After Long Ordeal, a Homeowner Can Stay Home

By ANN CARRNS

 

A HAPPY ENDING Cornel Blakey and Althea Girard-Blakey negotiated a loan modification for their home in East Palo Alto, Calif. She had bought the house in 1975 for $17,500 and refinanced. 

FOR two years, Althea Girard-Blakey toted a black canvas bag when she went to work, full of the enormous collection of papers documenting her request for a mortgage modification. 

“I never knew when I was going to need it,” said Ms. Girard-Blakey, 59, who was struggling to make payments on a loan she took out on her home in East Palo Alto, Calif.
Now, Ms. Girard-Blakey can leave the sack at home. Her lender, Chase, has approved a permanent loan modification that reduced her monthly payments to an amount she can afford. She made the first of the new payments on Oct. 1.
In the context of the housing crisis, Ms. Girard-Blakey is one of the lucky ones: She got to keep her home, a compact two-bedroom with a pale exterior framed by bougainvillea. “Home, sweet home,” she said, smiling, during an interview in her cozy living room, which she has decorated in brown hues, contrasted with colorful orange and green accent pillows.
Getting the necessary approval involved several false starts and proved to be a frustrating, sometimes bewildering, process for Ms. Girard-Blakey and her husband, Cornel Blakey, 61. Her experience shows how the loan modification process can tax the resources of people who already are stressed by the demands of a difficult economy.
Coming as close as she did to losing the house was wrenching, because Ms. Girard-Blakey had owned it for more than 30 years. She bought the property in 1975, for what now seems like the startlingly low sum of $17,500. “It’s like buying a car, now,” she said of the price. A young single mother at the time, she wanted a home in which to raise her daughter. “I needed a place to get us settled,” she said.
She was able to secure a mortgage by saving a small amount for a down payment from her income as a preschool teacher, she recalled, and also by agreeing to pay the owner part of the purchase price over time.
Over the years, she said, she borrowed against the house to make improvements, like a new roof and an additional bedroom, and once to support herself during a period of unemployment. More recently, she and her husband added a small covered patio with artificial turf in the backyard. “This is my favorite part of the house,” she said while giving a visitor a tour. She viewed the debt-financed upgrades as positive, at the time. “I had my house working for me,” she said.
The most recent refinance came in November 2007, when, amid the housing bubble, the home’s value had grown to more than $500,000, according to the real estate Web site Zillow. She took out a 30-year fixed-rate loan, arranged through a broker, for roughly $265,000.
The loan was sold to Washington Mutual and ended up at Chase after Chase took ownership of WaMu’s mortgages in September 2008. (Mr. Blakey wasn’t a borrower on the loan, although his income helped pay the bill; because Ms. Girard-Blakey had owned the home herself before the couple married in 2000, they considered it her asset, they said). The resulting monthly payment of more than $1,600 was higher than she had expected. Still, she initially was able to handle the payments.
But two years later, the stalled economy was affecting Mr. Blakey’s income and straining the couple’s ability to pay their bills. East Palo Alto, populated by many African-American and Hispanic families, is less affluent than its neighbor Palo Alto, home to Stanford University and technology companies, including Hewlett-Packard. East Palo Alto was hit hard by the recession. On a recent Saturday, as children played in the street, a woman approached passers-by, asking for spare change.
Mr. Blakey had worked for years cutting hair at the barber shop his father had operated since the 1960s. But long-time customers began to move away, he said, and new ones seemed to be getting fewer haircuts during the slow economy. Finally, late last year, his father retired, and they closed the shop. The sign, East Bayshore Barber Shop, still hangs on the building a few blocks from their home, but the space has been taken over by a neighboring liquor store. “Right now, I’m unemployed,” said Mr. Blakey, a slight, soft-spoken man wearing a felt cap. He makes some money cutting hair for a few customers in a makeshift barber shop in the garage.
Ms. Girard-Blakey’s job as a receptionist at an office in nearby Mountain View was steady, she said, but it was getting harder to pay the bills, which included credit card debt.
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