October 22nd, 2010
10:33 AM ET

Florida man caught up in foreclosure chaos

Editor's note: Watch Drew Griffin's full report here

[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2010/images/10/22/art.tonytable.cnn.jpg caption="Florida homeowner Tony Louzado is facing foreclosure and two different law firms are pushing the foreclosure - on the same mortgage."]

Drew Griffin and Jessi Joseph

(CNN) - Tony Louzado is facing foreclosure.

He's not alone - in central Florida, where Louzado lives and works, one in every 56 homes is in foreclosure.

That simple number, from foreclosure data firm RealtyTrac, doesn't tell the whole story, especially in Louzado's case. Two different law firms are pushing the foreclosure - on the same mortgage.

"I see now that there's two people that are coming after me, that maybe [the bank] hired in this way," he said. "I don't know all the specifics, but there's two people that are coming after me on the same loan number," said Louzado.

Across the country, millions of Americans have lost their homes to foreclosures since the recession began in December 2007, according to RealtyTrac. Increasingly, however, more of those stories are becoming horror tales about a system in chaos with banks pushing people toward foreclosure, sometimes, allegedly, based on error-filled or even fraudulent and illegal documents.

Several of the nation's financial giants, including Bank of America, Allied Financial, JPMorgan Chase and GMAC, have halted foreclosures, although Bank of America and GMAC announced they are resuming the process. While the Obama administration opposes a moratorium on foreclosures so the process can be examined, the federal Fraud Enforcement Task Force has launched a criminal investigation to determine if the banks and their lawyers have done anything illegal.

Louzado's case may or may not have been handled properly, but his story is typical.

"I bought the house 6 years ago. It was something I was happy with. It was $1,500 a month," said the physical therapist and part-time fireman-paramedic. "I'm a prideful man. I take pride in paying all my bills."

But then, there were a series of tragic turns.

His young son needed heart surgery - three open heart surgeries as well as other surgeries to drain fluid. Louzado's health insurance is good, he said, but not good enough to cover $1,800 per month in prescriptions and co-payments and deductibles. He took a loan from his retirement account. The low interest rate on his mortgage - supposedly fixed for the first five years and variable after that - nevertheless rose every year, including a $600 jump in Year 4. The bank had no real answers, he said, and wasn't very helpful.

Meanwhile, the bills piled up, and he started to fall behind. Louzado took a 5 percent pay cut at the fire department, necessitated by the struggling economy. But still, he thought he could work his way out until he began calling his bank and realizing, he said, no one wanted to listen.

"They said, 'You are a hard-working American, thank you for paying us. When you stop paying, now we can start working with you,'" Louzado said. "Basically, do something wrong, then we're going to work with you. Go through your savings, go through everything, now you have nothing."

"With my situation it's a little more difficult because of my son's surgeries and the medical bills which I now have to take care of, which I want to take care of."

His son's medical bills take priority, Louzado says. But that's not easy with a big bank seeking to repossess his modest, three-bedroom townhome in Miami - and two law firms to deal with.

"In my opinion these are hired guns. Banks want these non-performing loans off their bottom line. And what do they do? They go out and hire a foreclosure mill who's trying to push it through as fast as possible," said Louzado's attorney, Jose Funcia.

Programming note: Learn more about Louzado's situation Friday night on AC360° beginning at 10 pm ET.

Filed under: 360° Radar • Drew Griffin
soundoff (40 Responses)
  1. zerimar

    I live in Puerto Rico and Im going thru a imilar situatiation.These banks don't care about family situations,they just want the foreclodure so later They can claim as a loss to insurance companies.Meanwhile familes suffer the consecuences of been trown in the streets.I saw an old lady being trown in the street with all. Her belongins.Now the house is close and the lady living with family.It is so sad to know that soon I'll be in the same situation.God bless all of the people that are going thru this.Mr.Obama consider a moratorium!!!!

    October 22, 2010 at 11:44 pm |
  2. Drew

    I used to work for one of those Bankruptcy and Foreclosure mills as a legal clerk. As I photocopied, faxed and mailed notices, motions, pleadings and assorted paperwork, I realized that the attorneys and paralegals were just signing the paperwork, and not looking or caring if it was done correctly. It was so heartless. The final straw for me was at the Christmas party the managing partner for the firm said at the toast, "We make people responsible for their obligations." My response was: "What about the people at the firm? Isn't their responsibility to be fair to the debtor?" It made me sick. I walked out a few weeks later, as I couldn't handle the irresponsibility of the staff I was assisting and the increasing paperwork. Something needs to be done to keep these mills and the clients they represent from getting out of control. And be fair with the debtor.

