just under $34,000 a year.

In mid-April of 2006, he called a real estate agent whose name he’d seen on signs. They arranged to meet on Bellevue Avenue and she showed him two houses: a three-family at 96-98 listed for $310,000 and a two-family at 212-214 for $305,000.

“I like both,” he told her.

He wasn’t sure he could even get a mortgage; his wife had stopped working because of health problems. Their household income had dropped to about $18,000 before taxes. But he figured it was worth a try.

“She [the real estate agent] made me sign some paper,” Vallejo recalled, “and a week later she says, ‘you got both houses!’ I say, what I need both houses? I need one!”

Vallejo says he didn’t understand at the time that the papers he’d signed were purchase-and-sales agreements.

He couldn’t imagine how someone with his income could get $600,000 in loans. “How can it get approved?” he said.

In June 2006, Vallejo received the same type of 80/20 mortgage as his neighbor Walter Fernandez. Vallejo’s loan documents show that the first mortgage on the house where he and his family live carries an interest rate of 9.3 percent. The second mortgage has an interest rate of 13.5 percent. At the time, the rate on traditional, 30-year fixed rate mortgages was between 6.6 percent and 6.86 percent.

Vallejo tried to keep up with his mortgage payments. He worked 10, 12 hours a day. He rented one upstairs apartment and posted a “For Rent” sign for the other. He found two families to move into the second house. But one family left after a month. Another stayed a year and then moved out owing money for gas.

To pay his bills, Vallejo borrowed money from friends and “on the street” from cash lenders. He fell behind on one mortgage, then the other.

He lost his rental property at 212-214 Bellevue to foreclosure last January.

Now, he’s working with a housing counselor to try to save the house he lives in from foreclosure, too.

Meanwhile, an agency in North Carolina is still trying to collect the unsecured debt on the foreclosed house he lost 10 months ago.

Every week, a woman from the collections agency calls him on his cell phone demanding money. When are you going to pay?

If he doesn’t pay, the woman told him, he could get deported.

Manny Vallejo has lived in this country for 10 years. He has a Green card. He has applied to become a U.S. citizen.

The last time the woman from the debt-collection company called, he said, he told her: “The house is in foreclosure, and tomorrow I take a plane back to my country!”

WALTER AND JANICE Fernandez fell behind on their mortgage after their tenants left.

The family who lived on the second floor scratched the hardwood floors, put holes in the walls, and didn’t pay their rent on time. One afternoon, Janice Fernandez was in the basement doing laundry as her son played nearby when she saw him holding an unfamiliar black and pink diaper bag. She looked inside and found two handguns.

She ordered the tenant to move out, and started eviction proceedings.

Their first-floor tenants took good care of their apartment, but the mother in the family became increasingly unhappy with the noise on the street at night, and the violence. “She didn’t want to raise her son in this area because there were a lot of gunshots,” Janice Fernandez said. So they moved out, too.

“That’s when everything went downhill.”

With no rent coming in, Janice and Walter Fernandez couldn’t afford their $2,200-per-month mortgage payments. Janice’s mother fell ill and they temporarily moved to Florida to care for her. The couple fell behind on their mortgage payments and the bank moved to foreclose.

On the phone from Florida, Janice said she tried to negotiate with the bank to lower their monthly payments. They borrowed from family members to pay the bank $4,900, she said, to modify the loan. That lowered their payments to $1,322 a month.

But then the bank hit her with another $6,000 in charges. They didn’t have the money.

When they finally got their loan-modification agreement, she said, it was for about $1,800 – not including insurance and the payments on their second mortgage.

They gave up.

“We need to eat,” she said. “We need to pay the water bill….”

The bank, she said, had agreed to let them try to do a “short sale,” in which a property is sold for less than what is owed on the mortgage, so they can avoid foreclosure. The bank agreed to sell the house for $150,000 if the buyer made a 20-percent down payment, she said. But the deal fell through when the prospective buyer didn’t have the $30,000 for a down payment. The house is back in foreclosure.

ONE RECENT afternoon, Manny Vallejo steered through downtown Providence, ear phones plugged into his cell phone, waving to the other cabbies waiting outside the Amtrak train station.

He slowed in front of the boarded two-family house he used to own, at 212-214 Bellevue, and let the engine idle. The house looks pretty much the way he left it: freshly painted, no rotted stairs or broken gates; no signs of long-term neglect.

Before he lost the house, Vallejo said, he put in a new hardwood floor. After the house was boarded, vandals broke in and wrecked the place.

“All my money,” he said, eyes filling up.

He and other neighbors say they saw men and women in broad daylight stealing copper pipes from the vacant house and carting them away in city garbage bins.

“See that grass?” Vallejo said, pointing to the front of the house. “I put the grass, coming every day to put water.”

He kept his foot on the brake pedal, not moving. He recalled the day he signed the papers to buy two houses.

“We have saying in Dominican Republic: Every day an idiot come into the street,” he said. “That day, I was the idiot.”

larditi@projo.com / (401) 277-7335

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Captions:

The Providence Journal / John Freidah

Above, homeowner Barbara Adams says, “I am not going to let fear run me out of my neighborhood.”

Janice Fernandez, at top, and her husband, Walter, were no longer able to pay their mortgage when it became difficult to find renters for their multifamily home. Once the neighborhood started to go, they say, renters did not want to live there. Now they face foreclosure.

Manny Vallejo hopes to save his home from foreclosure after losing a second property earlier this year.

The Providence Journal / John Freidah

Postal worker , who delivers mail along Bellevue Avenue, finds more and more mail to be undeliverable because of foreclosures in the area.

Jennifer Gonzales, right; her sister Emily Gonzales; and her son, Jeremy Larda, who rent from Manny Vallejo, were sleeping one night when a bullet flew through a bedroom window.

The Providence Journal / John Freidah

Patrolman Miguel Mena-Torres, who patrols the West End area of Providence, including Bellevue Avenue, stops to speak with the neighborhood kids.

Manny Vallejo’s daughter Gabriela, 11, right, and her friend Yosayra Pacheco are asked not to leave the family’s front porch for safety reasons.

With the help of the West Elmwood Housing Development Corporation, Barbara Adams, right, has been able to buy a house in the neighborhood. The City of Providence helped pay her closing costs. She got a low-interest loan from Citizens Bank. She enrolled in a homebuyer education class and later a landlord class. Now, she is determined to stick it out.

Walter Fernandez, with his 4-year-old son, Wally, at their home on Bellevue Avenue. His family ran into trouble when they couldn’t fill the rental units in his house.

PROJO.COM

Video: It’s not the money, it’s the disgrace of a foreclosure; sisters say. Are there foreclosed homes on your street? How are they affecting you? Respond, and watch the video, at projo.com