    October 22, 2010 at 10:42 pm |
  3. Evan

    It sure sounds like both law firms believe their respective clients hold the mortgage.

    Unless either can produce the note, you don't have to go anywhere. Hopefully you got a good law firm to sort out this mess!

    This goes to show the banks need the government to step in and take control, because the situation is clearly out of control.

    October 22, 2010 at 6:51 pm |
  4. MID

    he should not have signed up for the note if he could not honor the terms. sad story about the kid and that stuff God forbid does happen

    October 22, 2010 at 6:45 pm |
  5. King freedom

    Defend your home with force

    October 22, 2010 at 6:42 pm |
  6. Rhonda

    And these greedy mega banks, who don't care about us or our lives, are the ones that we gave the billion dollar stimulus to. Shameful! I am ashamed that my government gave my tax money to these greedy monsters!

    October 22, 2010 at 6:33 pm |
  7. ALincoln

    I have little sympathy because I am a bank stock holder and I am already paying for you.

    October 22, 2010 at 6:31 pm |
  8. Frank

    I have moved a few times, bought a few houses, and refinanced. Each time I went to closing, the loan terms were explained in excruciating detail – how is that all these people fighting foreclosure have ARMs that surprised them. I don't buy it – they were all misled – doubtful.

    More likely they wanted something they couldn't afford, and gambled that the house would appreciate before the loan fluctuated. You don't sign a contract on a loan that is fixed for 5 years, but it goes up year 1,2,3 and 4. That would be fraud – also $600 in year 4 – that means it was a balloon loan.

    I am sorry he had other family medical issues, but the mortgage issue is his doing. He shouldn't have signed that loan.

    October 22, 2010 at 6:30 pm |
  9. George Laszlo

    Did he read the loan docs he signed? I have sympathy but if you dont understand the paperwork have it explained to you or do not sign it. Post them and I can explain them.

    October 22, 2010 at 6:27 pm |
  10. KeithTexas

    Hire your own lawyer, keep the bank tied up in court as long as you can. By now there should be some sharks ready to take the banks on.

    It's just business, take every advantage you can and stay until the county movers your stuff out into the street.

    October 22, 2010 at 6:07 pm |
  11. Rethink

    What's the problem (other than the heartbreaking situation itself)? Medical bills pile up and someone is out of a house. Happens all the time. Sell off and rent something tiny. It's what we would all have to do in the same situation–especially if we had put all of our eggs in the success of an ARM. The fact that someone goes broke and loses everything doesn't mean the system is broken. It's just called life. It's why we have the bankruptcy code.

    That being said, I wish you the best of luck, Tony!

    October 22, 2010 at 5:46 pm |
  12. Dan

    Unfortunate situation but I don't understand why he would by an adj rate mortgage when rates were at all time lows??? Probably to afford a more expensive house and then he couldn't sell his way out of it...crazy leding practices/decision by owner

    October 22, 2010 at 5:42 pm |
  13. Steve

    First off house payments come first. Yes his sons health is important but the hospital should be willing to work more with payments. Did he even work out a payment plan with the hospital? Oh by the way I work for hospital an know this. IF not file for chapter 11 and force the new lower payment.

    October 22, 2010 at 5:34 pm |
  14. Michael Oswald

    He shouldn't have taken any loans against his retirement. He should have racked up all the medical bills necessary then filed a medical bankruptcy.

    Oh well.

    October 22, 2010 at 5:25 pm |
  15. Scott Adkins

    The answer to the foreclosure mill problem is not difficult: Lawyers who signed court filings that are false can (and should) be suspended, or in cases of fraud on the court, disbarred.

    The only way to stop such bad behavior is to make the individuals responsible personally accountable, and here, that means discipline by the state bars, to include permanent disbarment in particuarly bad cases.

    Believe me, lawyers will get the message quickly.

    October 22, 2010 at 5:25 pm |
  16. RoscoeChait

    This would not happen in Canada. The child's medical bills would be covered.

    October 22, 2010 at 5:22 pm |
  17. Brian

    I just don't get it. You borrow money to buy a property (which you pledge as collateral for the loan), you agree to repay it according to terms, and if you don't follow those terms, you forfeit your collateral. Why is this such a difficult concept, people?

    October 22, 2010 at 5:18 pm |
  18. Arelis

    I feel your pain...I live in SoFLo. Lost my job last year for 8 mos...had to stop paying mortgage out of necessity. Like you, I took pride in my responsibility to pay bills but creditors don't want to hear from you when you are paying....only when you're delinquent. I tried also to work with my creditors to no avail...including my morgage company. I finally recieved a remodification but not after a full year of calls, paperwork and red-tape. I feel like I just bought another house since I'm now back to a 30 year loan with a higher mortgage than a year ago and a 30% cut in salary!!!! GOD BLESS YOU and your son!

    October 22, 2010 at 5:16 pm |
  19. Ronnie Eggerson

    This is the problem for many hard working Americans. He really should not loose his home he still has income enough to pay his original mortgage of 1,500. The Bank and the hospital should work out a plan to forgive a portion od his debt and put is mortgage back to where it was originally.

    October 22, 2010 at 5:10 pm |
  20. Mark in Las Vegas

    There is probably a million heart breaking cases like Louzado's but banks don't lend money for the purpose of forgiving debt. Their purpose is to make money and you can't make money if you forgive everyone that has problems. As far as his interest going up, didn't he read the contract before signing?
    We all hope his son gets well. In the mean time maybe he should let his house foreclose and start a new life. Will it hurt? Sure, but better to hurt for a short term than go completely broke and lose it anyway and then hurt in the long term.

    October 22, 2010 at 5:08 pm |
  21. Canadian

    This is why the US needs the Gov to cover health care. Most in the US feels that it hurts them. He would not have had bills to pay for his poor son. Here in Ontario, they would have been paid for. This man would not have been in foreclosure.

    October 22, 2010 at 4:53 pm |
  22. pundit

    First they create this mess by outsourcing loan creation, then they try to fix it by outsourcing the collection and foreclosure?

    What are these banks doing besides charging us fees with one hand and asking the government for bailouts with the other?

    We should have let them all fail. At least then we would not have the same people in charge making the same stupid mistakes again.

    October 22, 2010 at 4:47 pm |
  23. Buddy

    Banks have been making money hand over fist in this economy due to ridiculous lending rates. Crushing people in trouble is part of what's killing the economy and they could care less as long as their ledger gets even more of a bump.

    This is just another example of corporate psychosis. Careful, corporate thugs. When people start starving, this country will take a drastic turn, and politicians won't be the only ones at the gallows.

    October 22, 2010 at 4:36 pm |
  24. Jon

    Why should the banks care about your situation or your son. They lent you money and you are not paying it back. Its their property not yours, so if you do not pay then get out. If I was the bank, I would want you off my property as fast as possible, so that I cant sell the home to someone that can pay.

    October 22, 2010 at 4:31 pm |
  25. Toby

    Nothing wrong with a medical bankruptcy dude. Drag out the foreclosure then file. Family comes before pride.

    October 22, 2010 at 4:30 pm |
  26. Doreen Lawson

    I think it is scandolous what the bank is doing. He has his priorities straight; too bad the bank won't try to work with him. Good luck.

    October 22, 2010 at 4:27 pm |
  27. greenlunch

    A sad situation, but how is this the banks fault? If he didn't make his car payment they would reposses his car; would that also be wrong? Guess it's time to rent.

    October 22, 2010 at 4:22 pm |
  28. Premium Roast

    It is very simple...you don't pay your mortgage, the bank takes the house back. It is very unfortunate that problems arise, this is why we have savings, you know, for the "rainy day"? But everyone is freaking out about foreclosures, but you signed a note agreeing to pay the money back and if you don't, then you know what will happen, not like it isn't disclosed...

    October 22, 2010 at 4:08 pm |
  29. tiredofitall

    If it wasn't for the outrageous medical bills then he could afford his payments even with the other issues.
    Why do we continue to listen to the idiots that complain about the attempts to change the healthcare abuse while we continue taking it in the shorts over and over again........healthcare is the # 1 killer in the US, financially and emotionally.

    October 22, 2010 at 4:05 pm |
  30. debbie

    I don't understand why he wouldn't qualify – or did he not try – to get a loan modification. Sounds like his type of loan would qualify since it was one of the junk variable rate plans. Also he can check with the pharmacy companies regarding his son's medical needs and often they will help – especially if you have insurance to cover some of the cost. There is help out there and it's nothing to be ashamed of. good luck to you

    October 22, 2010 at 4:05 pm |
  31. Jim

    hey,,,we all have it tough. Why is his story more newsworthy than mine, or my neighbors, or the mayors..?

    October 22, 2010 at 4:04 pm |
  32. Bruce

    The statistics about those affected, never mind the individual tragedies and the seemingly incompetent (or worse) practices of mortgage companies and their agents, are staggering. It's not a recession. This is depression for millions both financially and emotionally.

    October 22, 2010 at 3:58 pm |
  33. Shawn

    This was the same thing our mortgage company did. They said that we had to be late or behind on our payments before they would work with us.

    That seems insane that they would deliberately force you to ruin yourself before they would help you. The only thing that happened for us is we didn't pay our mortgage for 2 months and paid basically all our other bills until they would talk with us.

    After that we were refinanced and now we're able to keep our home and pay our bills. If they would have just worked with us in the first place they wouldn't have missed any payments.

    October 22, 2010 at 3:57 pm |
  34. Fred

    This is the essence of the Securitized mortgage
    fraud and it leads directly to the FED itself.
    The reason 2 parties are trying to foreclose is
    because the originating bank sold the same mortgage twice. This is the core of the fraud.
    Louzado should immediately hire an attorney to
    file a motion for both petitioners to show him the note. It's likely that neither can and neither has standing. If no petitioner can prove standing no one can foreclosure even if he stops paying on the mortgage.

    October 22, 2010 at 3:57 pm |
  35. Rick

    This is sad but the article raises more questions than it answers. Why did this fellow allow the bank to raise his mortgage payments if he was on a fixed rate? Why didn't he do something about it then? other than that I'm not sure anyone has done anything wrong here, except of course the issue with 2 different groups possibly claiming ownership of the same mortgage. That's an issue the 2 other parties will have to resolve first and I'm not sure it has anything to do with the fellow in the article.

    October 22, 2010 at 3:56 pm |
  36. Jon

    I just cannot understand why banks will not work with hardly anyone to avoid foreclosure. Do they really want these houses back – and to do what with? They cannot sell them at much of a price, and it seems like somehow reworking the mortgage loans would be just a better win-win deal for everyone. Why is that so hard to understand? I sure must be missing something. I can understand why people who are so severely underwater" with these loans would want to get these albatrosses off their backs. Why in heck did they give loans to people with no down payment and no income verification?
    And don't tell me that the Democrats MADE them do it. Baloney.

    October 22, 2010 at 3:56 pm |
  37. Stephen Nelson

    I had the same experience. I tried working with the lender for 2 years to modify my loan, but they kept denying my claims because I had not missed a payment. They told me to stop paying, and then I could qualify. So I stopped paying, and they proceeded to foreclosure. I now have multiple firms/banks involved, since I had a 1st and 2nd loan, and both have referred out to collection agencies and attorneys.

    October 22, 2010 at 3:49 pm |
  38. Lisa S

    I'm tired of the current administration getting away with doing NOTHING for these homeowners. When are they going to get tough and help people? This is not change I believe in.

    October 22, 2010 at 3:46 pm |
  39. Kennedy Degitz

    I am in the exact same situation, except further along. My mortgager, GMAC, basically said I had to be in default before I could get help. They were very unhelpful every single call I made, even though I was trying to follow everyone's advice on "staying in touch with my mortgage company". I filled out all the requested info and applications for mitigation and loan modifications, all the while keeping my business with 6 employees going. Never a word from GMAC. Just the foreclosure papers. I suppose they just threw the modifications in the trash, as I know for a fact I qualified for it. I think the mortgagers did not want to hassle with the help to it's homeowners. Just foreclose.

    October 22, 2010 at 3:46 pm |
  40. Rob

    Foreclosure mill or not, you don't pay your mortgage, the bank has the right to foreclose. A mortgage is a legal document, a business transaction. People aren't endowed with the "right" to own a home. If they can't afford it, for whatever reason, then they need to consider letting it go, as hard as that may be, get something cheaper, and take care of your son. A house is really nothing more than just an address, bottom line. He says his son is more important than the house, at least according to my interpretation of the story. So, cut your losses and move on.

    October 22, 2010 at 3:44 pm |